September 30, 2020

Forget Popping Bottles. Buy the Vineyard.

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buy-vineyardBy Michael Steinberger From The Financialist
Several years ago, hip-hop mogul Jay-Z was in the market for a new favorite Champagne. A long-time fan of Cristal, his brand loyalty was destroyed when an executive with Louis Roederer, which owns Cristal, suggested in an interview that he wasn’t thrilled by rappers mentioning the bubbly brand in their songs. In response, Jay-Z called for a boycott and swore allegiance to Armand de Brignac Champagne. The new brand clearly suited him, because a month ago, Jay-Z acquired the house outright. The terms of the transaction were not disclosed, but a spokesperson for Sovereign Brands, the former owner, said the rapper “made us an offer we simply couldn’t refuse.”
In buying his favorite winemaker, Jay-Z fulfilled many wine enthusiasts’ fantasies. While some simply want the cachet of owning a vineyard and are happy to leave the winemaking to someone else, others yearn to get dirt under their nails. Regardless, with some planning, acquiring vines of one’s own is a dream that can come true.
The first decision prospective winemakers face is whether to buy an existing winery or to start entirely from scratch. From a risk/reward perspective, the former is far wiser. A vintner is only as good as his land, and in most established wine regions, the best sites were identified long ago. There’s no way of knowing an undeveloped site’s true potential until the first few vintages are in the cellar, and it takes three years to yield enough fruit for commercial winemaking.
The second critical decision is where to buy. Wine grapes can be successfully cultivated in many places, but most aspiring vintners are rightly attracted to France’s rich terroir and available acreage. Billionaires or near-billionaires willing to part with a healthy portion of their assets can try to buy a major chateau in Bordeaux or a domaine in Burgundy. A share of a grand cru or premier cru vineyard in Burgundy is also a possibility, though shares are hard to come by and a single hectare of grand cru vineyard costs around $5 million. (Even in California’s relatively affordable Napa Valley, an acre of good land costs at least $250,000.)
Non-billionaires have options, too. In 2010, Richard von Seidel left his investment-banking job in London and set off with his wife Arianne Vanden Berghe and their four children to join the caravan of expats making wine in France. Their vineyard, Chateau Damase, is in the village of Savignac de L’Isle, just up the road from the famous Pomerol appellation, and has 14 hectares under vines – a mix of merlot, cabernet sauvignon, petit verdot, and even some carménère grapes. These so-called “lost grapes,” once a Bordeaux staple, were nearly wiped out when the Phylloxera root louse chewed its way through the region’s vineyards in the mid-19th century.
Having no previous winemaking experience, the family had hoped to get guidance from the many established producers in Bordeaux. And four years on, neighbors have indeed been generous with advice. Building the business, however, has been challenging. Château Damase, which falls under the Bordeaux Supérieur appellation, produces around 100,000 bottles annually. But the couple wants their wine to punch above its weight, and despite its name, Bordeaux Supérieur is considered a minor appellation that lacks the prestige of Pomerol or St Émilion. Producing high-quality wines is also expensive. As Arianne admits, “this adventure would have been very tricky without having been bankers first.” Asked if the business is profitable, she demurs: “It’s definitely not a gold mine. It is an investment that has more to do with the heart than the head.”
Elsewhere in Bordeaux, acreage around Côte de Bourg and the Côtes de Blaye resembles the highly praised Medoc region just across the estuary. In the Côtes de Bourg, an 8.7-hectare property is currently selling for €995,000 ($1.2 million) – about the price of a one-bedroom apartment in Manhattan. North of the Côtes de Bourg, a 41-hectare property producing 120,000 bottles of Côtes de Blaye annually is listed for between €4 million ($5 million) and €5 million ($6.2 million).
Those long on enthusiasm and short on experience might also consider heading south to Languedoc. The region produces easy-to-the-palette, rustic wines that, unlike Burgundy or Bordeaux vintages, are made from a single grape (either Merlot or Cabernet Sauvignon), eliminating the need for an experienced wine blender. A 12-hectare working property producing some 30,000 bottles of table wines is currently on the market for €294,250 in the village of Corbieres, near the Pyrenees. Happy hunting.
Michael Steinberger is the wine writer for Men’s Journal. His latest book, The Wine Savant: A Guide to the New Wine Culture (W.W. Norton), came out last year.
For more on this story go to: http://www.thefinancialist.com/forget-popping-bottles-buy-the-vineyard/#sthash.iPwGBIjJ.dpuf

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