Wine investment: A worrying state of affairs

IMAG0028Bear with me, the link I am about to make is tenuous. It’s often disappointing when something that you wanted to believe was true turns out to be nothing more than a sham. In the case of the Wizard of Oz, that sham was a wizard who sustained the myth of his powers using smoke and mirrors, shielding his worshippers from the reality that he was just an ordinary man from Omaha who got lost. Thanks to the power of fiction, the wizard effected a happy ending by proving to Dorothy and her friends that the answers they were seeking were always within them.

When it comes to wine investment, there has been no shortage of instances when people wanted to believe something to be true. Rudy Kurniawan is perhaps the most famous recent fraudster, but don’t forget about the case of Labouré-Roi’s fake pinot noir or even the somewhat mythical Thomas Jefferson bottles, documented in the book The Billionaire’s Vinegar.

We need not travel too far to find cases of wine fraud. A daily visit to Jim Budd’s blog keeps us up to date with just about every instance of nefarious activity in the wine investment world, some elaborate and some not.

The latest story that caught my eye was that of opportunists attempting to capitalise on clients of the now-defunct wine investment company European Fine Wines. EFW was a company that many of us wanted to believe was the real deal and free from the troubles associated with other collapsed wine investment firms, but deep down there were plenty of suspicions floating around. This all came to fruition in 2014, when EFW’s phone lines went unanswered and the staff had reportedly been ‘sacked’.

Indeed, once the company went under, it left behind a trail of unhappy former clients and dubious practices. Sadly, they did so right under our noses. On three occasions in 2012 and 2013 it held tasting events where, looking back, it seemed to wish upon itself all the scrutiny and suspicion it could muster. I wrote about the first of these tastings back in May 2012, where the wines lined up on the table consisted of Haut Brion, Cheval Blanc, Yquem and more from the 1998 Bordeaux vintage. The event was peppered with clients and journalists alike, but any scrutiny that was in the air was drowned out by a fog of first growths.

Later that year, the company held a Christmas tasting. The first growths were fewer in number, but the volume of financial journalists attending was uncanny. If they had something to hide, they were doing an unbelievable job of hiding it out in the open.

It was at this tasting that an unhappy client’s story of cold-calling and potential mis-selling (unverified), began to raise my suspicions. What he told me was all too familiar. A slick sales person from EFW  cold called him and sold him a story about the thick profits that could be made by investing in wine and how EFW would handle everything for him. The person on the phone was pushy and persuasive, of course, and managed to part the client and his money with ease. And because this person knew nothing about wine, especially not Bordeaux, EFW sold him second-tier wines from lesser vintages at prices that were very likely unfavourable.

The unhappy customer was angry but realistic. He figured he had been duped, but thankfully didn’t lose a fortune. When he received an invitation to the Christmas tasting, he attended because he wanted to see for himself if the company was legitimate. I gave him my card and told him that if he wanted further help with his situation, I could recommend a few avenues for him to follow. He never did get in touch.

A year later, another tasting invitation landed in my inbox. It was near the end of 2013 and this time there were no journalists present and the wines were all lower-tier. The atmosphere was also much frostier than usual. Something had clearly changed at EFW.  Six months later, the company would be gone. Rather than follow the path of successful and trusted brokerages, companies like EFW seem designed to make quick profits by taking advantage of naive clients by promising fast profits. The problem is that if there is money to be made in wine, it doesn’t come quickly.

In a recent interview with the Telegraph’s Victoria Moore, famed American wine critic Robert Parker said that there is no way to make a quick buck out of wine, adding:

Speculation is one of the ugly down-sides to Bordeaux. I think these speculators have finally, especially the Chinese and some other wealthy people, recognised you can’t make money on them. Now if you’re buying it to sit on it for 10 to 15 years ….but speculators are looking to turn things over.

Truer words were never spoken. We all know the adage; if it seems too good to be true…

Fake bottles and dopers: A treatise on cheating

Anyone who knows me is likely aware there are two things I love in equal measure: wine and cycling.

While it seems the two topics are as different from each other as carbon fibre and malolactic fermentation, there is one way in which they are very similar – and it’s something few people might have thought about before.

Bear with me, because this is perhaps one of the most tenuous links I’ve ever made and potentially one of the most barmy things I’ve ever written. But don’t worry; I’m not going to get all philosophical here. There will be no treatise on cycling and wine, no ode to the bike and the bottle.

No rhyming couplets about riding through the vineyards of Bordeaux.

No rambling words extolling the virtues of a fine right bank merlot.

Absolutely, certainly, most definitely: a big fat no.

Instead, I’m going to talk about cheating and lies, two things that have done a disservice to cycling and fine wine, and unfortunately show little sign of abating any time soon.

I started thinking about all of this not long after I heard the news American cyclist Lance Armstrong gave up defending himself against the US Anti-Doping Agency’s allegations he used performance-enhancing drugs during his career.

Doping is a topic many cycling fanatics hate to discuss most of all, primarily because it is a constant reminder the sport has a shady underbelly where dishonest people cheat for personal gain.

And while the Lance Armstrong story has been rumbling on for years, fresh allegations of cheating in the sport never fail to send daggers through the hearts those who wanted to believe the sport had changed for the better.

The cycling world has endured much disappointment in the past 20 years. So many of the most famous names, the biggest icons, turned out to be little more than fakes.

Unfortunately we are finding the same to be true in the wine world. And we need not look back too far in time to find the sorry evidence.

In the first half of this year it seemed the wine world was collapsing upon itself like a house of cards. Rudy Kurniawan was indicted in the spring for allegedly selling $1.3-million worth of fake wine, while in June directors at Burgundy negociant Labouré-Roi were detained under suspicion the firm faked two million bottles of wine.

Things have become so bad that some experts suggest a great deal of wine, mostly old Burgundy, sold at auction around the world is actually fake. Rather than coming from the finest grand cru vineyards, they are, in fact, no finer than a bottle of basic vin de pays.

So what is a wine drinker to do? Well as any fule kno, if you play with fire, there’s a chance you’ll get burned. When doping got out of hand in cycling, German broadcasters that were sick of being let down by the sport took the extreme measure of pulling their Tour de France coverage. Should fine wine collectors and investors boycott auctions where the old Burgundy looks too good to be true?

Put it this way. If no one bought Rudy Kurniawan’s wine, would he have made it as far as he did?

Waitrose assures us bottles on shelves not affected by suspected fraud at Labouré-Roi

By now we have all become familiar with the suspected wine fraud that is the case of Labouré-Roi selling bottles of wine that were passed off for something they were not.

Indeed, the situation has become such a concern for producers in the region that the Burgundy Wine Board has joined the investigation as a civil party to gain access to the fraud office’s files in the matter. This is so it can do an analysis of its own and determine how much the debacle has damaged its members’ reputations.

This past weekend while I was browsing the wine section in Waitrose, it wasn’t long before I stumbled across a bottle of Labouré-Roi, on this occasion a Cote de Beaune-Villages 2007.

Knowing the Labouré-Roi affair covered all levels of wine, ranging from village wines all the way up to Grand Cru betwen 2005 and 2009, as reported on Decanter.com, the alarm bells started ringing in my head.

While I was tempted to buy this bottle just to see what it might be like and maybe even try to find a way to determine if it was one of those affected by the alleged fraud, the truth is I really didn’t want to touch it with a barge pole.

However, via direct message on Twitter Waitrose told me their wines go through a rigorous quality control process and none of the wines they are selling have been affected by the timeline of the fraud, so shoppers should feel confident when making decisions.