Focus On – Château Coutet

A fortnight ago, two of the Vinetrade team were lucky enough to be invited along to a wine dinner and tasting near Vinopolis in South London. It was hosted by 12× and led by the ever-accommodating Aline Baly, who very generously had brought along not one, but eight wines from Château Coutet. Needless to say they were delicious and whilst we were tempted to include them below, our “seven word wine reviews” just weren’t long enough to do the wines justice.

A selection of some of the better recent vintages of Château Coutet, as well as Cuvée Madame and Opalie.

A Short History of Château Coutet

For those who haven’t heard of Château Coutet before, it is one of several top Sauternes producing  Château in Bordeaux. Sauternes is the one of the most famous sweet wines in the world, vinified from white, rot-stricken, dehydrated, raisined grapes. The rot in question, is often referred to as Noble-Rot and is a result of the rather unique terroir in the Sauternes appellation. Around 25 miles south-east of the city of Bordeaux lies the river Ciron, a tributary of the Garonne, whose waters are several degrees cooler. Where the two rivers meet, the convergence causes Autumnal mists to form, creating the ideal conditions for the noble-rot (Botrytis Cinerea) to form on the grapes, which slowly desiccates them, concentrating the sugar and making for a much sweeter, richer must. This micro-climate, whilst not unique in the world, is restricted to just five communes in the Sauternes appellation, including Sauternes, Barsac, Preignac, Bommes and Fargues.

Château Coutet itself is regarded as one of the finest producers of Sauternes and was classified as a Premier Cru Classe in the 1855 Classification; rated as one of the top nine amongst twenty-one other properties in the Sauternes appellation, and it is one of two Premier Cru château in Barsac, the other being Château Climens. Today the château is owned and run by the Baly family, who purchased the property in 1977, but there is a storied history of wine production going back as far as the mid 17th century, with such historical footnotes as Thomas Jefferson noting that Château Coutet produced the best wines from Barsac.

The Property

Unlike it’s neighbour, Château Climens, down the road with 29 hectares, Château Coutet has a slightly larger vineyard holding of 38 hectares under vine and produces on average around 4500 cases of its top wine a year. All three  of the grape varieties, allowed by the Sauternes appellation rules, are planted; around three quarters Semillon, one quarter Sauvignon Blanc and a smattering of Muscadelle. The vines are located between the Garonne and the Ciron, south of the village of Barsac where the soil is predominately clay over limestone, ideal for these white grapes, and with an average age of around 38 years old per vine. The château building itself dates back to the 13th century and was constructed by the English as a citadel to dominate the surrounding land.

The Wines

Today the Château produces four wines and we were fortunate enough to try an example of each (bar the second wine). The word Coutet derives from the old Gascon word knife, and it is that cutting quality, the way that there’s depth and richness to the palate that is laced through with acidity, that is quintessentially “Coutet”. The four wines each share this characteristic:

The wines we tried were the delicious Opalie 2010, six recent vintages of Chateau Coutet including the underrated ’02, the warm ’04′, the soft  ’08, the distinguished ’97, the luscious  ’07 and raisined ’89, finishing with the 100% Semillon, stand-out Cuvée Madame 1995.

Super Tuscans

Courtesy of several tastings held by members of the London trade over the past fortnight, we’ve been very fortunate to try several different, as well as different vintages of, some of the best Super Tuscans: Sassicaia 2009, Ornellaia 2009, Tignanello 2001 to name but a few. Having been rather impressed by the quality of the wines we thought it’d be prudent to take a look at what makes a Super Tuscan worthy of inclusion in a cellar, and why you should not be without them. In short we’ll be looking at:

  • What is a Super Tuscan?
  • Why should you own a Super Tuscan?
  • Current Market analysis and pricing.

What is a Super Tuscan? – Is it a bird…

The name Super Tuscan started appearing in the English-speaking media back in the early 80s, but the history of them goes back another 40 years to 1944. The first vines for Sassicaia, the original Super Tuscan, were planted by Marchese Maraio Incisa della Rocchetta, from cuttings of Cabernet Sauvignon taken from Chateau Lafite Rothschild, at his estate San Guido in Bolgheri near the Tyrrhenian Coast. The difference with these plantings were not just the pedigree of the vines but also the type. Whilst Cabernet Sauvignon had been planted for centuries in Tuscany, the predominant grape varietal is Sangiovese, with Chianti, Brunello di Montalcino and Vino Nobile di Montepulciano all using strains of it to make world-class wine. Predominantly Cabernet Sauvignon wines weren’t allowed under the Tuscan quality-wine appellation rules, the Denominazioni di Originie Controllata (DOC), and as such Sassicaia was just labelled as a Vino da Tavola, a table wine. Incisa’s nephew, Piero Antinori persuaded his Uncle to sell the 1968 Sassicaia vintage through their Marchese Antinori exporters and Sassicaia has grown in fame since. Other Super Tuscans soon starter appearing, such as Tignanello in the early 70s, created as a more Sangiovese dominated blend by Antinori’s oenologist Giacomo Tachis, who is also credited with Solaia and several other Super Tuscans.

 Why should you own a Super Tuscan?

Apart from the time-honoured phrase, involving eggs and baskets, you should include Super Tuscans in your collection for the following reasons:

  • Super Tuscans are made to age,
  • They’re made with  precision and quality in mind,
  • They’re made in limited quantities,
  • They’re consistently rated highly by the leading wine critics.

Furthermore, whilst Bordeaux has seen a drop in both interest and prices of late, the demand for and performance of the Super Tuscans has never been better.

Current Market Analysis and Pricing – which Super Tuscan is right for me?

Super Tuscans sit in a particular niche within the fine wine market:

  • Not quite as liquid as say, the First Growths,
  • More interesting than the similarly priced 2nd-5th Growths,
  • Not tied to the Bordeaux En Primeur campaign,
  • Not scored by Robert Parker himself,
  • Yet definitely wines that have performed well in the past and
  • That are improving in quality year on year.

Standing somewhere between Bordeaux in terms of taste and appeal, and the Northern Rhone in terms of craftsmanship and typicity, asking which Super Tuscan is right for you is down to price and taste. Currently with a perceived lull in the appeal of the left-bank Bordeaux staples and the more sought-after Burgundies now going for significantly higher prices for the latest vintage, wines like Sassicaia, Ornellaia, Masseto and Tignanello have never looked more underpriced or attractive. Consider, the latest release of Masseto from Ornellaia, the 2009, was around the £2750 mark, compared with the similar scoring Mouton Rothschild’s latest release, the 2011, at £3800, you can see why there’s very little available on the open market. Price-wise the Super Tuscans range from the lower end like Flaccianello at around £380 for the 2009 release, to the mid priced Tignanello at around £500 for the 2009, to the more expensive like Solaia 2009 at around £1450. As with all wines that have the potential for growth, a good score and a good price are key, so consideration must be taken.

The Trouble with Valuing Wine

This week the financial press and wine trade has been abuzz with news that one of the largest wine funds in existence, the Noble Cru fund, is potentially over-valued. The long and short of it is that the valuation method used by the Fund’s advisers is apparently not accurate enough, especially when compared with other independent valuations. ”Why the sudden interest from the press?” you might ask. Apart from the obvious, that ‘potential financial scandals’ sell papers, there is something in this story that doesn’t sit right with the facts. And more interestingly, this story does raise two important economic questions:

How do you value something that is so rare as to be almost illiquid?

This first question is raised in conjunction with a rather pun-filled aside from the FT’s own Lex. While it’s easy to value the more liquid portion of the Nobile Cru portfolio, the fast traded Bordeaux, it’s far harder to correctly value something like a Double-Magnum of Mouton Rothschild 1945, a wine that is considerably rarer and is not in an easy-to-calculate format, as opposed to a 12x75cl bottle original wooden case.

Here at Vinetrade we had a go at a section of the easier, full cases, Bordeaux bit of the Fund. Basing our price data accumulated from the market on the 31st of August and using the Euro Exchange rate on the day of 1.26 to the pound, we calculated that there was a 21.6% difference between their total of €21,076,754 and ours of €17,037,939.

However, market data on the rarest wines is somewhat inaccurate and unreliable, simply because there is little in the way of a market for them. Echezeaux 1985 from Henri Jayer may be currently offered in France for around £3350 a bottle, but the last full case sold, was under the hammer at a recent Sotherby’s Auction for £49350 (or £4127.5 a bottle, 18% difference). The crucial point being that any valuation that is based on auction prices is A) dependent entirely on the context of the Auction (number of buyers, economic climate, simple demand) and B) likely to be wildly different from a merchant’s listed price the rarer the item gets. As one auction-specialist who would prefer not to be named put it:  ” when it comes to the super rare items you have to be a little more open-minded and take into consideration: both the buyer and the seller, historical prices, similar vintages, trading climate, and also who your potential purchaser may be.  Effectively, these wines are worth what someone is willing to pay and if there is a lot of interest on the lot, the price will be driven up“.

How do you realise the value of a wine without selling it?

Without the wine being sold, how do you make a monetary gain or reward and how does this fund actually make money? Specifically, rarer wines will only tell you their real value when they’re sold. Thus, how does this wine portfolio actually generate a return without sales? Or more pressingly, if this fund is on paper increasing year on year, and a performance fee is being paid, what are the checks and balances for the investors who won’t see a return before this fund unwinds for its 5 year horizon? Or, that potentially because the valuations are based upon unrealised, potentially wrong, figures the reward of 20% is erroneous? Of course all of these questions assume that the valuation of the wines is not based on sales.

Whilst finishing this post, a further update to the story broke here, to the extent that, Noble Crus Fund are working on “automatic and scientific valuation system with two renowned finance professors who have no financial interest in the wine market”. How the two finance professors go about addressing the problems above, we will be interested to see, although we question what added experience a renowned finance professor has that an experienced-auctioneer or a dedicated database of wine-prices, such as those collated by Vinetrade, does not have when it comes to valuing wines.

 Addendum: the previous version of this post included a reference to moral-hazard with regards to performance fees paid on unrealized gains. Our intention was not to call into question the nature of open-ended equity funds in general, which do book performance in such a way based on independent benchmarks/valuations (like the London Stock Exchange). It was rather to query how illiquid wines increase in value without being sold and how performance fees are paid on such a perceived increase.