▻ Collecting and Investing in Wine – Part Two

Let's Talk About

28 Jul

Written By Sarah Kemp

In conversation with Tom Gearing of Cult Wines

Episode Summary:-

Elin McCoy talks to Tom Gearing, CEO of Cult Wines, a leading company in global fine wine investment and management. Cult Wines currently manages US$270 million dollars’ worth of wine assets and has just collaborated with Château Angelus in producing one of the first wine NFTs (non-fungible token). In this in-depth interview, they discuss who the new collector and investor is, whether to buy 2020 Bordeaux En Primeur or not, and why Cult Wines has decided to open an office in New York: “It is the biggest opportunity market for fine wine,” he says.

Tom explains to Elin how the collaboration with Château Angelus came about and why he believes that block-chain technology offers many opportunities to the wine trade, not least environmental. While he believes the classics will always be wanted, Tom also discloses the dynamic changes in the market, and predicts the countries and producers he believes will start to attract more investors and collectors. His top tips are Fixin and Marsannay in Burgundy, the Jura, Oregon, and Germany, which all offer superb value for money. Elin asks Tom to gaze into the crystal ball and predict which wines will have realised the best return on investment in 20 years’ time. “If you want a guarantee, you can’t look past the big names, like Petrus, DRC, the First Growths,” he says, but if you are looking to back the next big thing, there are regions and producers to explore, e.g., “Growers’ champagne, and Burgundy newcomers,” and he predicts that “Domaine Leroy has a unique position in this market, and I think that it will be the next Henri Jayer in terms of pricing.” It’s inevitable, he concludes.

““Collecting and investing in wine is about owning the greatest wines in the world, but it is also about finding and supporting the new superstars and the winemakers and regions coming through, and that side of it is equally exciting.””

— Tom Gearing

Running Order:-

0.00 – 13.49

“I think the one thing that gives me the most satisfaction is the idea of going to new markets, bringing wine to new audiences, creating more education and awareness, essentially making it accessible to more people.”

Tom Gearing talks to Elin McCoy about his company, Cult Wines, which he founded in 2007 and is now responsible for US$270 million of wine assets. Tom explains that Cult Wines focuses on private individuals and tailors their portfolio depending on “whether they are pure romantics or see wine as a financial asset, and everyone in between.” He describes how his typical customer starts off with a basic knowledge of wine at the beginning of their wine journey, and he derives great satisfaction in seeing them become more involved and, after several years, much more knowledgeable. Cult Wines has just set up a New York office, as Tom believes the US is the greatest opportunity right now in the fine wine market.

Tom describes how they put together customers’ portfolios, starting by understanding the balance they’re wanting between drinking for pleasure and financial return. The minimum spend to become a customer is £10,000 sterling, but Tom explains how that gives access to educational and lifestyle events – he recently took a group of clients by private jet to Tuscany. With storage facilities in the UK, US, Europe, Singapore and Shanghai, they can deliver their clients’ wine wherever they are.

Elin asks what is the strangest request so far and Tom describes delivering wine to footballers’ changing rooms, private jets and ski chalets.
13.50 – 25.44

“Bordeaux 2020 – Sometimes I feel that producers, negociants and wineries look back and they go, ‘I wish we hadn’t sold that wine at that price, now I’m not going to make that mistake again,’ and that is when I think it can sometimes result in prices being probably overpriced and above what is value for a customer.”

Did Tom recommend 2020 Bordeaux En Primeur to his clients? asks Elin. “Quality was not homogenous,” Tom states, but he found some brilliant wines with freshness and plushness of fruit. He believes there is great value for money in the sub-$100 range and singles out Ch La Gaffeliere and Ch Langoa-Barton as great value for money. Elin and Tom discuss the 2019 campaign, which came out at lower prices and has proved a good investment, but Tom relates, “Whilst prices came down, a lot of the volumes released were very small and demand outstripped supply.”

Cult Wines sold 25-30% less wine in value compared to 2019. ”There was a lot of apathy with the prices, not every price made sense,” he notes. Another upcoming star Tom singles out is Château Marquis d’Alesme in Margaux which has improved dramatically under its new ownership. At the top end, Lafite, Mouton and Cheval Blanc offer value and on the Right Bank, Châteaux Figeac and Valandraud are offering considerable value.
25.45 – 34.09

“There is a natural evolution of the wine market with NFTs and En Primeur.”

Elin and Tom discuss the collaboration between Château Angelus and Cult Wines offering one of the first NFTs. Tom describes how the auctioning of a barrel of wine allows the customer to choose the format of the wine, and how they have added in other benefits, such as visits to the vineyard at harvest time to enrich the experience.

The risks and rewards of NFTS in the wine world are discussed – Tom believes they offer new opportunities in the fine wine market.
34.10 – 38.06

“It has never been easier to learn about wine than now.”

Is it a good time to invest, asks Elin. “This is the most dynamic I’ve seen the wine market,” Tom responds, as he explains that the pandemic has created virtual tastings which make wine more accessible than ever before. He believes attitudes to wines are changing and it isn’t seen as all about dusty old cellars, with people like Saskia de Rothschild at Château Lafite being more open, and engaging more with their audience, which is benefitting the wine market. With podcasts and videos, there is so much information now available on wine.
37.07 – 57.23

“I think the regions that have the biggest opportunity to grow within the collecting and investor mindset are the Jura, Fixin and Marsannay, Oregon, and Germany.”

Elin asks whether Bordeaux will take back the buzz from Burgundy. Tom recounts that his wine journey started in Bordeaux, and he believes it will continue to be the start of the journey for many wine lovers, as it is easy to understand. The image of Bordeaux has also changed recently, and people like the Cathiards at Château Smith Haut-Lafitte have done a brilliant job leading the way in organic and environmental practices, which younger wine lovers want to see.

Tom predicts that regions to look at to attract more investors and collectors will include the Jura, which offers great value compared to Burgundy for its white wines. Fixin and Marsannay are also areas to watch, with the prices a third of the Côtes de Nuits and Côtes de Beaune. In the US, he believes “Oregon is ready to explode,” as the price point offers great value compared to Burgundy and Napa and Sonoma. Pinot Noir from Germany is his other tip as wine lovers are priced out of Burgundy and the US.

Elin concludes by asking him to look into a crystal ball and predict the best investment return in 20 years’ time. “If you want a guarantee, look at the big names, Petrus, DRC, the First Growths,” Tom advises, but if you are looking for the next big thing, he suggests Growers’ Champagne and names Burgundy newcomers. The one to watch is Domaine Leroy: “Leroy has a unique position in the market, and I think it will become the next Henri Jayer in terms of pricing.”