ZACHYS ANNOUNCES WORLD RECORD-BREAKING DEBUT EUROPEAN AUCTION OF WINES FROM THE CELLAR OF ENOTECA PINCHORRI TOTALLING £3.2 MILLION

After decades of auctions in New York and Hong Kong, the world’s leading wine auction house, Zachys, hosted its first European auction in London via livestream, on 12 September 2020. In a great success by any measure, the auction was sold out and realized £3,153,952. The wines and aquavit in the auction were from the legendary cellar of three-Michelin-star Enoteca Pinchiorri in Florence, Italy. The sale included Coche-Dury, Rouget, Dujac, Ramonet, Leflaive, Jayer, Liger-Belair, DRC, the First Growths, Pétrus back to the 1920s, Le Pin, Yquem back to the 1920s, Masseto, Ornellaia, Krug, Chave, an amazing collection of Italian aquavit in beautiful hand-blown Murano glass, all curated by the restaurant’s owner Giorgio Pinchiorri. The auction was live-streamed from Zachys’ home office in New York, by Zachys President Jeff Zacharia and Head of Auction Sales Charles Antin, while bidders logged in from home, along with intimate get-togethers in Stockholm, Geneva, Beijing and at Cabotte Wine Bar and Restaurant in London. Bidders from 20 countries, including the UK, US, UAE, China, Hong Kong, Israel, Switzerland, Sweden and Monaco, all vied to take home a piece of vinous history. The 864-lot auction featured 2,507 large formats including nebuchadnezzars, methuselahs, jeroboams, magnums and was 100% sold. 26% of the auction, or 226 of the lots, set new World Records, and an astonishing 55% of the lots set European Records, despite this being Zachys first auction in the UK. The top World Records include:

• A single magnum of 1979 Jayer Richebourg for £47,120

• A single magnum of 1990 Roumier Musigny for £47,120

• A single imperial of 2009 Pétrus for £42,160

• A single bottle of 1985 Jayer Richebourg for £34,720

• A single methuselah of 1981 DRC RSV for £29,760 Zachys sold over £115 million worth of wine at auction and retail in 2019.

In March 2020, as Covid-19 forced bidders to stay at home, Zachys quickly transformed into a digital business and was the first major auction house to offer its live auctions fully online, allowing clients to bid from anywhere globally. Despite COVID-19, Zachys has had its busiest first half-year ever, overreaching projections with over £34 million in year-to-date auction sales. Since the start of the pandemic, all live auctions have taken place through Zachys’ “Studio Sales” live-streamed, sometimes with over 150 people in the “virtual room,” watching the auctioneer from New York. Zachys even carried out a Hong Kong sale on EST, which took place 10pm-4am. Zachys’ global team hosts now-famous bidding parties, where potential buyers in Beijing, Shanghai, Stockholm, London, Hong Kong, or elsewhere can get together in small groups, enjoy a glass of Burgundy, some fine dining, and bid in real-time. The “Studio Sales” have made Zachys auctions more accessible as bidders are no longer required to attend in person. Zachys has offices in New York, Los Angeles, Napa, Washington DC, Hong Kong, Beijing, Shanghai, Stockholm and Paris. London, the historic centre of wine buying and trading worldwide, was the obvious choice for Zachys’ new European hub. Zachys’ presence in the UK capital is a key piece in a global expansion strategy that ensures the company’s global clientele will receive the same level of service regardless of time zone. Christy Erickson, Head of Europe, Zachys said: “We’re delighted with the results of our European debut. We were coming into the auction against a backdrop of global uncertainty due to the ongoing pandemic, but since wine auction sales in 2020 thus far have exceeded our January projections, we decided to forge ahead. And we’re glad we did: this auction shows that the fine-wine auction industry is still booming, and our buyers’ appetite for quality shows no sign of slowing. We’re thrilled to have set a 226 World Records and achieve over double our pre-auction estimate for this collection. We can now look forward to three more sales in New York and Hong Kong in September, three auctions in New York in October, and then we’re back in November for our second sale in London.’’ In addition to its upcoming auctions in New York and Hong Kong, Zachys will follow up the London auction with a multi-vendor sale in the city in November 2020. Visit the auction calendar here: http://www.zachys.com/auctions.

US Wine Market Adapts to “New Normal” According to Nielsen Report

US off-trade consumers are settling into new normal following the incredible sales spikes seen at the height of the pandemic, the latest data from Nielsen has shown, but US wine appears to be losing out to imports from New Zealand, Italy and France in the most recent weeks.

According to data for the week ending 22 August, wine in the US off-trade grew 17.4%, marginally lower than the previous week, and well below the 25.2% of the whole Covid period to date. Spirits meanwhile led the charge at with growth of 26.2% (down from 27.2% last week, or 33.5% over the whole Covid-period to date) led by the whiskey (24.2%), which accounts for a third of the spirits category, tequila (+59.1%), ready-to-drink cocktails (+101%) and cognac (+53.2%).

Hard seltzers also saw triple-digit gains, up 113% this week, compared to the same period last year. Although this growth has slowed slightly, it still accounts for 10.2% of sales in the latest week.  Craft and super-premium beer also showed strong sales within the core beer category, which rose 9.8% overall.

Drilling into wine sales, sparkling wine grew well ahead of table wine, rising 35.5%, compared to table wine’s 13.3% growth.  However, the data showed sales of American table wine are losing out to wines imported from New Zealand (23.6%), Italy (23.3%) and France (18.7%) at a faster rate than pre-pandemic, with the market share of domestic table wine falling 3 percentage points, on the back of a 2.5 percentage point decline in Californian wine.

US Consumers are settling into a new normal, according to Nielsen’s vice president of beverage alcohol Danella Kosmal, with year on year trends up 18.5%

However, Kosmal stressed that although off-premise growth rates for alcohol continue to outpace growth rates of total consumer goods, the off-premise growth was not enough to make up for the total losses in on-premise channels. “There has been a significant shift in volume from on-premise channels, which has exaggerated growth rates for off-premise alcohol,” she said.

The latest data showed that the US Wine Market Adapts to “New Normal” According to Nielsen Report premise saw steady growth, showing the seventh consecutive week without decline, with the average rate of sale per average establishment up 3% compared to last week. This metric varied in different states across the US, with New York rising 4% in the last week, and Illinois seeing the strongest growth, at 11%, making it only a third (36%) below the ‘normal’ level of the same week last year.

However, the average rate of sale in outlets that are currently open is still down 22% compared to the same period last year.

WINE NEWS: ALCOHOL BAN LIFTED, BUT A LONG ROAD TO RECOVERY FOR THE SOUTH AFRICAN WINE INDUSTRY

The South African wine industry acknowledges today’s announcement by President Ramaphosa to resume local trade and distribution of alcohol under alert level 2 from midnight 17 August 2020, but says the industry still has a long road to recovery.

“Although we are grateful to start trading and delivering online sales again, we are dismayed at the extent of the damage caused to our industry during the temporary ban on exports and extended restrictions on local sales,” says Rico Basson, MD of the wine industry organization Vinpro.

“It might be too little too late. Many wine businesses have already closed down and a long road to recovery lies ahead for the industry as a whole,” says Basson.

The industry is believed to have lost more than R7 billion since the introduction of sales restrictions in March 2020. Following the initial nine-week ban on local sales, five-week ban on exports and second domestic sales ban, Vinpro estimates that more than 80 wineries and 350 wine grape producers would go out of business over the next 18 months, with a potential loss of more than 21 000 jobs across the value-chain.

Vinpro has been working closely with industry partners on a disaster recovery plan to address the urgent need to stabilize the sector, including the extension of further excise relief for the current year, as well as the 2021 season, addressing bottlenecks and challenges at the Cape Town Port and formulating solutions to reduce a current wine surplus of around 300 million litres.

“The wine industry is geared to reopen domestic trade and distribution with all necessary health and safety regulations in place, while focusing on changing behaviour with regard to responsible production, promotion, trade and consumption.”

 

The Fine Wine Market Expands to Further Heights

Recently reported, July proved to be a positive month for the fine wine market, due to an ever-broadening array of wines being traded.

Liv-ex states on its website that the number of unique wines traded on the exchange in the first half of 2020 was 37% higher than the same period in 2019.

These are wines marked with code known as an LWIN7, which identifies the producer or brand as well as a specific grape variety or vineyard associated with it.

The second half of the year got off to an even stronger start when the number of wines with an LWIN7 traded in July alone exceeded 1,000 for the first time, 20% higher than the previous record monthly high.

This is due to an on-going broadening of the market at the expense of Bordeaux. Although a vital component of the fine wine secondary market, Bordeaux’s share of trade has been in decline for some time now. January 2020, 46% of unique wines traded on Liv-ex were claret, but by July that figure was down 34%.

At the same time, while Bordeaux has seen the smallest growth in new wines traded, Italy, Spain and the Rhône are recording exponential growth; with unique wines traded up 154%, 153% and 127% respectively since January.

Wines from Austria, Germany, Chile and the Loire have also seen growth (from a small base) and added new and unique wines

Italy of course has been rising for some time now. In October last year it was noted that the number of Italian wines traded on Liv-ex had risen 1,500% in the last 10 years.

Italian wines were also excluded from the 25% import tariffs the US recently imposed on numerous EU produce.

Spain, a small player in fine wine, has seen the number of its unique wines traded rise to match those of the US.

Liv-ex  https://www.liv-ex.com/news-insights/

Source:  Liv-ex

Research from University of Cape Town shows old vines add value

Research from the University of Cape Town shows that using old vine fruit earns winemakers more money.

South Africa has finally discovered – and celebrated – its treasure trove of old vineyards. A country that typically renewed its plantings every 15 to 20 years, pretty much as soon as the yields began to decline, was an unlikely candidate to develop a culture of ancient vines.

Part of the reason for the constant renewal of vineyards lies in the history of the industry. Until the modern era, it existed primarily to supply cheap wine to the domestic market and to provide distilling grapes to the local brandy trade. Accordingly, it was planted to high yielding varieties – or at least to varieties which could be induced to increase their yields if the local market preferred quantity to quality.

There was also another reason for the frequent replacement of vineyards: the widespread incidence of leaf-roll virus. Within a few years of a vine reaching productive maturity, the vine leaves, lacking essential chlorophyll, turn russet long before the vintage. Since the vine is unable to convert sunlight into fruit ripeness, as the season advances it shows signs of stress; acidity declines in the grapes while the sugar levels remain resolutely low. Within a few years the yields drop. By the time a vineyard has reached what should be peak maturity it is economically unviable and must be replaced.

In the pre-modern era of the Cape wine industry roughly a third of the national vineyard was Chenin Blanc (putting South Africa’s share at over 50% of the world’s plantings) followed by Cinsaut. The two varieties accounted for half of all vine grapes in South Africa. With the Mandela presidency in 1994 came an extraordinary worldwide demand for Cape wine. Exports, which in 1992 had totaled a mere 21m liters – roughly 2% of total production – doubled and redoubled every year. At the end of the decade they had grown sevenfold to over 140m liters. In 2008 they crossed the 400m liter mark for the first time.

In this post-Apartheid export boom, vineyards were uprooted simply to meet the expectations of a market that wanted Cabernet and Chardonnay rather than Chenin and Cinsaut.

Rescue Plan

A number of initiatives were undertaken to save focus varieties, of which the most important was a campaign launched in the early 1990s to preserve the country’s Chenin heritage. Happily, Chenin is less susceptible to leaf-roll, so there were many older vineyards yielding reasonable quantities of often fabulous fruit. There was less success with Cinsaut: many of the older plantings fell victim to the simple demands of the international supermarket trade and were replaced with Merlot and Shiraz.

In the early 2000s Rosa Kruger, a viticulturist with a passion for the country’s viticultural heritage, began to research and create a record of the country’s oldest vines. Unsurprisingly, most were Chenin, though Grenache, Pinotage (a local crossing of Cinsaut and Pinot Noir), Semillon and Cinsaut were also present in more reduced amounts. At much the same time Eben Sadie, a producer who enjoyed a singular reputation for hand-crafted artisanal wines, began marketing some of these single-site rarities. His lead was followed by many of the younger, and more adventurous, winemakers. Suddenly, for the first time, it seemed as if it could be profitable to farm low yielding ancient vines.

At this point Johann Rupert, whose family had started one of the country’s major liquor companies and had then gone on to create Richemont (whose brands include Dunhill, Cartier and Mont Blanc), provided the seed capital to launch what is now known as the Old Vine Project. Making use of Rosa Kruger’s catalogue of the old vines, it identified just over 3,800ha of heritage vineyards, and then persuaded the authorities to certify wines produced exclusively from them.

In 2019 the University of Cape Town’s Graduate School of Business conducted research into the value that old vines bring to the selling price of the wines: its primary objective was to determine whether, given the inevitably lower yields associated with older vineyards, it was actually viable (from an economic rather than a sentimental perspective) to keep them in the ground.

Price Advantage

The research was able to quantify the retail price advantage of old vine fruit: all other factors being equal, it added R100 ($5.70) per bottle to the final product. Given that most wines sold from these varietals retail for less than R200, the connection to an old vineyard was significant – at this stage an estimated 30% to 50%. Typically, the fruit cost of a bottle of wine comprises a low percentage of the final selling price. Stellenbosch grape prices average less than R12000 per ton, or R20 per liter. Dry goods, oaking and processing cost would take this to R50. These are largely constant, unless a producer opts to use a high percentage of new wood. Doubling the fruit price only raises the input costs by 40%. If certified old vines add R100 to the price of a bottle of wine, this potentially means that grape prices could increase from R12000 to somewhere close to R60000.

This amount of upward price mobility is vast in the South Africa context: it more than compensates for the lower yields. Johann Rupert’s investment in the Old Vine Project has proved, beyond doubt, that well-sited virus-free older vines are worth nursing to the magical age of 35 years – at which point they acquire the Certified Heritage Vineyard seal. It may seem strange that the country’s most famous luxury goods mogul’s true legacy – at least in the world of wine – will rest on an act of generosity aimed at saving a dwindling number of old vines. But it is also apt. It is the combination of quality and rarity which ensures that there’s nothing artificial about the premium: on reflection, that has always been the unique selling proposition of the luxury goods business.

Source:  Wine Business International