In the world of appraising the object under scrutiny can create its own sweeping enthusiasm. Collecting fine and rare wines has its roots in ancient culture. Evidence of the earliest wine production has been uncovered at archaeological sites in Macedonia and dated back to 4500 BC. Traces of wine dating from the second and first millennia BCE have also been found in China.
Wine is an ingredient in religion, matters of state, times of festival and times of mourning. However, as noted in Wine for Dummies, “Ironically, what will really make you feel comfortable about wine is accepting the fact that you’ll never know it all … and that you’ve got plenty of company. You see, after you really get a handle on wine, you discover that no one knows everything there is to know about wine. There’s just too much Information, and it’s always changing. And when you know that, you can just relax and enjoy the stuff!”
Concerning the more current history of wine, an International Wine Crisis In 1863 was discovered when an unidentified vine disease was found to exist in France’s Rhone Valley. By the late 1860’s vine growers all over France were losing their vineyards. The scourge was phylloxera, an insect indigenous to the eastern United States. For a while, eradicating phylloxera seemed hopeless. Eventually a solution presented itself: graft vinifera vines to pest-resistant American rootstocks. It worked, but it was a long and arduous process to “retrofit” a complete industry.
Then, in 1920 the 18th Amendment to the Constitution established Prohibition. The almost immediate result was the decimation of the American wine industry. In 1919 the United States produced 55 million gallons of wine. In 1925 it was 3.5 million gallons. By 1933, when the Twenty-first Amendment repealed Prohibition, much damage had been done. The redevelopment of the industry was been slow but constant.
With the historic, ”Judgment of Paris” in 1976, the United States joined the community of vintners and started a revolution in wine-drinking and appreciation at home. The Smithsonian’s National Museum of American History houses two bottles of wine: a 1975 Stag’s Leap Wine Cellars Cabernet Sauvignon and a 1973 Chateau Montelena Chardonnay. These are the wines that won at the now famous Paris Tasting in 1976, where a panel of top French wine experts compared some of France’s most famous wines with those of California and the California wines were judged superior.
For the last 25 years wine-drinking Americans are continuing to upgrade their taste in wines along with wine classes, tastings, dinners, and publications that have helped to maintain the momentum.
As to value? The fact that one bottle sells for $10 and another for $50 another $500 isn’t a matter of chance, Winemakers can choose whether they want to make their wines cheaply or expensively. Do they want to age their wines in barrels or bottles? There are lots of variables that go into pricing and valuing wine but it all begins with the grapes. Some properties are ideal for growing grapes: good soil (terroire), proper drainage and the right sun exposure. In some cases, the planting acreage, because of the reputation the area has acquired, commands top bottle pricing. Napa Valley is a perfect example.
How the grapes are grown affects price. Although the more grapes you grow on an acre of land the more wine you can make, it’s generally agreed that lower yields produce better quality grapes and more concentrated flavors in the juice. To achieve lower yields winemakers thin the vines meaning they remove whole clusters of grapes by hand. The cost of the bottle goes up. Pressing, fermenting, and aging all contribute to price. One wine maker might squeeze as much juice as possible out of the grapes and then ferment in huge tanks … filtering and bottling after only a few weeks. Another producer might use minimal pressing, ferment and age the wine in oak barrels.
Features to look for:
Bottle – Glass making has changed considerably since the bottling of famous vintages prior to 1982.
Capsules – These should be consistent with other known examples of the vintage, although there are a few rare examples of chateaux using more than one capsule type for a vintage.
Corks – Chateau-bottled wines have the correct vintage and brand printed on the cork. Before 1970, wine was often shipped in casks to wine merchants who bottled the wine themselves (leading to labeling such as ‘Belgium bottled’, ‘Berry Bros bottled’, etc. on some old wines).
Recorking – There was a tradition of recorking wines and refilling the bottle – generally from a recent vintage where levels were low. Serena Sutcliffe (of Sotheby’s), for example, is ‘against recorking of wines, even if old, as the shock is great and fraud made more easy by the practice’.
Labels – For old wines, some label damage is to be expected and perfect condition is a sign of possible fraud and/or storage in too-dry conditions. Wine stored within the correct humidity range can naturally lead to some label staining. It is common for fraudsters to get the labels almost, but not quite, right.
Check for spelling errors, font changes, etc.
Provenance – Wines that have been traded many times, or where there is vagueness about the ownership trail are clearly more open to fraud. At the other end of the market, there are wines that have been cellared at a chateau since bottling. These, rightly, command a premium in the market.
US Strip Labels – Wines imported into the USA must have a USA strip label on the bottle stating the importer’s name. A wine with a USA strip label is virtually impossible to sell outside the USA. Generally, be wary of wines that look too good for their age, labels that are too perfect, or fill levels that are too high. Take care whom you buy from and avoid any wine merchant who cold-calls you.
Corked Wine – The plague of the wine trade. Obviously corked wine has aromas of wet cardboard, mushrooms and mold. Corked wine has been in contact with a cork infected with a fungus that produces 1, 2, 4- trichloroanisole, otherwise known as TCA.
Cooked Wine – This is wine that has been exposed to too high a temperature, leading to a stewed, prune-like taste. Prior to 1985, less care was taken when shipping wines around the world. If a container without full temperature control is kept for a few days at a port during high summer, it will ruin any wine inside. As the liquid heats, it expands, pushing the cork out. So never buy a bottle where the top of the cork doesn’t sit flush with, or below the level of, the mouth of the bottle.
Oxidation – The small amount of air behind the cork is regarded as one of the mechanisms by which wine develops when in the bottle. However, should the wine come into free contact with oxygen in the air, whether during careless winemaking or due to a faulty cork, rampant oxidation will rapidly ruin the wine.
Volatile Acidity – The smell and/or taste of vinegar indicates that a wine has either been open for too long and/or has been attacked by a bacteria called ‘Acetobacter’.
Sediments and Crystals – Sedimentation within the bottle is a natural occurrence in wines designed to withstand some ageing, and it simply reflects the solid matter settling out of the wine. Be wary of old bottles without sediment.
Wine Futures – The terms Wine Futures and En Primeur refer to buying wine after it is made, but before it is bottled.
Six months or so after vintage, when the wines are still in tank or barrel, tasting samples are made available to wholesale buyers and wine journalists. The buyers place orders based on their assessment of the wines, and sell their ‘future’ stock on to their customers although the wine itself is not bottled and shipped for another year or two. The wine is rated in either print or online media. Publishing these ratings (particularly for Bordeaux futures / en primeur) is increasingly competitive since the advent of celebrity wine critics, online wine media and wine investment. In the case of Bordeaux En Primeur, the wines are released in several stages ortranches, in which prices are adjusted up or down according to the success of the previous tranche. The first tranche typically attracts the most attention.
Futures & Wine Investment – Buying wine en primeur (literally ‘in youth’) or as wine futures can be a prudent investment practice – the initial release prices are usually the lowest at which the wines will ever be sold . The Bordeaux 2000 vintage was highly profitable for futures and en primeur investors; the wines were in great demand, but were initially priced too low. Even those who bought at the second or third tranche prices saw the value of their wines rise quickly.
As with all investments, however, nothing is certain. The 1997 Bordeaux futures prices, for example, were pitched too high initially, and actually declined slightly over the following few years.
A rudimentary understanding of the above along with a reminder of the fact that you’ll never know it all, leads us to the sober understanding that valuing and appraising wine for insurance or donation purposes relies heavily (as tasting is normally out of the question) on the facts, or provenance, as presented to the appraiser along with the analysis of current conditions which includes; a visual investigation of the cellar, the cooling system, the humidity control, the bottles themselves, the corks, the capsule and the history of ownership. (a 1787 Chateau Lafite once owned by Thomas Jefferson sold at Christie’s for $160,000), and, there is always the following to consider: Some experts estimate that as much as 5% of the fine wine secondary market involves fake wines. From grape juice shipped across borders to acquire a famous region’s kudos, to clean-skins labeled with illustrious names and ancient vintages, the full range of trickery occurs on a regular basis.
On 06/18/2014, Forbes reports “there are no even vaguely reliable numbers compiled on the value of bogus fine and rare wines that change hands every year (as opposed to the industrial-scale counterfeit bottling of more commonplace wines said to take place in the Far East). Egan’s ballpark estimate is around $100 million. But most of them go undetected, or unprosecuted, partly because, as Russell Frye discovered, “it takes very deep pockets to pursue someone who is selling fake products.” (For that reason Frye ended up settling out of court with the vendor who sold him the ersatz bottles.)
Unfortunately for several big-time wine counterfeiters and the auction houses and retailers that sold their bottles, that deep-pocketed someone arrived on the wine scene: billionaire William Koch. Koch’s estimate of the size of the counterfeiting market tops Egan’s (“My out-of-the-air estimate,” he says, “is that several hundred million dollars’ worth of fake wine is being sold every year”), which is bad enough in the abstract, but it came home to him personally. “I bought a lot of fake wine at auction–that’s where I got most of it–but I’ve even bought fake wine at charity auctions! I’ve been given fake wine as a present.”
This rubbed Koch the wrong way. Very wrong: He has now spent, by his estimate, more than $30 million pursuing wine fraudsters. As he says, “It just bugged me that there was this code of silence. The auction houses and the resellers don’t want to know it’s fake because they are making a gross margin, and then when the collectors get it they don’t want anyone to know they have fake wine because it devalues their cellar–they want to dump it, get rid of it.”
When he began to have doubts about a large consignment of dazzling rare wines bought through Zachy’s in New York, Koch turned to Egan to break “the code.” And the Wine Detective went to work: “I told him, sorry, but all the wines you’ve shown me are fake.”
There were bottles with wrong corks–a château name printed in the wrong direction–and doctored labels (a glue expert would later determine that some had been attached with Elmer’s). Remembers Koch, “Michael used his superb access to the châteaux to get harvest records, which were very useful. [For example] I had bought seven or eight magnums of Château LaFleur 1947, and it turned out there were only five ever bottled!”
Looking on in the Cape Cod courtroom were spectators watching Egan’s testimony with uncommon interest: agents from the FBI and lawyers from the Southern District of New York’s U.S. Attorney’s office. They soon contacted Egan and put him to work on a made-for-the-tabloids counterfeiting case.
In what appears in retrospect an impossible-to-miss echo of the Hardy Rodenstock scandal in Germany, a man with a hazy, unverifiable past–in this case an Asian expat named Rudy Kurniawan–burst onto the scene with a bottomless trove of wines no one even knew still existed. A charmer with an authentically impressive palate, Kurniawan, like Rodenstock, established himself by throwing astounding, bacchanalian tastings at his own expense. And once again the wine establishment–Robert Parker, Burghound’s Allen Meadows and many others–joined in the chorus of praise.
Kurniawan had pulled off some very public coups–including a $25 million auction sale–and perhaps untraceable numbers of private sales to collectors by the time the FBI raided his Los Angeles home in 2012. The raid netted, among other smoking guns, 20,000 fake wine labels and a cache of empty top-end wine bottles that Kurniawan had bought from sommelier friends, some of them marked right on the glass with the formula he would blend in them to fabricate the original wine.
As Egan quickly realized, the man was a student of the art: “This was a very sophisticated operation. He had actually scanned the original importer’s back labels from, say, the 1950s and 1960s, and had those printed professionally.” But even the cleverest criminals trip themselves up. Egan’s sleuthing discovered, for example, that the label on a bottle of 1929 Roumier Bonnes-Mares bore an all but imperceptible watermark (“Concord”) that he traced to an Indonesian printing company established in 1983.
At the trial last December that ultimately convicted Kurniawan of fraud, Egan was able to draw on his years of experience to verify that, on various assignments, he had personally examined and determined to be fake 1,077 bottles of wine attributable to Kurniawan. The 267 bottles the FBI had seized from his home or rounded up from other sources–all of them fakes, Egan testified–were only the tip of an otherwise invisible iceberg. As Egan puts it, in regard to the market in general: “There is a lot of fake wine about, and a lot that has yet to come to light.”
Yes, appraisals are done and values are recorded and, in most cases, with proper research and due diligence, the wine is as presented and the appraisal can be recognized. But it must be kept in mind that rare wines are essentially collected for their high-status value and are, unfortunately, probably undrinkable.