IN FOCUS: CALIFORNIA CABERNET
in The Drinks Business
|Bill Harlan has created a California first growth in cult Napa Cabernet Harlan. Photo credit: Olaf Beckman|
When property developer Bill Harlan founded Harlan Estate in 1984 in the western hills of Oakville, clearing 16 hectares of forest on his prized plot of land to plant vines, he had an audacious ambition – to create a California first growth. Many may have laughed in his face at the time, but 35 years on, his wine now sells for US$900 (£695) a bottle on release, and significantly more on the secondary market.
“It felt cheeky saying we wanted to create a California first growth back then, but people have been saying it back to us, so on some level it must have worked,” says estate director Don Weaver. “We’re not trying to be the Latour of the Golden State, but we do make very serious wine. The inspiration came more from wanting to mirror the first growth’s model of success and longevity.”
Having proved themselves over time, California’s equivalent of the five first growths are blossoming at the top of the fine wine tree, and stand apart in terms of their investment value. So much so that last year fine wine trading platform Liv-ex, the global marketplace for the wine trade, created the California 50 Index to follow the price performance of the past 10 physical vintages of Harlan, Screaming Eagle, Dominus, Opus One and Ridge Monte Bello – the Golden State’s most traded wines on the secondary market.
In the past year alone, the prices of the last five vintages of these wines have risen by an average of 25%, and over the past five years the California 50 Index has outperformed industry benchmark the Liv-ex 100 and the Liv-ex 1,000, rising by a staggering 76%, with Screaming Eagle alone posting gains of 89%. Justin Gibbs, director and co-founder of Liv-ex, puts this stellar performance down to a number of factors. “Bordeaux sales have been running flat for two years, and many collectors have cellars full of claret but very little from California.
With small production, high scores and the ‘shock of the new’ factor, prices of California’s big five have been pushed up with each release,” he says. Scarcity is key Scarcity is a key driver in pushing the price of these five wines to unprecedented levels – their volumes being more akin to top Burgundy than prized claret.
“A Bordeaux first growth produces around 20,000 cases a year, while Harlan makes 2,000 and Screaming Eagle only produced four barrels in 2017, so there is a massive level of rarity, which, when combined with their quality, results in high prices that are only going to go up,” says California specialist James Hocking, who imports the likes of Corra and Scarecrow into the UK through his eponymous agency, James Hocking Wine, and has found a niche among wealthy London-based Americans in their 30s and 40s who are thirsty for a taste of home.
While the big five continue to enjoy the lion’s share of secondary market sales, the audience for these wines has broadened, and the number of California wines trading on Liv-ex has doubled in the past two years, with both the UK and Asia becoming increasingly interested in what the Golden State has to offer at the top end.
However, the ongoing trade war between the US and China is stalling sales in Asia. While the US will always remain the number one market for these wines, the majority of which are sold direct to consumers via coveted mailing lists, many of California’s top producers are keen to increase their global presence, and are making their wines available in the UK for the first time, though the allocations are often miniscule.
Cult California Cabernet Ovid from Pritchard Hill will soon make its UK debut through The Wine Treasury, but don’t get too excited – account manager Christian Manthei told db during the recent Collectible California tasting at the American Embassy in London that the UK will be allotted between 18 and 24 bottles per year. The UK’s allocation of Harlan is slightly higher, ranging from 20 to 200 bottles, depending on availability, many of which are ‘flipped’ on the secondary market soon after being snapped up – a trend Weaver admits he has no control over.
“If you’re blatantly buying the wine to sell on then you’re not my favourite customer, but what people do with the wine once they buy it is their own business,” he says. One venue keen to make the most of its Harlan allocation is celebrity chef Jason Atherton’s new Mayfair restaurant, The Betterment, where a 125ml glass of Harlan 2012 will set you back £495.
Keen to expand his international reach, last summer movie mogul Francis Ford Coppola started distributing the Rutherford jewel in his California crown, Inglenook, through La Place de Bordeaux via three négociants – CVBG, Duclot and Maison Joanne. Jackson Family Wines does the same with Vérité, its revered range of three Bordeaux blends from Sonoma County. “We want the wines to compete on the same stage as top Bordeaux, and being available through La Place has helped us to expand our reach to France and other parts of the world,” says Christopher Jackson. “Selling through La Place is a major point of pride for us.”
The likes of Jackson and Inglenook aren’t the only ones benefiting from this new route to market. “As the world shifts away from en primeur, Bordeaux négociants need to change their business model accordingly, and working with California’s top producers is a great way to do that,” believes Dave Allen of California wine importer, The Vineyard Cellars. While the Jacksons like to benchmark Vérité against the likes of Margaux and Petrus, wine writer Francis Percival believes California’s top Bordeaux blends “exist in their own lane, and have no direct competition, except perhaps the Super Tuscans, as they’re both warm climate wines loved by Baby Boomers”. The jury is out as to whether the likes of Screaming Eagle and Dominus are made with the American palate in mind. “Definitely not,” insists Alistair Viner of Mayfair fine wine Mecca, Hedonism.
“These wines appeal to such a wide and varied group. We have over 1,400 California wines in stock and they account for a considerable percentage of our overall business,” he says. Oliver Bartle of Roberson thinks that while a number of the big five were initially crafted to appeal to sweet-toothed Americans, with their ripe fruit, high alcohol levels and lashings of new oak, he has noticed a stylistic shift in recent years. “They have become more food friendly and European in style, and display structure and balance,” he says. California-focused wine writer Stephen Brook has noticed “more polish, better handled oak and more refined tannins” in top California Cabernet of late. For Don Weaver, the abundance of sunshine in California is intrinsic to the character of Harlan, leading to “dense and profound wines with luscious texture”.
|The Sine Qua Non room at Hedonism in Mayfair|
Perhaps the more important question is whether or not California’s big five and beyond have true ageing potential; as this is often considered the mark of a fine wine. While many of California’s cult Cabernets are too young to be able to prove themselves over time, older vintages from the likes of Heitz, Dunn, Stag’s Leap and Château Montelena are proving increasingly popular at auction.
Macy Pigman of Christie’s New York says: “The auction market for the upper echelon of California Cabernet is exceeding expectations, and we’re seeing a resurgence in demand for 30- to 40-year-old Cali Cabs as collectors and critics begin to discover the unbelievable ageing potential these wines.” Viner stocks California drops dating back to the 1930s at Hedonism, and is confident about their ageing potential.
“I have been lucky enough to try several wines from the 60s and 70s from the likes of Heitz, Inglenook and Mondavi, and they have all been exceptionally good and very fresh,” he says. Cathy Corison’s elegant expressions are often used to highlight the ageability of California Cabernet. Bartle of Roberson says: “Corison ‘89 is a superb example of a mature Napa Valley Cabernet that has retained its acidity and fruit character, making it great to drink now or 20 years from now.”
|Single bottles of Harlan sell for US$900 on release|
For Dave Allen of The Vineyard Cellars, the ageability of top California Cabernet depends on the intentions of the winemaker when creating it. “Those made with a view to ageing will certainly do so, but those made to be voluptuous in their youth will struggle after 15 years,” he says.
But it’s not only ancient Cabernets that are attracting attention at auction. The allure of the big five is so strong that recent vintages are generating eye-wateringly high hammer prices. Just last month three bottles of the 2010 vintage of Screaming Eagle fetched US$10,625 at a Christie’s auction in New York.
The same auction saw three Screaming Eagle wines from the recently released 2016 vintage sell for US$7,500, fuelled by rumours that the 2017 vintage may not be released at all due to fears of wildfire-induced smoke taint. The winery’s inaugural 1992 vintage, made by Heidi Peterson Barrett, still has pulling power.
Last month a pair of 1992s went under the hammer for US$15,000 at Sotheby’s in Hong Kong. The fact that the big five don’t tend to hold back a lot of stock is only adding fuel to the fire. “The lack of library stock in a period of rising demand has undoubtedly helped to push prices northward,” says Gibbs of Liv-ex.
While the likes of Harlan and Screaming Eagle make so little wine that the idea of holding a sizeable chunk of it back each year would be counter-intuitive, a growing number of California estates are waking up to the benefits of nurturing a wine library. John Williams of Frog’s Leap has held back 10% of his stock each year since his debut vintage in 1981, to be able to prove that his wines age gracefully. Having heavily invested in the fine wine side of its business, E & J Gallo is looking to build up its library stock, particularly of its Louis M. Martini Monte Rosso Cabernet.
“This is top of mind for us. In some markets our distributors have built a library of our wines to be able to put on vertical tastings. Having a library of back vintages is an important way of gaining visibility in the on-trade, particularly at fine dining restaurants,” a Gallo spokesperson said. Jackson Family Wines, meanwhile, has started putting aside as much as 25% of the annual production of Vérité, with the aim of re-releasing the wines at a later date with they are ready to drink.
“Our library programme was created in response to certain vintages of Vérité getting snapped up really quickly, so we’re forcing the hand of the market a bit. We’re going for the long-term decision rather than the short-term gain,” says brand ambassador Dimitri Mesnard MS. With Scarecrow and Screaming Eagle’s chief winemakers having moved on to launch their own projects, might we soon see a slew of new ‘cult’ California Cabernets threatening to topple the big five from their throne?
|Lawrence Fairchild with his new ‘cult’ Cabernet, Perrarus|
“Napa is a very close-knit community and people tend to follow the path of a winemaker, so Heidi Peterson Barrett’s new small production projects like La Sirena, Kenzo and Lamborn are all gaining traction, as are those made by Napa legends Andy Erickson and David Abreu,” says Christian Manthei, who was astonished to chance upon dozens of Napa Cabernets he didn’t recognise priced upwards of US$200 at a grocery store in Oakville during a recent buying trip.
Alistair Viner flags up Russell Bevan’s Perus as a winery to watch, while importer James Hocking describes Philippe Melka’s Moone Tsai as a future classic.
However, California’s fine wine future won’t necessarily lie in Cabernet. “I think Pinot Noir will start to command as much attention as Cabernet, as producers work out how to get the best from this fickle grape in California,” predicts Dave Allen of The Vineyard Cellars, who believes the likes of Kutch from the Sonoma Coast and Domaine de la Côte in the Santa Rita Hills are poised for their moment in the sun. While most estates need to prove themselves with a 20-year track record before they can enter the fine wine canon, some labels lay claim to being a ‘cult’ wine off the bat.
In August, Lawrence Fairchild (pictured), a Washington insider during the Reagan years, and now a wine entrepreneur, released 300 magnums of a 2015 Napa Cabernet called Perrarus (meaning ‘exceptional’ in Latin) priced at US$3,500 a pop, which he describes as being “the Ferrari of wines” with “the wild energy of a leopard”. The magnums were allocated at random to members of Fairchild’s mailing list.
How long the likes of Ridge and Opus One can continue their upward trajectory on the secondary market remains to be seen. Justin Gibbs of Liv-ex has already noticed that the price appreciation “at the very top of the California tree” is slowing. However, with limited supply, critical success and a run of good vintages, the top drops from the Golden State are helping to expand collectors’ wine horizons and prove that, in sensitive hands, California is more than capable of creating wines that can stand shoulder to shoulder with the best of Bordeaux.
For these and other excellent California Cabernets, please visit our store at http://GoldenGateWineCellars.com. As always, please don’t hesitate to give me a call at 415-337-4083 for any questions, suggestions, or wine advice