How much would you pay for a bottle of 1995 Latour? If I told you that the bottle hadn’t left the Latour estate since it was bottled nearly two decades ago, would you be willing to pay more for it than a bottle that’s passed through dozens of hands in its lifetime?
In 2013, collectors had to make this exact choice after Latour decided to drop out of en-primeur sales altogether and sell off older ex-chateau wines from 1995 instead. What this meant was that Latour held onto the 1995 bottles, waiting until they reached peak drinking age, then sold them directly to collectors. This is the definition of ex-chateau wines (sometimes called “ex-cellar wines”): wines are sold directly from the winery after being bottled and stored in the winery’s cellar. Ex-chateau wines are not like wine futures. With futures, collectors buy wines before they have been bottled, and there’s no guarantee of quality. When wine futures are received by collectors, they usually need much more time to mature before they reach peak drinking age. Collectors don’t have this problem with many ex-chateau wines; while not all ex-chateau wines are ready-to-drink, they’re generally much closer to being mature than wines bought as futures.
What to Expect When You Buy Ex-Chateau Wines
While on your hunt for an ex-chateau wine, you might find a bottle selling for the same price or less than the current market value, but most of the time, you’ll pay more for ex-chateau wines. Expect to pay about 10 percent above the current market value on any ex-chateau wine, especially those that are from sought-after producers or vintages. If you’re not prepared to spend slightly more on an ex-chateau wine, you will want to stick with wines sold on the secondary market instead. However, if you are ready to invest a bit more in ex-chateau wines, you’ll find it has a number of benefits. Here are some steps to get started buying ex-chateau wines:
Step One: Research Wineries
For beginning collectors, lauded estates like Latour and Mouton Rothschild are not necessarily the best ex-chateau wines to buy right off the bat. That’s because these estates usually charge far more for their bottles than lesser-known estates. In addition, beginning collectors might not be well-versed yet on which vintages are worth the extra investment; it’s easy to invest heavily in an off-vintage ex-chateau Latour, only to find that you can’t make that money back on the secondary market because serious collectors are only interested in paying for popular Latour vintages. If this is your first time investing in ex-chateau wines, purchase a few bottles from lesser-known estates first.
Seasoned collectors may want to consider buying ex-chateau wines from major estates, even if the bottles cost more upfront. When you invest heavily in a rare, expensive wine, you don’t want to risk the entire investment on a fake bottle. Since ex-chateau wines come directly from the estate, there is little opportunity for wine frauds to fake the bottles. Estates like Mouton Rothschild almost always sell out of every en-primeur wine future, so they sell additional ex-chateau wines in order to guarantee bottle authenticity years after the original en-primeur bottles were shipped out to buyers.
Step Two: Consider En-Primeur Leftovers
Sometimes, wineries can’t sell out of en-primeur wine allocations. Although these wines didn’t sell out when they were offered up en-primeur, that doesn’t mean the wines are necessarily inherently lower in quality compared to other wines on the market. You can often find irresistible deals when you shop for ex-chateau wines that were left over from en-primeur week. For example, in 2012, a negociant sold a number of bottles of ex-chateau 2001 Chateau Vieille Cure for much lower than the estimated market price. The wine was high quality, but the estate needed to make room in the cellar for the next round of en-primeur bottles, so the negociant was willing to let the bottles go for less than what they were worth.
Most ex-chateau wines sell for as much as 10 percent more than the market value, but wines sold as excess after en-primeur are often sold wholesale. The gives collectors the chance to buy the wine before it reaches wine stores, and avoid the wine store markup in the process. These kinds of wines are not being held on purpose to combat wine fraud; most of the wineries who sell these bottles simply want to get them out of the cellar and into the hands of wine lovers.
Step Three: Invest in the Most Promising Bottles
Before you buy wine from an estate, research their off-vintage bottles before you look into the sought-after vintages. These bottles are typically sold for less than vintage ex-chateau bottles, but you will still want to make sure that the off-vintage you choose will be worth something on the market later. Check that the off-vintage wine is of high quality, and that wine critics did not find a fatal flaw that will make the bottle difficult to sell later. Overall, the best ex-chateau wines typically come from the Left Bank, according to Liv-ex. Bottles from this region are typically sold at reasonable prices, and are valuable on the secondary market. You should also consider buying second wines from First Growth estates; these wines are less popular than flagship wines, but still garner generous profits on the secondary market. For example, an average bottle of Petit Mouton costs about $54 ex-chateau, and sells for an average of 72.6 percent higher on the market.
Step Four: Ship under Bond
Shipping under bond means that your wines go through a trusted shipping company, which takes every precaution to ensure that your bottles arrive safely. While the safety features are a bonus, the most important reason to have your ex-chateau bottles shipped under bond is that you can avoid a duty tax if you ever decide to sell the bottle on the secondary market later. You take care of the duty fee upon arrival of the bottle, and don’t have to pay additional taxes or hidden fees when you ship your wine under bond. Not all wineries offer this option, so it is essential to ask about shipping options before you agree to buy a bottle ex-chateau.
The Benefits and Risks of Ex-Chateau Sales
To avoid unexpected complications and paying too much for an ex-chateau bottle, it’s essential to consider the benefits and risks that come with this type of wine sale.
The Benefits of Ex-Chateau Wine
The primary reason that collectors buy ex-chateau wine is to avoid buying counterfeit wine bottles. This is why Latour decided to stop selling wine en-primeur in 2013. The estate was concerned that wine frauds were selling fake versions of their wine, and the owners wanted better control over bottle authenticity. However, ex-chateau sales aren’t the only way to combat wine fraud. Some of the best wine retail websites now offer bottle authenticity inspections, such as the inspections offered by Vinfolio. When you buy or sell wine through Vinfolio, each bottle is personally inspected by a wine expert, who checks for bottle damage and label authenticity. If bottle authenticity is your only concern, ex-chateau wines are only one of many options that you have for avoiding wine fraud.
Another benefit of ex-chateau wines is that many of them are ready-to-drink, no additional cellar time required. Some ex-chateau bottles still require decades of cellaring, especially bottles that are left over from en-primeur sales. However, most wineries hold off on selling ex-chateau bottles until they are ready to drink, making it the convenient choice for collectors who don’t want to wait. Be aware that when you buy ready-to-drink bottles, you will likely pay more for them than newer vintages, and you will not be able to sell them for as much of a profit as a bottle that you personally stored for 10 years.
Buying ex-chateau also means taking less of a risk on quality than buying en-primeur. Although you are getting both types of wines directly from the estate, when you invest in en-primeur wines, there’s no guarantee of quality. Not even the winemakers themselves can accurately predict how a wine will age two years before it’s ready for the market. Buying ex-chateau wines means buying bottles that have been tried and tested already by the winemakers and critics.
The Risks of Ex-Chateau Wine
In general, ex-chateau wines are a smart investment, but they come with some serious risks as well. For one thing, many wineries charge far more for the ex-chateau privilege than what the wine is actually worth on the market. When Latour decided to focus on ex-chateau wines, many collectors scoffed at the price tag for the 1995 vintage. One retailer from Hong Kong complained, “I already have stock on hand at lower prices than what was being offered to me. There is always demand for Latour from my clients, but not at these prices — they don’t appeal to my clients.” Not all Latour wines cost this much ex-chateau, but it is essential to decide how much you are willing to spend on these wines before you go into the shopping process.
Ex-chateau wines also vary in quality. In some cases, a wine didn’t sell well during en-primeur week because it was lower in quality than what the winemakers had expected that year. Poor weather, changes in winegrowing techniques and unexpected problems in the winery’s cellar can impact the quality of a wine, making it undesirable for en-primeur wine hunters. It is ill-advised to buy any ex-chateau wine that doesn’t have a clear worth on the secondary market, or, if you intend to drink the wine, one that wine critics claim has major flaws in taste.
By: Harley Hoffmann
Harley is an Executive Wine Specialist for Vinfolio, helping collectors find the best wines for their collection. He’s a lover of everything outdoors and the proper bottles to go along with it. You can find him at any of the newest cocktail bars and restaurants in SF or on an adventure somewhere in between Lake Tahoe and the California coastline.
***Grabbed from: http://blog.vinfolio.com/2016/05/03/what-are-ex-chateau-wines/