As the industry benchmark Liv-ex fine wine 100 continues to fall, investors search for non-traditional wines that may show a good return within their portfolio. Our market analysis leads us to explore the increasingly acclaimed region of Priorat in Catalonia.
Phylloxera in the late 19th century reduced this region that once boasted over 5,000 hectares of vineyards to a mere 700 hectares in 1980, yet renewed enthusiasm for the wine has pushed this back closer to 3,000 hectares today. Promoted to a Denominació d'Origen Qualificada (DOQ) by the Catalan authorities in 2000, Priorat was finally recognised alongside Rioja as a Denominación de Origen Calificada (DOCa) in 2009. Some very old (100-plus year) vines exist, predominantly (using the French varietal names) Grenache, and more modern plantings also include Carignan and Syrah and to a lesser extent Cabernet Sauvignon and Merlot. Low bush vines are commonplace, protecting the grapes from the heat, although this combined with the free-draining schist (llicorella) gives a low vine density and yield: think more the yields of Sauternes rather than Rioja.
Sentiment for Priorat was spurred on by Robert Parker’s Wine Advocate which in 2008 awarded 100 points to several of the region’s wines. The Wine Advocate has continued to produce positive reviews for Priorat, most recently in February 2014 awarding 100 points to Arrels del Priorat Ca les Vinyes, NV, and 99 points to Álvaro Palacios’ l’Ermita 2010. In terms of investment horizons, how do these wines stack up?
The former will fall at the first hurdle – only 60 half-bottles were produced from the 100 year old solera, so getting hold of one will be harder than looking for a Salvador Dalí at your local auction house. The latter is a little easier to find: 250 cases were made which is more on the scale of Dominio de Pingus (Ribera del Duero), or half of Guigal’s La Mouline (Northern Rhône).
Above are three high scoring vintages of Álvaro Palacios’ l’Ermita tracked over the last 7 years: vintage 2004 (98 points, Wine Advocate) performs the best, appreciating 78% over the period to SFr 570- per bottle and below that vintage 2005 (also 98 points) gained 48% to SFr 535-. Vintage 2010 has not performed so well, albeit on a much shorter timeframe: -1%, now trading at SFr 725- and still available with many merchants. We may conclude that the premium for the extra critic point, making 99 points, does not have a marginal value of SFr155- in the current marketplace.
It is worth noting that these wines are at the start of their drinking windows – while the lifetime of Priorat’s wines has not been proven yet, the best are expected to drink well for 20-30 years. This gives further scope for price appreciation and decreases the pressure on market depth.
At a much lower price point, René Barbier’s Clos Mogador hits the shelves at around SFr 65- and the back vintages, as shown above, can generate good returns of between 40 and 90% over seven years. The greatest appreciation here is the 98 point 2005, which still trades below SFr 80- per bottle, whereas the aged vintage 2001 at 97 points now trades at SFr 115- per bottle. These wines again have good ageing potential, reportedly around 35 years, but we’ll have to wait and see how long it really turns out to be!
There is higher liquidity in these wines, with around 2,000 cases produced annually from 18 hectares of bush trained vines; while Priorat has permitted yields around 40 hectolitres per hectare, these rates are back to the 10hl/ha seen in Sauternes.
René Barbier also has old vine Grenache, Espectacle, made with 120 year old vines in his century old manual press. Vintage 2004 was awarded 99 Parker points, with 2007 and 2008 gaining 98 points. Returns here are also good, 25 - 70%, and all can trade under SFr 150- per bottle. What fun!
As we conclude our look at Priorat, do bear in mind the following:
- Critics are not unanimous in their high praise of the region – within 10 months of Wine Advocate giving a wine 98 points, Stephen Tanzer gave 93 points and Wine Spectator 89
- The lifespan of these wines is uncertain – the modern wine making in Priorat is at most 25 years old, with both style and technology needing to settle in and prove their worth
- Montsant DO surrounds Priorat DOCa and its wines often provide even better value for money than Priorat - René Barbier’s Espectacle being a case in point.
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