California wines, and particularly California Cabernet, could be the smart investment for collectors, writes Ella Lister. But which are the best to go for? And will it last?

According to Wine Owners, Californian wines – predominantly California Cabernet and a majority from from Napa Valley – have risen by 33% on average, over the past 3 years to May 2015 – compared to a mostly flat Bordeaux and a 24% rise for Burgundy(See chart 1, above.)

California’s position could be strengthened further by winemakers declaring that California Cabernet 2013 is better than 2012.

Mark Andrew, senior buyer at Roberson Wines, told Ella Lister in the Decanter 2015 California supplement, that ‘California has the most exciting wineries in the world’, which is why Roberson had been specialising in them for three years.

Californian wines are also benefitting from several years of subdued investment in Bordeaux – albeit Bordeaux has shown signs of recovery in 2015.  The average bottle of California wine auctioned at Sotheby’s is £214, less than the equivalent bottle of Bordeaux.

How to pick the best for investment?

Andrews’ advice would be to split your investment wisely. His ideal California portfolio would be 70% blue chip, such as Ridge, Kistler Vineyards, Diamond Creek and Kongsgaard.  The other 30 can then go on producers experimenting with other varieties, including Arnot-Roberts and Hirsch Vineyards.

Picking the new ventures of more established vintners is another way to get a good return. Michael Jessens, CEO of Wally’s Auctions, advised ‘Established names are always the safest bet’.

Uncertain future

However, others  have warned that California could face a similar slump to Bordeaux in the future.

Whilst Screaming Eagle’s Cabernet Sauvignon has tripled in price since 2007, with average vintages worth more than £20,000 a case, experts can’t guarantee it will continue in this way. (See chart 2).

Screaming Eagle chart, California wines

The rise in price of Screaming Eagle wines since 2007

‘I’m sceptical as to how much more upside there is on Screaming Eagle,’ Andrew told Lister. ‘How many more 100-point scores can it have?’

 

Ella Lister’s full article appeared in the Decanter 2015 California supplement, with the September issue. Subscribe to Decanter magazine here.

 

  • Benjamin B

    Well said tkoby11. Spot on.

  • tkoby11

    I think this article is pretty far off the mark, the best producers to buy for investment ARE Screaming Eagle, Scarecrow, Abreu, Schrader, Sin Qua Non and maybe Marcassin (Cayuse out of Washington too). You just have to be on the mailing list to get them at release prices and wait a little while. Wines like Ridge and Diamond Creek need 10, more likely 15 years to get meaningful returns on your investment to outpace costs to store the wine properly and sit on the inventory for a decade plus. You also are only talking about small dollars as well so though the % return can look high, you need 10 cases plus to make a real cash earning impact. Then you need to find a buyer(s) of ten cases of Diamond Creek or Ridge Montebello?

    Premium Napa wines are a very risky investment. Though small in production most producers know their market well and price out secondary investment accordingly. That is why wines like Harlan, Colgin, Phelps Insignia, Opus One, and Sloan to name a few rarely move on the secondary market as the release prices are eye gougingly high. 10-15 years back vintage? Sure Harlan trades all the time from those years but the release prices then justify the prices now. The only thing that moves these wines up in newer vintages are Parker 100 point scores, that is literally all or if some unforseen scarcity occurs.