The lure of California

The arrival of Opus One 2013 on La Place on Monday morning is a reminder that the fine wine investment market isn’t all about Bordeaux, much as trading may be dominated by the Bordelais producers most of the time.

Indeed the fact that the Liv-ex 1000 is now in all time high ground while the Liv-ex 100 is still at a 20% discount is a further reminder about the importance of diversifying your exposure when investing in fine wine.

Narrower indices are always more volatile than broader indices, which is great provided you know that is the ride you’ve signed up for. Many people prefer a quieter life, and for such people the diversified approach as exemplified by the broader index represents the better approach.

In recent weeks we have been highlighting opportunities within the Bordeaux sector but for those with broader horizons there are also features elsewhere, and the listing of Opus One 2013 as mentioned above may see Napa Valley return to the fray. The 2013 is a highly rated vintage so it will be interesting to see how quickly the stock on La Place gets hoovered up.

At guide prices around £2,200 the answer should be pretty damn fast, because James Suckling’s reputation depends on it. Whilst it is yet to be tasted by anyone from the Parker stable, Suckling has awarded it a nice round 100 points. Parker has already given the region a vintage score of 98 which is higher than any other, ever, indeed the excellent 2012 and 2010 vintages ‘only’ scored 96, so it augurs well for 2013. So does the fact that he has scored the Dominus 2013 at 100 points.

What also augur well are the prices of some of the back vintages. The 2005 and 2007 now trade at £2,900, both individually 95 pointers with vintage scores of 95 and 96 respectively, while the 96-point 2010 has moved up to £2,600. It has a vintage score of 95. All of these highlight the potential value of the 2013, but we shouldn’t neglect the 2012, at £2,250. It scores 96 and has a vintage score of 96, rating its relative value higher than all three earlier vintages.

For anyone who imagines that vintage scores of 96 and 95 are de rigeur for Napa, it might be interesting to learn that 2011 was a shocker meriting only 78, same as the 2000 vintage. Opus One made a “surprisingly feeble offering” in 2000, according to Parker. “…horsy, sweaty saddle leather/locker room aromas”, go his tasting notes. Yum. “The cheesy aromas are not expected in a wine that costs $150.” I should say not! It’ll be cheap as chips then, surely? At £3,210 this 84 pointer is as expensive a recent Opus as you can find, which can surely only be explained in terms of the customary Millennium fairy dust.

We have drawn investors’ attention before to the pricing disparity between Opus One and Dominus, and it is fair to say that no such fairy dust fell on Dominus 2000, which scores 87 but crawls across the line at £690. At Amphora we wouldn’t be suggesting picking any of these up but we have identified one or two other bargains.

Dominus illustrates as well as any the propensity of a wine to increase in price as it ages. Three wines have scored 99-points over the last two or so decades, the 1994, 2002 and 2008 (vintage scores of 95, 95 and 94 respectively, so very similar). The prices, respectively, are £2,600, £1,860, and £1,540.

A similar pattern is at work with the 98 pointers, 1991, 2001, and 2007 (vintage scores 94, 96, 96). These cost £2,800, £1,700, and £1,420. It’s nice to learn that if you spend time in the market it bears fruit. It is also interesting that in both cases (the 3×99 pointers and the 3×98 pointers) the rate of price increase seems to escalate the further back you go in time. We will analyse this phenomenon in more detail over the coming weeks.

All things considered we think there is money to be made in the 100-point Dominus 2010 at £2,400. Early indications for the 2013 are around £3,000, and even if that does turn out to be the iconic vintage of the generation it won’t harm other cheaper 100-point scorers. We would also be happy to recommend the 2008 and the 2002 and the 2007.

Philip Staveley is head of research at Amphora Portfolio Management. After a career in the City running emerging markets businesses for such investment banks as Merrill Lynch and Deutsche Bank he now heads up the fine wine investment research proposition at Amphora Portfolio Management