Bordeaux faces New World challenge

New World wines have the potential to challenge Bordeaux's dominance of the fine wine market, according to one leading merchant.

Slurp Investment Research argues that the current premium commanded by Bordeaux is "unsustainable". In a note to fine wine collectors and investors, it says that top wines from California and Australia - along with wines from elsewhere in Europe - are currently undervalued and under-represented in portfolios.

"After 18 months of dramatic gains, Bordeaux red wines are trading at premiums of between 300-450% over wines of identical scores in other regions," Slurp said.

It predicts a "rebalancing of international portfolios away from Bordeaux, with New World, Rhône and Italy (Barolo) being the major beneficiaries". Slurp said Bordeaux prices have been driven higher by the first wave of Chinese buying, but added that its sales force in Hong Kong is starting to see much greater differentiation in Chinese buying habits.

The note added that Penfolds and other New World brands "are becoming global icons in their own right".

"Producers like Torbreck, Clarenden Hills, Catena Zapata, Almaviva, Screaming Eagle, Henschke, Cullen, Harlan Estates, Ben Glaetzer and many others all have the potential to become far better known amongst collectors and investors than they are today.

"More and more premium New World wines are being made to last the necessary 20-30 years for genuine investment potential. This is occurring at a time when many Bordeaux wines are actually being made in a more accessible, earlier drinking, style."