The Signs a Wine Isn't What Its Label Says It Is
As the market for fine wine grows, so does the opportunity for making money from passing off a cheap blend as pricey aged Bordeaux.
Wine counterfeiters "are getting really sophisticated," says Charles Curtis, a New York-based wine consultant who, through his company Wine Alpha, offers a service that checks for fakes in the cellars of wealthy collectors throughout the world. "People are reusing old bottles, reapplying labels and corks-it's complex."
Few wine collectors have seen as many old bottles as Mr. Curtis, a former head of wine for Christie's auction house in Asia and the Americas. He now advises private clients on how to start or sell a collection as well as verifying the wines they own.
The problem of fakes is particularly acute in Asia, where the market for fine wine has boomed thanks to the rise of a new wealthy class amid strong economic growth in the region in recent years. Hong Kong now rivals New York and London as the world's most active center for wine auctions.
"They're acquiring faster than they're drinking or selling in Asia, whereas they're acquiring less in the West," he said, adding that because of the shift of demand eastward, the fakes often end up there, too. China, where many like to show off the expensive label rather than savor the drink inside, has become a major destination for fakes.
During his days at Christie's, Mr. Curtis developed his own checklist to verify a wine: "Capsule, cork, label, glass and finally, the wine."
He checks to see if the capsule, the protective foil sleeve affixed atop the bottle, matches the label. It should show signs of age and the foil design should match the château's style at the time of bottling. A sloppy fake will often have a new foil capsule on a purported old bottle.
Next, he'll remove the capsule to examine the cork. He'll shine a small, powerful flashlight at the neck of the bottle and examine the cork through the glass with a jeweler's loupe, a small magnifying glass. A cork with a hole in the middle is a sign it has been reused from another bottle. Mr. Curtis also will look for indent marks on the side of the cork to see if it was previously removed with two-prong openers. "Sometimes they'll sand down the sides of the cork, or re-apply ink on it," he said.
Then he checks the label. Fakes might include spelling errors or design mistakes that are inconsistent with the original. Mr. Curtis will often cross-reference a bottle with photos of past examples since labels, especially old ones, often vary from year to year. Still, there are times he gets fooled. He recently encountered a 3-liter bottle from a 1993 Rousseau Chambertin Clos de Beze, a Burgundy wine, that stumped him. Unsure, he sent a photo of the label to the French winery, which confirmed it was real. It had made a special label that year for the large bottles.
As for the glass, or bottle, it should reveal age, if it purports to be old. Since wine is typically stored on its side, there should be sediment on one side of the bottle. "If it's an older bottle of wine that looks new, it's probably not 50 years old," he says.
Finally, Mr. Curtis examines the wine itself. With his light and the loupe, he looks at the color. "Older wines are turning orange on the edge of the wine and in the middle, it'll be a plumy dark color. A new wine will be just dark all around."
Mr. Curtis says he can now sample a wine without removing the cork, using a new gadget called a Coravin, which sticks a thin, hollow needle through the cork so the wine can be poured. The most obvious fakes will pass off a Chilean Cabernet or Australian Shiraz as an aged wine from a renown Bordeaux producer.
The difficult-to-spot fakes involve similarly aged vintages of wines from the same producer "like a 1964 Bordeaux that is being labeled as a 1961 Bordeaux-1961 was a great year, but 1964 is about the same age. If you're not used to tasting the 1961, how are you going to know?"
For novices, Mr. Curtis says one sign a wine isn't the real thing is if the deal is too good to be true. "If it's half the price at normal auction, it's probably not real."
Second, he recommends asking the seller where the wines were last bought and stored. Auction houses should have a confident answer; if they don't, he recommends not bidding.
Finally, a careful inspection of the label will often reveal the most blatant fakes-spelling mistakes or design irregularities are the tipoffs. If you still aren't sure about a wine, seek an expert. Mr. Curtis says auction houses have their own or can suggest an independent consultant. He adds collectors can contact the Appraisers Association of America for a certified wine appraiser. "If you're spending the amount of a small car on a bottle of wine, you should ask someone who knows," he says.
Wine linked to lower disease-related mortality risk in men: study
In a study of more than 32,000 men in France, those who got more than half their alcohol consumption from wine had a lower risk of death from heart disease and several different cancers.
Source: NY Daily News
July 22, 2013
A wide sweeping study has found a link between moderate wine consumption and a lower risk of mortality from cardiovascular disease and cancer among middle-aged men, lending more credence to the French paradox.
After following up with 35,292 men over about 28 years, researchers from the Université Paris Ouest Nanterre La Défense and Bordeaux Segalen University in France found that when more than 50 percent of their alcohol consumption came from wine, subjects showed a lower risk of death from heart disease as well as lung, lip, oral cavity, pharynx, larynx, bladder and rectal cancers.
In numbers, moderate wine consumption was associated with a 40 percent reduced risk of mortality from cardiovascular disease, and a 20 percent reduced risk of death from cancer.
At the beginning of the study, subjects ranged in age from 40 to 65 years and hailed from Eastern France. In the end, a total of 4,035 deaths from cancer were recorded. Numbers for heart disease-related deaths were unavailable.
The results of the study were presented at WineHealth in Sydney, Australia, which wrapped up over the weekend.
When it comes to the famous French paradox, however -- that long-standing belief that the health benefits of red wine negate the effects of the famously rich, high-fat diet and the risk of coronary heart disease -- the scientific community is divided.
A study printed the Journal of Epidemiology and Community Health also suggested that drinking up to half a glass of wine a day can boost life expectancy in males by five years after studying the driking habits of randomly selected men over a 40-year period.
But another study out of the Washington University School of Medicine in St. Louis, for instance, found that resveratrol, the magic ingredient in red wine thought to improve insulin sensitivity and reduce the risk of heart disease, had little effect in already healthy women. Though small, the study of 29 postmenopausal women found little health improvement in those who were given 75 mg of resveratrol daily -- a large amount equal to drinking 8 liters of red wine.
Wine fund market brought to its knees
By Ellen Kelleher
It is difficult to turn a profit on bottles of bordeaux and burgundy when the outlook for sought-after vintages looks bleak at best. And it is more challenging still if you run an open-ended wine fund, as evidence emerges that this niche investment sector is floundering.
Just ask Andrew Davison, founder of the Vintage Wine fund, a Cayman-based investment vehicle once boasting as much as ?110m in assets at its 2008 peak. It is to be wound down at the end of the month after being hit by dismal performance, forced sales and a spate of redemptions.
"The wine market is dead. It could take years for this market to recover," says Mr Davison. "I think you have to ask whether open-ended structures are suitable for these sorts of illiquid investments. There's also a danger that wine funds can get too big. When you allow investors to come in and exit on a regular basis, you get huge outflows when things go bad."
The closure of one of Europe's oldest wine funds is not a lone example of why gaining exposure to this sector can turn into a cautionary tale.
The industry took another hit this month when the UK's Financial Conduct Authority announced that wine funds listed in London - which are unregulated collective investment schemes - must not be marketed to retail investors of limited means.
The demise of the Vintage Wine fund also comes as the Luxembourg financial regulator is forcing Nobles Crus, once the world's largest registered wine fund worth as much as ?109m, to bar its investors from withdrawing their money. It can no longer sell its shares after running out of cash.
The decision by the Commission de Surveillance du Secteur Financier to "temporarily suspend all redemptions and subscriptions" in Nobles Crus came late last month after Elite Advisers, the fund's managers, admitted they did not have enough cash to meet redemptions.
The fund revealed the news in a letter sent to investors.
"Nobles Crus now finds itself confronted with a few requests from large institutional investors for redemptions involving considerable sums of money," wrote Miriam Wilson and Michel Tamisier, general partners at Elite Advisers in a letter dated May 31. "Currently, Nobles Crus does not have the necessary liquidity to honour these requests."
The gating of the fund follows a long spell of criticism of its practices. The valuation system Nobles Crus employs continues to come under attack from other wine fund managers, who tend to rely on Liv-ex prices as a benchmark for their portfolios, but have not reported consistently strong returns.
Rather controversially, the managers of Nobles Crus opt not to use Liv-ex. Their reasoning is that its coverage of the rarer vintages in which they invest is "patchy and inconsistent".
Andrew della Casa, director of the $55m Wine Investment fund, which only invests in bordeaux, adamantly disagrees with the decision: "We do believe the best practice is to use Liv-ex. If Liv-ex isn't covering your stocks, then they aren't liquid enough to be considered in the portfolio."
While many wine funds took a beating in recent years, especially after the Chinese pulled out of bordeaux in 2011, the Nobles Crus fund, which launched with just ?2m in assets at the start of 2008, did not. In 2008, the fund returned 20.4 per cent; in 2010, 13.4 per cent; And in 2012, the fund returned 8 per cent despite meeting millions of euros in redemptions.
Envious rivals argue that most of the fund's profits have come from unrealised accounting gains on inventory, not from actual sales of wine. They say that a number of the bottles in the Nobles Crus portfolio are freely available at cheaper prices elsewhere.
Mr Tamisier vigorously defends the fund's valuation methods.
"Our 2001 valuation of Cheval Blanc 2000 included observed market prices from the UK of ?789 per bottle, but up to ?1,525 per bottle from a Hong Kong auction house," he told FTfm.
Wine funds remain exclusive. There are no more than 20 registered, with most concentrated in Europe and a select few in Asia and the US. Even the most established have not been in existence for more than 10 years.
Justin Gibbs, co-founder of Liv-ex, says: "Wine funds are still a game in their infancy."
But the market holds appeal, especially for wealthy Chinese, who just a few years ago were responsible for driving the price of fine French wines to record highs.
According to Mr Gibbs, the performance of wine, which is worth about £6bn per year as a global market, has been "very lacklustre" since June 2011, when the market turned after a strong two-year run. The best bordeaux vintages tend to fare better than burgundy, but on the whole the market remains weak.
In a note to investors, Mr della Casa, described last year's en primeur season, which involves purchasing wine while a vintage is still in a barrel, as "generally disappointing".
He blamed poor sales on the high release prices French chateaux demand.
Mouton Rothschild emerged as the strongest of the young wines, with price increases of around 1.5 per cent on average across vintages. Château Margaux was up a bit as well, while Château Lafite was broadly flat.
FYI: BHW is considering creating a wine fund for serious investors.
As a wine entrepreneur, I'm often looking at the business of wine from a skewed perspective of dollars and sense.
As a wine lover with limited resources, I am often seeking out certain wines for my own pleasure at affordable prices. People often ask me what I'm drinking and where I buy wines. I buy a lot of wine from private collectors who have too much wine in their collection, whose tastes may have changed and/or no longer drink enough wine to warrant the amount of wine they own. Wines that are easy to purchase for resale include about 10 properties in Bordeaux and 5 properties in Burgundy. They are the usual suspects. The first and second growths in BDX plus Petrus, DRC, Roumier, Leroy, Jayer, Leflaive, and a few others. More interesting to find, and more rewarding to drink, especially as a wine lover on a budget are the unheralded wines from outstanding producers most people have never heard of. This includes Huet, Foreau and Cotat in Loire. There are some fine older Rhone wines at incredible prices. I like to find 8-15 year old white burgundy under $50. I'm always happy to see how inexpensive some older Barolos, Barbarescos at killer prices because these wines tend to age gracefully. There are even some Napa cabs from Dunn, Ridge, and Pahlmeyer at prices that make you feel like you're stealing; at times 50% of the current release price on the same wines. Of course, there are lots of gems that come along too. Wines that don't have much appeal in the resale market, but turn out to be really fantastic wines for less than $40. Stay tuned to our growing selection and try some of these wines.