Wealth Blog | Invest in cognac as old as Marie Antoinette

Timing is everything. If you bought Bordeaux before everyone piled in, and offloaded before it crashed, you’re laughing. But if, like many novice Asian wine investors, you’re pretending you always intended to drink that case of 1982 Chateau Lafite that’s now worth half what you paid for it, it’s not so funny.  Aware that pure wine investment can get a jaded response, one fund has come up with a different twist on this happy asset class. It’s basically fine wines and rare spirits in your chosen combination, with the emphasis on 18th and 19th century cognacs.

Something different for HNWIs

This might suit High Net Worth Individuals who are bored with art and watches and fancy a flutter on something new.  And they store it properly for you.

David Nathan-Maister is a former Stellenbosch winemaker who now lives in France. He’s director of Oracle Paradis Wine Fund, which offers two share classes: fine wine and old rare cognacs. The idea is the less-volatile cognac is a hedge against flat markets and capital loses, apparently.

His theory is this. Fine cognacs bottled 100 to 150 years ago are undervalued. If, 30 years ago, you took a case of one of the best years of Lafite as benchmark, it was worth the same as a bottle of 1811 cognac, depending on the quality of the bottle. Today, one bottle of Lafite is worth the same as the 1811 cognac. “Anywhere from US$3,000 or 4,000 to US$20,000. We feel something’s out of whack – either the wine is too expensive, or the cognac is too cheap.”    

In many cases we’re talking about familiar labels, like Hine, Courvoisier, Martell, Remy Martin and Delamain, but also smaller cognac houses. It’s hard to find. Much of the good stuff is in the cellars of top European restaurants and hotels or comes up at auction. But at euros 800 or 1,000 a shot it’s often too expensive for restaurant customers. So they can often be persuaded to discreetly liquidate the odd prized bottle.

Nathan-Maister makes a strong case for the virtues of ancient cognac. Not only is it 100 years older, he says, but the modern stuff is made from different, inferior grapes. This dates back to phylloxera, which wiped out vines, including the Folle Blanche used for making cognac since Roman times. Winemakers had little option but to replace the folle blanche with the Italian ugni blan, which was resistant to phylloxera and suited to the Charente region. Previously used for making industrial alcohol, ugni blanc is still used for cognac to this day, explains Nathan. “It was not regarded as a quality grape, but it was all they had.”