When the world seems to shine like you’ve had too much wine Antinori
25.04.19 – Fine wine investment –
One of the areas of performance that has seemed unusual to us at Amphora year-to-date has been the Italian sub-index quotient of the Liv-ex 1000. This comprises the better known, and traded, Super Tuscans from Masseto, Sassicaia, Ornellaia, Solaia and Tignanello; the rather less liquid Antinori Guado Al Tasso and Tua Rita Redigaffi, also from Tuscany; and the Piedmontese Gaia Barbaresco and Sori San Lorenzo, and Giacomo Conterno Barolo Cascina Francia – again, very illiquid. It is important to remember that when we talk about liquidity in fine wine investment terms we are not referring to ease of acquisition, so much as of disposal.
It is perfectly easy to pick up any number of these wines and the briefest of glances at Wine Searcher will illustrate where to go if you want to buy any of them. We make no apology however for endlessly reminding potential investors that there is often quite simply no resale market yet for a lot of wines which qualify perfectly as “fine”, in that they improve over time as they age in the bottle. That means that bids can often come in at derisively low levels, notwithstanding the quality of the wine. If you can’t sell it, at an acceptably narrow discount, it just doesn’t qualify as an investment.
The Italy 100 sub-index, then, has performed reasonably well so far this year, in that it has bucked the trend of the broader index, dragged down by the correction (if you can call it that at this early juncture) of Burgundy.
Scratching at the surface of this performance as we did last week with the more liquid wines from Bordeaux, we found some surprising results. Initially we took the data back to 2000 for the Super Tuscans only, because we are as yet unconvinced that regular investors should venture beyond those wines (on liquidity grounds), and there seemed, in stock market parlance, to be blood everywhere.
The Solaia aggregate return for the 15 vintages from 2000 to 2014 is down a punchy 72% ytd, with an average decline of almost 5%, followed by Masseto down 49%, Tignanello 45%, Sassicaia 15% and Ornellaia 10%. We observed that in 3 cases, the Ornellaia, Solaia and Tignanello, the aggregates had been distorted to a degree by the 2000 vintage, which had declined individually by 15%, 39% and 26% respectively. This offered a sizeable clue as to what had been happening on the index front.
The Liv-ex Italy 100 comprises the most recent 10 vintages for the 10 wines listed above, and when we narrow the filter to include only those vintages the results improve markedly. In aggregate terms Masseto goes from a decline of 49% to an improvement of 16%, Sassicaia from -15% to +24%, Ornellaia from -10% to +8%, Tignanello -45% to +10%, whilst only Solaia stays in the red, moving from -45% to -20%.
Not only does this explain what appeared to be the discrepancy referred to above and illustrated in the chart, but it also more importantly highlights how investors might modify their approach when investing in Italian wines. Whereas we are quite comfortable with the liquidity and marketability of Bordeaux wines going back well into the 1990 vintages, in Italy the secondary market becomes much more uncertain a lot earlier than that.
Given that Masseto only produces around 2,500 cases each year it is understandable that scarcity will set in quite early, indeed aside from its obvious quality that is one of the reasons for its premium price level, but Sassicaia produces as much as 15,000 cases which is on a par with someone like Chateau Montrose, so there ought to be enough to keep the market liquid for a couple of decades or so. That said its 2001 vintage is down 28% this year and given that it is over a year since the last trade on the Liv-ex platform we think we are reasonably safe to suggest that the recent scale decline is due to lack of liquidity.
The clear message for investors is not so much to avoid back vintages over 15 years old at all costs, so much as be mindful, as you would with a 30 year old Bordeaux, that you might have to be more flexible with the timing of your exit if you don’t want to be trapped by short term illiquidity.
Many people will be familiar with the Antinori name from their own consumption journey in and around the off licences of life, but it is interesting to note just how integral that family has been to the development of the Super Tuscan wave. Given that the family has been involved in wine-making since the end of the 12th Century perhaps it shouldn’t be too much of a surprise. Suffice to say an Antinori (Piero) owns Tignanello, Solaia and Guado Al Tasso, his brother Lodovico founded Ornellaia and Masseto, and their first cousin owns Sassicaia.
A cool 60% of the Italy 100. Now that’s a way of life.