Rioja Rocking

2018-05-02

There comes a moment in the evolution of every market where all the stars are aligned. Last week a bottle of CVNE Vina Real 1959 sold on an online auction for 905 euros.

One might well ask what this has to do with investing in (comparatively) young Rioja to make the best returns. What it confirmed to me was that the home market, Spain was back.

After several years in the doldrums the Spanish economy, at least for the wine drinking classes, was back on its feet.

What has also been noticeable is that recent releases have shown that wine makers felt able to increase prices by double figure percentages. Castillo Ygay for example has seen a 15% rise from the 2007 to the current release of 2009.

Other important factor is the considerable improvement in quality since 2001.

Wines that had consistently been receiving marks around the upper 80s and low 90s began receiving marks in the mid to upper 90s. I mention this not as a slavish follower of Parker; but as Maynard Keynes remarked investment is like a beauty contest where success is not necessarily about picking what one likes oneself but choosing what the crowd will like.

Secondly what is screamingly obvious is that Rioja is extraordinarily cheap in relation to French wines of a similar quality. Of course the market is much bigger, especially for Bordeaux, but like many markets the big returns come in the smaller markets. One only has to look at the Burgundy market over the past 20 years to see the truth in that.

Rioja prices have been suppressed by the fact that it is largely an internal market whereas Bordeaux is international.

Amongst specific choices Rioja Alta 904 and the even cheaper Vina Ardanza stand out as highly marked wines at very little purchase cost. Picking the best vintages of CVNE Imperial and Vina Real is also an inexpensive hobby. One only has to look back over recent vintages to see how rapidly all these rise in relation to their purchase cost over a 10 year period to see that returns of 200-300% are achievable. Given the Burgundy effect that could well prove very conservative…

My general advice is stick to the traditional names (making classically crafted wines) that are showing rising quality. Those in the know will note that I have not mentioned Lopez de Heridia: the reason for this most obvious of omissions is that I feel the market in their wines is so interesting as to be worth a further blog instalment.

Mike Armitage

Mike is a Wine Owners member and a long-term collector who started his cellar in the 1960s. Having witnessed the development of wine markets over the last 60 years, and a salesroom regular for several decades, Mike is well placed to spot opportunities.