Domaine Romanee Conti (DRC) – A Bordeaux Hedge
21st September 2011
By Tom Turner (Senior Portfolio Manager) - Cult Wines Ltd -
In recent months, increased attention has been drawn
to the top wines of Burgundy, which have seen prices
soar, both on the London Exchange (Liv-ex) and in
Domaine de la Romanée-Conti is leading the trade in
Burgundy, accounting for a quarter of all of the
region’s trade on the London International Vintners
Exchange and in terms of performance for the wider
market, Burgundy has been leading the charge. It’s
appeal – not least to Asian buyers, who appear to be
contributing to the increase in demand – is obvious.
DRC is the most iconic fine wine outside Bordeaux,
and the only Burgundy producer that possesses
similar brand strength to the big names of Bordeaux.
It also benefits from a production that provides
enough liquidity to gain real market momentum (less
than 8,000 cases produced per year across the 8
grand crus), whilst not providing anywhere near the
quantities required to satisfy demand. Its rarity is
part of its mystique.
DRC has been the main article of numerous auctions
globally, particularly in the main trading hubs;
Hong Kong, London and New York. The most sought
after lots are those of DRC La Tâche, Romanée Conti
and Montrachet, which regularly achieve hammer
prices above the market value, likely due to high
quality and provenance offered by most auction lots.
Prices achieved at Hong Kong auctions are generally
a healthy margin above those in New York and London.
The table below (source: Liv-ex) compares the
winning bids from the Sotheby's auction in New York
on 10th September 2011, with those from the
Christie's sale in Hong Kong four days earlier on
4th September. Auction prices are for cases
(12x75cl) and include buyer's premium, shown
alongside current list prices.
Jackson Taylor (wineyields.com), recently summarized the Christie’s
Hong Kong Finest and Rarest Wines Auction (3rd & 4th September
2011). Below is an extract from his article:
“Behind the headlines of the Lafite vertical, an overview of the
results shows prices clearing roughly where one would expect to find
them, in a positive sign that wine markets are so far withstanding
the macroeconomic turmoil:
(all Lots 12x75cl)
1982 (est HKD 350,000-460,000) HKD 456,000 (£36,115, $58,838)
1996 (est HKD 120,000-160,000) HKD 156,000 (£12,355, $20,129)
1982 (est HKD 130,000-260,000) HKD 240,000 (£19,008, $30,967)
1996 (est HKD 650,000-85,000) HKD 90,000 (£7,128, $11,613)
Brion 1982 (est HKD 60,000-85,000) HKD 96,000 (£7,603, $12,387)
Brion 1996 (est HKD 32,000-45,000) HKD 42,000 (£3,326, $5,419)
The offerings from Domaine Romanee-Conti however were among the
biggest winners of the evening:
1978 (est HKD 350,000-450,000) HKD 456,000 (£36,115, $58,838)
1990 (est HKD 600,000-700,000) HKD 780,000 (£61,776, $100,643)
2002 (est HKD 140,000-190,000) HKD 228,000 (£18,057, $29,419)
1988 (est HKD 680,000-800,000) HKD 960,000 (£76,032, $123,869)
That’s an incredible spread for the 1990 La Tache over the 1978 –
and it’s not reflected in current London trade pricing either. That
might present an opportunity.
An exceptional result for the DRC stable all around. You have to
think that the rest of the season has plenty more of that to
Burgundy is clearly on the radar of a vast number of collectors and
the investment merits of the younger vintages are apparent when
looking at the price discrepancy of comparable back vintages (take
La Tâche ’02 auction price over the ’90 – a 242% difference).
Asian buyers are becoming more discerning and with DRC representing
the most allusive of all fine wine, it is unsurprising that
performance has been so spectacular thus far in Far East auctions.
As a collector if you’re driven by exclusivity, rarity and status
then nothing represents this better in the fine wine world than DRC
*12-bottle case of the legendary 1990 DRC Romanee-Conti realized a
staggering HK$2,318,000/ £189,975