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Château d’Yquem – Liquid Gold - 4th October 2011
By Tom Turner (Senior Portfolio Manager) - Cult Wines Ltd - http://www.cultwinesltd.com


Back in April of this year, we looked at one of Bordeaux’s most prestigious estates – Château d’Yquem. Following the lifting of a sulphites restriction on wines imported through Hong Kong around 12-months ago, the sweet white wines of Sauternes and Barsac became eligible for import into China and given the discernible demand for Bordeaux there, the promise held by a new offering could be huge. Whilst Yquem was present in the Far East previously, Hong Kong is the main import hub for fine wines in the region and the vast majority of China’s fine wines are sourced through Hong Kong based merchants.

Yquem's holding company LVMH – the world’s largest luxury goods conglomerate and owners of St. Emilion producer Château Cheval Blanc – are masters of marketing luxury goods, with a particularly good track record in the Far East where Louis Vuitton has been the most popular luxury brand for several years.

Looking more specifically at the appeal of Yquem to the Asian market, it seems this wine has all the natural components for success.

Ice wine is extremely popular in China already; China itself is home to the largest ice wine estate in the world at Liaoning as well as being a top importer of ice wine from Canada.

The wine already has an interesting translation in Chinese, often cited as a pre-requisite for popularity in the Chinese populace (as with Lafite and Lynch Bages): characteristic of the Chinese language is that it will try to make the proper nouns correspond with meanings – with Yquem being the perfect example, translating as 'drop' and 'gold'. The pronunciation of in Chinese is "dict gum" which is similar to d'Yquem in French.

Considering the golden hue of the wine itself, the name lends itself very well to the burgeoning wine enthusiasts from the Far East and could well see Yquem emerge as the Lafite of white wines.

In the 6-months following the lifting of the sulphites ban, the Far East secondary market appeared to be none the wiser as to Bordeaux’ sweeter option. However, the last 2 quarters have seen a strong uptake in Sauternes’ only 1er Grand Cru Superior, with prices rising 5-10% across the board and a large increase in trade frequency on the London Exchange (Liv-ex).

What’s been particularly interesting are the recent auctions, with a huge surge in Hong Kong based activity, which has been impressive by the volume of lots, the range of vintages and consistency of estimates being achieved (and in numerous instances exceeded). Most recently, a case of 2001 sold for £6,338 at one of Acker’s Hong Kong auctions – over 26% above recent Liv-ex trades. But topping estimates at auction is not a new phenomenon for Yquem. Headlines were made in 2006 when a 135-year vertical was sold by The Antique Wine Company at a London auction for $1.5 Million, the record for a single lot of wine at the time. In July this year, Stephen Williams, Managing Director at AWC, sold a single bottle of 1811 Château d’Yquem at a private auction in London’s Ritz Hotel, making it the most expensive bottle of white wine ever sold.

Looking more specifically at the vintages of Yquem offering the best value and growth potential, it’s notable that certain vintages have not been scored by Parker – 2002 and 2004 – with the 2004 being of particular interest considering Jancis Robinson MW and other critics' high scores.

There is no doubting the quality of this vintage, but without the Parker score it has been able to fly very much under the radar. There could be fantastic growth potential, even in the top vintages, as – in comparison to the hugely popular Left Bank 1st Growths – they’re still available at a considerable relative discount. Another consideration must be the average annual production of 60,000 bottles, which is a quarter of Lafite’s annual yield, resulting in sufficient liquidity to create a presence, but limited enough to put a serious strain on supply for older vintages.


 

     
 
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