French wine is produced to quantities decreed by the Appellation Laws of 1855 which were instigated by Napoleon III. These laws even dictate the yield of each acre of planted vines and are subject to strict controls.

New World wines are restricted to existing production levels by the availability of land and quality vines. The fine wine market is overwhelmingly made up of red wines with only very few exceptions.

A maximum of 2% of all wines made globally are considered to be of sufficient quality to rise in value and very few wines ever break into this tier from a lower starting position. Under the French Appellation control system there are five First Growths or Premier Cru wines against which every other product has been judged. These are followed by Second, Third, Fourth and Fifth Growth wines produced to varying quantities.

Wine graded highly enough by the world’s most influential critics is deemed to be an IGW (investment grade wine), and its value should rise over the period of time it takes to reach its maturity window (when it will be perfect for consumption).

Drinkers, connoisseurs, and collectors, together known as the secondary market, will traditionally look to acquire their wines just prior to the wines’ maturity window. For example, almost all Australian fine wine is fit to drink soon after its release and will be reaching the start of its maturity window five to eight years from that point. Individuals will be looking to source them from the beginning to the mid-point of that maturity window, which could range from 20 to 50 years. French wines generally have a lengthier maturity period but will normally be considered the “Blue Chip” element of a portfolio and reward owners over an extended hold term.

Over past decades fine wine has been seen as a patient man’s market and although this approach is still very much advised, over recent years the price of fine wine has moved more forcefully and rapidly than many had expected. The market has proved itself to be stronger in recessionary times than many, if not all, alternative areas.

French wine has been leading the way with faster growth than in the past. Australian wine is showing to have far greater potential for higher rates of return as it compares favourable, in terms of quality, with French wine whilst starting from a lower individual bottle price.

The conservative view is that Australian wines could be selling for a release price far closer to the French products before too long. This will prove extremely beneficial for those who had the foresight to get involved at advantageous prices.

 

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