Investment Tips - Burgundy - 4. December 2019

Leflaive Chevalier-Montrachet: White Burgundy Potential at Spot Price

Demand for the best white Burgundy wines is rising and selected Domaine Leflaive is selected as one of the largest white wine brands with solid investment potential

From Submarine to Top Wine

Marine and wine production, fewer things have less in common, but that did not stop Joseph Leflaive from taking a big leap. From an engineer in the navy, where he helped build France's first submarine, he made the leap to a career as a wine farmer. In 1905 he founded Domaine Leflaive after acquiring a few acres of vineyard from his father. However, the domain's roots date back to 1717 which may rightly be called the official foundation of the domain, although 1905 is the foundation of the Domaine Leflaive we know today.

Although the phylloxera ravaged the French wine farmers in the early 1900s, Joseph Leflaive managed to turn the difficult times into something positive and bought parcels and vineyards from smaller farmers who had to give up. It was during this period parcels from which some of Leflaive's greatest wines today come from - including Chevalier-Montrachet.

Today there are both more expensive white wines and also white wines with higher scores than Leflaive Chevalier-Montrachet, for example from Coche-Dury, Domaine Ramonet and Domaine Coffinet-Duvernay. Nevertheless, Domaine Leflaive is probably the best-known white wine producer and a massive white wine brand has been developed which is not only the biggest in Burgundy but in the world as well - a domaine that will be extremely interesting to follow in the future.

White Burgundy: Limited Production – The same goes for Leflaive

White Burgundy is and always has been the highest standard when it comes to the best Chardonnay. Wine lovers all over the world are looking in this direction when the desire turns towards the characteristic buttery flavor range and oak notes that characterize the wines of the region. Similarly, interest in white Burgundy wines seems to be increasing, which has also increased demand accordingly - and thus price rises.

Although demand for red Burgundy is significantly higher than that of white, investment in white Burgundy is nevertheless very interesting. This is because while interest and demand are rising for the best white Burgundy wines, production is still extremely limited compared to the production of red. When talking about the best Burgundy wines, the talk is implicit mentioning the wines of Côte de Beaune and Côte de Nuits in Burgundy. Together, these two regions produce around 2 million. bottles of Grand Cru wine per vintage* of which only about 400,000 bottles are white Grand Cru. This gives an 80-20 ratio between the greatest red and white wines in Burgundy, which together with a growing interest in white wine makes investment in this increasingly attractive.

Domaine Leflaive produces several different regional and municipal wines, as well as five different Premier Cru wines. Of course, the greatest of the house's wines must be found among the four Grand Cru wines, where this investment tip focuses exclusively on Chevalier-Montrachet. As with all the best white Burgundy, the quantities here are sparse and are limited to just 8,000-10,000 bottles a year. A quantity that, seen in light of Domaine Leflaive's big brand and Chevalier-Montrachet status as one of the house's greatest wines, makes this white wine an interesting investment asset.

*Total French wine production: 7-8 billion bottles a year.

The Grand Cru vineyard of Chevalier-Montrachet The Grand Cru vineyard of Chevalier-Montrachet

Stable High Quality

The fact that Domaine Leflaive wine is sought after by wine lovers all over the world is not a surprise when you look at the quality of the house’s wine. Focusing on the Grand Cru wine from Chevalier-Montrachet for the past 10 years, the quality is consistently high:

WA: Wine Advocate BH: Burghound, VI: Vinous

Nevertheless, Wine Advocate, Burghound and Vinous, who have all tasted the 2008-2017 vintages of Chevalier-Montrachet, consider that the 2014 and 2017 vintage stand out as top vintages with average scores of respectively 96.67 and 96.33.

White Burgundy was badly affected by premature oxidation, or in short “premox”, in the mid-'00s, which could turn opening an expensive bottle of white Burgundy into a lottery. However, the problem is under control and today, the risk of premox in trading vintages after the 2008 vintage is minimized. However, high quality wine was still produced during this period, if only it "survived". The same goes for Leflaive's Chevalier-Montrachet, but the 2017 vintage is only surpassed by the 2014 vintage and has only received similarly high points once before; In other words, the 2017 vintage is one of the absolute best Leflaive Chevalier-Montrachet produced over the past 20 years - only marginally surpassed by vintage 2014 and not in real competition with the 2005 vintage due to the risk of premox in that decade.

+ 30% Average Annual Return

Despite problems with the so-called premox, investing in Domaine Leflaive Chevalier-Montrachet has yielded fine returns for investors. Especially when looking at a five-year perspective, the wines have produced great returns, despite this period being dominated by wines from the troubled period:

Period1 Year2 Years*5 Years**
Average Return6,41%17,67%70,67%
Average Annual Return6,41%8,47%30,64%
Based on trade data for the 2001-2017 vintages of Domaine Leflaive Chevalier-Montrachet from Liv-ex. * vintages that have been on the market for at least two years (2001-2015) **vintages that have been on the market for at least five years (2001-2012)

The fact that the older vintages have delivered a higher return over a long period of time is not a special sight, but what is interesting here is that these price increases have happened in the face of a period of uncertainty and risk of wines damaged by oxidation. In addition, over the past five years there has been an increased interest in the best white Burgundy wines, which together with higher quality and increased security regarding premox will create a good starting point for price increases. This makes it interesting to follow the price development when the data includes a higher concentration of wines from after the 2008 vintage as well as the top vintages of 2014 and 2017.

Investment in white Grand Cru 2017 Domaine Leflaive Chevalier-Montrachet

Vintage and Prestige Discount

Vintage discount is a term used when a wine from a given vintage is cheaper than a wine from a top vintage. Great vintages and top vintages are characterized by particularly good conditions for the grapes and together with a higher quality, the storage potential and prestige of the wine from these vines increase as well. It is not unusual for a wine from a top vintage to be traded at 10-50% higher prices than a similar wine from a weaker vintage. However, weaker vintages are often referred to as the more positive-sounding “value vintage”.

The same term could also be used for the "discount" that may lie in buying a producer's second greatest wine rather than the largest. You can call it a prestige discount for the sake of understanding. For example, it can be two different wines, from the same producer of comparable quality, where one due to the name of the vineyard it originates from, can be significantly more prestigious and thus significantly more expensive.

Two Bargains in One

In recent years, the best wines from Burgundy have been the subject of large price increases, with the greatest and most expensive wines being subjects largest increases - especially in 2018. As a derived effect of this, another trend has emerged: While the most expensive wines only became more expensive, the second most expensive wines suddenly became more interesting to many wine lovers. For example, looking at the 2016 vintage you can get approx. four bottles of DRC’s La Tâche for the same price as one bottle of DRC’s Romanée-Conti, which to many wine lovers after all looks like a really good deal.

The same is certainly true to many when looking at Domaine Leflaive's Chevalier-Montrachet versus the Domaine’s absolute top wine of Montrachet. While a 2017 Leflaive Montrachet* is trading for € 10,000-11.000 per bottle, the 2017 Leflaive Chevalier-Montrachet, which is neighboring Montrachet, is available for just € 750 per bottle. This means that wine lovers will be able to get up to 14 bottles of Chevalier-Montrachet over one bottle of Montrachet. For many, this will look like the better deal - or bargain # 1.

At the same time, the 2017 Leflaive Chevalier-Montrachet is more than 16% cheaper than the 2014 vintage although the average score of the two is separated by less than half a point! Here again it can be argued that the 2017 Leflaive Chevalier-Montrachet looks like a bargain, giving Chevalier-Montrachet two bargains in one.

The price of € 750 per bottle is among the lowest in the world at the moment in terms of whole boxes in perfect condition.

*However, this wine is only produced in approx. 800 bottles a year

Invest in Leflaive Chevalier-Montrachet The 2017 vintage is one of Leflaive's absolute best Chevalier-Montrachet for more than 20 years

Rare Wine Invest’s Opinion

White wine for investment is becoming more and more interesting and speaking of white Burgundy, Domaine Leflaive is essential.

Domaine Leflaive Chevalier-Montrachet has the same fundamental characteristics that apply to investment wines in general: They are simply from a well-known house, a great brand, of high quality and limited production and have historically delivered great returns of up to 30.6% in average annual returns over the past five years.

White Burgundy is also particularly interesting in an investment perspective, as the ratio of red to white Grand Cru is approx. 80/20. Given that red Grand Cru Burgundy is generally considered to be limited, extremely small quantities of white Burgundy is produced. Therefore, there is a great potential upside in the growing interest in the best white wine, as supply remains extremely limited.

In addition, the 2017 Chevalier-Montrachet from Domaine Leflaive looks like a bargain - both in terms of the price difference for the top vintage 2014, which is only marginally better than 2017, but also compared to the absolute top wines, like the house’s Montrachet, where value-for-money can prove to be a really good investment.

We recommend investing in white Burgundy and Domaine Leflaive is very obvious when it comes to this. The Chevalier-Montrachet fits into most portfolios and if you haven't invested in white Burgundy in the past, this is an obvious case.

Invest in Domaine Leflaive Chevalier-Montrachet - Highly limited Quantities and Among the Lowest Prices in the World

2017Chevalier-Montrachet750OWC1224€ 750
2017Chevalier-Montrachet750OWC618€ 750
*All prices are in EUR ex. customs duty, tax and VAT for delivery to a bonded warehouse. Prices including customs duty, tax and VAT can be sent on request. The wines are only sold in whole cases unless otherwise specified and the price is per bottle. Minimum order size € 2,500. Assumes a total minimum investment of € 10,000. Prices may have changed since release of this article.

Do you want to learn more?

Read more about why investing in wine is the perfect investment and get wiser on what mechanisms make investing in wine especially attractive right here: Why invest in wine?

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