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Domaine Romanee Conti (DRC) – A Bordeaux Hedge - 21st September 2011
By Tom Turner (Senior Portfolio Manager) - Cult Wines Ltd - http://www.cultwinesltd.com


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 auctions worldwide.

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.

Market commentator 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)

  • Lafite 1982 (est HKD 350,000-460,000) HKD 456,000 (£36,115, $58,838)

  • Lafite 1996 (est HKD 120,000-160,000) HKD 156,000 (£12,355, $20,129)

  • Latour 1982 (est HKD 130,000-260,000) HKD 240,000 (£19,008, $30,967)

  • Latour 1996 (est HKD 650,000-85,000) HKD 90,000 (£7,128, $11,613)

  • Haut Brion 1982 (est HKD 60,000-85,000) HKD 96,000 (£7,603, $12,387)

  • Haut 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:

  • La Tache 1978 (est HKD 350,000-450,000) HKD 456,000 (£36,115, $58,838)

  • La Tache 1990 (est HKD 600,000-700,000) HKD 780,000 (£61,776, $100,643)

  • La Tache 2002 (est HKD 140,000-190,000) HKD 228,000 (£18,057, $29,419)

  • Romanee-Conti 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 follow.”


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 Romanee-Conti.

*12-bottle case of the legendary 1990 DRC Romanee-Conti realized a staggering HK$2,318,000/ £189,975


 

     
 
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