Low risk with attractive upside – a diverse approach to Cult Wine Investment’s Tier 2 and Up & Coming Burgundy categories can increase the potential for long-term gains. Here, we highlight the opportunities within these Burgundy producer categories, including a specific look at Domaine Coquard Loison Fleurot, Domaine Duroché, Domaine Henri Gouges, and Domaine Pierre Girardin.
We’ve recently highlighted how Iconic Burgundy wines can form the foundation of a long-term Burgundy allocation due to their timeless appeal and scarcity. In the Tier 1 category, we’ve identified excellent relative value opportunities that could deliver healthy growth in 2022 and beyond.
Now we turn to our Tier 2 and Up & Coming categories, which include select groups of excellent wines from producers who may not have the same global following as the big names. We believe wines in these categories offer investment-minded Burgundy buyers limited downside with the potential for some names to achieve strong returns over the long term.
Rewards from rising stars
The upside comes from the potential for some producers within the group to gain a wider international following over time. We’ve carefully selected the producers and winemakers that we think are among the best and most exciting in Burgundy, rivalling the quality of many of the top domaines despite their lower profiles or shorter track records.
One of the main points driving the higher prices for the Iconic and Tier 1 producers is their widespread recognition among global fine wine lovers. But recognition and brand prestige are evolving concepts; producers that we categorise as Tier 2 and Up & Coming now could climb the ladder as their global followings grow. This would generate greater demand and lead to substantial price growth over time.
Domaine Sylvain Cathiard provides an example of a producer that has enjoyed a noticeable jump in its global following in recent years. Had Cult Wine Investment been categorising Burgundy producers a decade ago (we established the categories in 2018), they likely would have received an Up & Coming label, but the global market now views Cathiard wines as among the most prestigious in the Cote d’Or, hence our Iconic ranking.
Unsurprisingly, Sylvain Cathiard prices have shot up in accordance with its climb to Iconic status and now compare to prices for many of the top names in Burgundy. Given that they started from a lower base, Cathiard’s price returns are massive. Some of its best wines have easily outpaced the Burgundy market including many of the top producers in the region (see below) over the long term.
Source: Pricing data from Liv-ex as of 30 Jan 2022. Analysis by Cult Wine Investment. Past performance is not indicative of future success.
This is not to say all or even a majority of the producers within the Tier 2 and Up & Coming categories today will one day join the top echelons of Burgundy. But they don’t need to for this category to form a great investment. As these wines offer attractive value for money, they come with a lower level of risk compared to the more expensive top tiers, in our view. Simply put, the lower prices should limit their downside.
Therefore, buyers can build a diverse holding of Tier 2 and Up & Coming wines with the potential for a few names to step up and deliver outsized returns whilst others may track the market. Since the risk is low that any wines in these groups will experience meaningful underperformance, a diverse allocation should reap healthy gains over the long term if even just a couple wines realise big gains.