A “Grape” History

How It Begins …

The Bordeaux region has been producing wine as early as 43 A.D., which was about 2,000 years ago. Numerous vineyards were established during the Roman occupation in Gaul to produce wine for its legion of army stationed there.

From Royal Beverages to Wine Trade

During the High Middle Ages, the province of Aquitaine had become the English territory for about 300 years since the royal marriage between the King of England, Henry II, and Eleanor of Aquitaine (Aliénor d’Aquitaine). Wine has become more than just a royal beverage thereafter. A large volume of wine produced by this region began to be exported to England. As Edward I enjoyed the Bordeaux wine which was regularly exported to England since the 1300s, the number of vineyards were increased to match the growing demand. After the Hundred Years’ War had ceased, many wine lovers from England had already learned to enjoy Bordeaux wine. Subsequently, the Bordeaux wine trade was born.

Dutch Traders Paving the Route of Bordeaux Wine Trade

The Dutch traders who were also the major buyers of Bordeaux wine had kick-started the process of building roads to ease the transport of goods and for convenience of wine trade during the 17th century. As they emphasize greatly on the value and quality of Bordeaux wine, a speedy delivery was required to avoid damage of the wine when they reach the consumers has led to the invention of the process of burning sulphur in the wine barrels and the land reclamation by the Dutch engineers whom also brought along their experience in water management, which permanently changed the landscape of the Bordeaux region. Hence, the land reclamation had led to the birth of many of the now famous vineyards in Bordeaux as there were lots of lands suitable for growing grapes that cater for the convenience of wine production.

The Emergence of Fine Wine Index

In 1855, Napoleon III had effectively started the “Fine Wine Index” where he classified the wines in Bordeaux from 1st to 5th Growth. He based his decisions on the quality and price realized on each Chateau wine over the previous 100 years or so. As the 1855 classification of Bordeaux wines only allow one major modification in more than 150 years, the Chateau Mouton Rothschild was promoted from Second Growth to First Growth status in 1973.

Bordeaux – The Strategic Wine Capital

Geographically, the Bordeaux wine region is divided by the Gironde River into the Left Bank area which includes the Médoc and the subregions of St-Estèphe, Pauillac, St.-Julien, and Margaux and the Right Bank area which includes the subregions of Saint-Émilion, Pomerol, Bourg and Blaye. Located at the southeast of the Médoc is the area of Graves which includes the sub regions of Pessac-Léognan, Sauternes and Barsac. Meanwhile, Entre-Deux-Mers is located in between the rivers of Gironde and Dordogne.

In fact, the name “Bordeaux” was derived from a French phrase, “au bord de l’eau,” that literally means “along the waters”. This term also refers to rivers which are crucial in the history and success of this region, especially the location along Gironde estuary that was the ideal trade route with the British Isles.

Bordeaux, located near the Atlantic coast, in the southwest of France, is also popularly known as the as the wine capital of the world. Its close proximity of the Atlantic Ocean has provided this region with long warm summers and moderate temperature during the winters. Such blessed weather condition is ideal for growing grapes which are most appropriate for premium-grade wine production.

Almost 88% of wine produced in Bordeaux is red, and is commonly known as ‘Claret’, especially in Britain. Cabernet Sauvignon, Merlot and Cabernet Franc are the three most dominant varieties of Bordeaux which are commonly blended together in order to produce a balanced and harmonious wine that Bordeaux is well-known for.

The Classification of Fine Wine

Governed by strict laws, the wine estates in Bordeaux are generally categorized based on the reputation of the fine wine producers. Basically, these wine estates in Bordeaux are classified under four classifications, covering different parts of the region, namely the:
i. The Bordeaux Wine Official Classification of 1855, covering the red wines of Médoc with one exception –Chateau Haut-Brion from Graves
ii. The 1955 Official Classification of St.-Émilion, which will be updated approximately once every decade whereby it is last updated in 2012;
iii. The 1959 Official Classification of Graves which was initially classified in 1953 and then amended in 1959;
iv. The Classification of Sauternes which covers the finest sweet wines from Bordeaux.

However, Pomerol, where some of the world’s most exclusive and high quality wines are produced, never falls into any of the above classification. For instance, in terms of its standing and exquisite quality, Château Le Pin and Château Pétrus are some of the most superior wines produced in Pomerol that are comparable to the first growths of the 1855 classification, which can often be sold at a much higher price.

The Benefits of Fine Wine

Fine wine is a consumable asset
The value of fine wine lies in its quality, not the bottle that holds it. Over the course of time, fine wines become rarer, whereby their exclusivity increases as the world’s top fine wines are being consumed. Fine wine is an asset that is consumable, meaning that you can drink it as and when you prefer to.

Fine wine is a steady form of investment
It has a proven track record of being an extremely steady form of investment. The performance of fine wine could generally withstand factors such as fluctuations in the stock market, politics, economic recession, and movements in interest rates, which makes fine wine a steadfast investment portfolio throughout the years.

Fine wine is tax-free and can be realised much easier
Fine wine investment has outshone other form of investments such as bonds, equities and unit trusts as it is tax-free and can be much easily realised. The value added tax (VAT) and duties* are not applicable as fine wines purchased under your portfolio will be kept in bond.

*It is recommended that you seek consultation from professionals such as a tax lawyer or tax accountant to help you better understand above the VAT and duties for fine wine investment.

Fine wine has become more popular and accessible
Fine wine has progressed tremendously as an alternative form of investment. Its popularity and accessibility has grown greater in recent years. The price appreciation of fine wine, a commodity with a limited supply but a rising demand, as well as the growing numbers of savvy investors and people who learn to enjoy fine wines, both locally and globally, have contributed greatly to the remarkable progress of fine wine as an alternative form of investment. With Liv-Ex the leading fine wine trading platform. Fine Wine can be traded 24/7 around the world.

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