Investing in California: Big-money buyers push demand
Despite rising prices on a handful of star names, global interest still gives potential for the rest of the market.
Saleroom prices have been rising on several superstar California wines, yet the market picture continues to appear more mixed for some cult Napa names.
Screaming Eagle is one of California’s most sought-after wines, and prices for its 2016, 2014, 2010 and 2008 vintages have increased strongly over 12 months, show figures from Bordeaux Index’s LiveTrade platform (see chart, below). Screaming Eagle has also driven a spike in the California 50 index at Liv-ex, a global marketplace platform for the trade.
Liv-ex added that Screaming Eagle 2006 recently traded at a record price of £38,640 (US$50,400) per 12-bottle case in bond.
At Zachys, older Screaming Eagle vintages constituted the five top-selling California auction lots in 2021. They were: Screaming Eagle 2001 (one three-litre bottle sold for $51,215); 2003 (9x75cl, $34,860); 1996 (6x75cl, $27,208); 1997 (5x75cl, $27,208); and the 1995 vintage (6x75cl, $25,608).
For comparison, Zachys’ top Bordeaux lot in 2021 was a six-litre bottle of Le Pin, Pomerol 1990, which fetched $448,200.
There are so many great California wines for collectors to explore, of course. Yet in terms of top-tier names on the international market, CEO of LiveTrade and head of investment at Bordeaux Index Matthew O’Connell said: ‘The biggest selling wines at Bordeaux Index are Opus One, Screaming Eagle, Harlan, Sine Qua Non, Dominus, Hundred Acre, Scarecrow, Monte Bello and Colgin.’
Ridge’s Monte Bello and Dominus Estate are two names with an interesting market trajectory and higher production than cult counterparts. Dominus 2018 sold well last year, and O’Connell noted ‘Dominus has been performing well so far this year in terms of pricing’.
Despite Monte Bello prices rising in recent years, it ‘is [Bordeaux] first-growth quality, but still not priced like a first growth’, O’Connell said. The situation appears more complex for a hardcore group of what O’Connell describes as ‘high-end, super high-quality, super high-scoring, low- production Napa wines’, such as Harlan, Colgin and Hundred Acre, among others.
‘There’s a good level of demand for them but that is the segment where one could argue that there could be exponentially more demand if a few factors aligned,’ he said.
Compelling release prices may catalyse market interest, while efforts to improve collector understanding are also important, he added.
He still believes in this Napa segment’s potential on the international market, particularly given the number of wealthy collectors seeking top wines. ‘One of the main things driving wine prices at the moment is ultra-high net worth [collectors] as a segment,’ he said.
International distribution continues to grow for leading California wines, via the Place de Bordeaux and merchant partnerships. Goedhuis & Co in the UK recently became a direct partner to Colgin Cellars, for example.
Goedhuis said strong demand for California wines has continued into the first quarter of 2022. Promontory 2016 sold out, it said, while ‘Screaming Eagle and Scarecrow released their 2019s but in tiny volumes’. Some estates have held back from releasing wines ‘due to the anticipated lack of 2020 [vintage], caused by the devastating wildfires of that year’, it added.
Not everybody was affected by fires, though, and high-quality 2020 vintage red wines found buyers at the recent Premiere Napa Valley auction (see ‘Marketwatch’, May issue).
Monitor: latest sales activity – California
The chart, above, from Bordeaux Index shows several strong price performances from top California wines over the past 12 months.
Yet Screaming Eagle, Ridge Monte Bello and Sine Qua Non dominate the top 10 risers, with Dominus 2009 the only wine outside this trio.
Elsewhere, a record auction price was set for Stag’s Leap Wine Cellars’ SLV Cabernet Sauvignon 1973, representing the Napa Valley red wine that beat Bordeaux in the 1976 Judgement of Paris tasting, according to Heritage Auctions. A single bottle fetched US$12,300 (£9,400) during an auction of 4,000 wines from Stag’s Leap Wine Cellars’ ‘legacy collection’, said Heritage.
Winning wines from the 1976 Judgement tasting were named by the Smithsonian Institution as among 101 items that ‘made America’. Frank Martell, senior director of fine and rare wines at Heritage Auctions, said of the auction: ‘Of all Stag’s Leap Wine Cellars lots, 56% sold at or above the high estimate.’
Young vintages of Screaming Eagle were also in demand at a recent Christie’s online auction. Two three-bottle lots of Screaming Eagle 2018 fetched $12,500 each (high estimate per lot: $10,000). Three bottles of the estate’s Sauvignon Blanc 2017 fetched $15,000, equalling the pre-sale high estimate.
Tasted & rated for Decanter Premium
Recently released internationally via the Place de Bordeaux following a US market debut last year, Promontory 2016 has won plaudits from several critics. ‘This is excellent from the start,’ wrote Decanter’s Georgina Hindle, giving the wine 98 points. ‘You have an intensity of flavour, the richness, the depth, with a really dark, spicy undertone – but also with these plush tannins that are soft, softly chewy and delicate, yet fill the mouth.’ Bill Harlan, of Harlan Estate fame, acquired the land that would give rise to Promontory in the 2000s. The first commercial vintage was 2009 and it’s a top-tier project to watch.
The Bordeaux Index View
Fine wine & spirits specialist Bordeaux Index kindly sponsors this section of Decanter, and provides its view on the market here. It can be found at bordeauxindex.com
The market for California wines has seen improvement in performance and outlook in the last 12 months. With a couple of exceptions, pricing had previously softened significantly and trading activity was down, but this has reversed, particularly in Screaming Eagle, Sine Qua Non and Dominus, where we have seen notable buyer interest and encouraging prices. Some core premium Napa wines such as Harlan, Colgin and Hundred Acre remain somewhat range-bound, with release prices broadly in line with other vintages. Elsewhere, Ridge Monte Bello continues its ongoing positive journey to recognition as a first growth-esque wine, with pricing to match. Given the positive market dynamics in other wine segments such as Champagne and Burgundy, it is not clear what will drive a sharp increase in focus on California. So it remains of investment interest but more marginal than could be the case, given the quality and track record of the wines.
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