Market Analysis - Italy - 13. July 2023

Barolo Analysis: 2019 And The Subsequent Vintages Mark A New Era For Wine Investors

2019 represents a "stellar" Barolo vintage, while a paradigm shift may make investing in Barolo more lucrative than ever. Also, 2020 and 2021 show lucrative potential.

The great wines from Barolo are facing a truly exciting future, whether you are a wine lover, investor, or both. However, in order to understand what is happening, what is changing, and why it can become commercially thrilling, it is necessary to grasp a bit of the background of Barolo to understand where it is heading.

So, What About Barolo...

Barolo is the only one among the major European wine regions that was created rather than developed over time. It wasn't until the mid-18th century that the first wines bottled under the name "Barolo" began to emerge. The architect behind this was a significant man named Cavour. He advocated for the exclusive cultivation of grapevines and using other French techniques he had observed during his travels. The result was what we now know as traditional Barolo. If you want to learn more about Barolo in general, read our full article about Barolo - the wine of kings, the king of wine. 

However, since the early 1990s, a sort of polarization has emerged in the region. On one hand, some appreciate the processes that followed Cavour's methods and are considered traditional. On the other hand, some support modern techniques, such as aging in barrique barrels and focusing on more fruitiness.

The only constant in Barolo is that it is exclusively produced from the Nebbiolo grape. This thin-skinned grape is early to bud and late to ripen. It produces wines with high acidity and, most importantly, tannins. It is primarily this component that has dictated Barolo's traditional production method. Also, read our full article about The Traditionalists vs. Modernists to learn about the so-called "Barolo War".

Barolo is a small region with just under 2,000 hectares of vineyards and approximately 1,000 growers. In comparison, the entire Burgundy region has about 29,500 hectares of vineyards. Despite its small size, Barolo is gaining more ground on the international stage of exclusive wines. The limited production scale, combined with a possible paradigm shift, makes Barolo more attractive than ever when viewed from the perspective of investment.

Rinaldi Barolo

What Characterizes A Good Barolo?

This is actually a good question and also somewhat of a matter of personal preference.

With the traditional approach, the Nebbiolo grape requires a high level of extraction to achieve the required color and body. However, this necessitates a longer aging period in large casks to soften the extremely harsh tannins.

The modernists, who challenged this mantra, argue that too much tannin was extracted and that a shorter but faster extraction (usually with the feared rotofermenter, which is blasphemy for traditionalists) results in a more accessible wine. They also claim that aging in small barrels reduces the impact of oxidation while replacing some of the missing tannin structure. This movement was largely driven by a shift in taste towards more accessible wine styles that are ready to drink earlier.

But as it goes, you can't have it both ways. To put it bluntly, traditional production often results in wines that remain too tannic, where the flavors and character from the fruit fade before the tannins do. Conversely, the modernists' faster extraction can remove some of the Nebbiolo grape's unique and extraordinary aromas, which are famously described as “tar and roses”, while excessive use of new oak can also overshadow them.

So, what is best is a matter of personal taste. However, what is interesting for the wine investor is that there may be a paradigm shift underway that could have significant commercial implications.

But first, let's talk about the sublime 2019 vintage.

Barolo Provides Insights For The Modern Consumer

Barolo has more in common with the prestigious Burgundies and Bordeaux than just the initials. As it is known from France, the vineyards in Barolo have since 2010 been mapped and classified - just as it is known from Burgundy, where each vineyard is recognized for its unique expression.

This leads to a natural increase in interest in the individual winery, likely followed by rising prices. Origin is the keyword for wine lovers from all over the world. They prefer to pick up the phone and zoom in on the individual vine to get a sense of the place. The overall experience of the soil, the slopes, and the rustle of history helps to create interest in a wine region.

In Barolo, mapping the vineyards has created the basis for increased interest, as the area is relatively small but with significant nuances in the individual sub-areas. It may be a few years before the majority can compare Monforte and Serralunga d'Alba, just as they can compare Chambolle-Musigny and Gevrey-Chambertin. When it comes to wine, time is an important concept, so the change you see in these years will spread for many years into the future and will only increase interest in the wines of Barolo.

In addition, you can now divide the origin of the grapes into three levels. This is basically not to be understood as a qualitative ranking but only as an indication of the origin;

Comune - one of the 11 communes can be indicated on the label.
MGA or Cru - one of the 170 defined MGA zones can be indicated on the label.
Vigna - the vineyard's name can be mentioned, but only if it stands with an MGA.

Alessandro Masnaghetti is the man behind mapping the area, and his website goes into depth with details about the vineyards in the area.

2019: A Sublime Vintage And Perhaps The Beginning Of A New Era?

Antonio Galloni from Vinous, who rightfully can be regarded as the foremost specialist in Italian wine among the most prominent wine critics, has examined the 2019 vintage of Barolo, and his enthusiasm is evident.

According to Galloni, Barolo is back on track after a more problematic 2018 vintage, with a "stellar" 2019 vintage that he believes could represent the beginning of a new cycle of strong and excellent vintages.

Galloni has been in dialogue with several leading producers in the area, all of whom emphasize that the parameters for what constitutes a warm vintage have changed in recent years. Although 2019 was warm in a historical perspective, it was cooler than the preceding vintages. Along with the absence of "shock weather" and the opportunity for optimal late harvest, the 2019 vintage ranks alongside benchmark vintages like 2016, 2005, and 1999, which, combined with a new paradigm, makes 2019 more attractive than ever.

If you want to delve deeply into the subject, here are Galloni's notes on the 2019 vintage.

Otherwise, it is recommended to proceed to the section on what this means for Barolo investment.

  1. A Long Growing Season

A long growing season, defined as the period from bud break to harvest, is essential for achieving full physiological ripening of the fruit, skins and seeds. Since Nebbiolo is already a tannic grape, less than full physiological ripeness is heavily penalizing. The growing season was within normal parameters, while harvest was on the later side, and good physiological ripeness was achieved (for various reasons), so the first condition was met.

  1. Diurnal Shifts

The final phase of ripening must be accompanied by diurnal shifts, which are the swings in temperature from warm days to cool nights. Diurnal shifts create aromatic complexity, full flavor development and color. Evening temperatures cooled down at the end of the season to balance the daytime high and stayed cool during the critical harvest period. Thus, the second condition was met.

  1. The Absence of Shock Weather Events

Frost and hail can severely and irreparably damage the crop. Similarly, periods of uninterrupted elevated heat can block maturation. Several weeks of rain in spring made vineyard work challenging but appear to have been less severe than in 2018. Hail was an issue in several places in and around Alba, Grinzane Cavour, Serralunga and La Morra. Therefore, the third condition was only partially met.

  1. Stable Weather During the Last Month

The last month of the growing season makes the quality of the vintage. Stable weather without prolonged rain episodes is essential for harvesting a healthy crop. The end of the growing season saw warm days alternating with cool nights. There was some rain at the end of October, but most of the crop was in by then. The fourth condition was mostly met.

  1. A Late Harvest

Harvest must take place in October (possibly late September in some areas), with the final phase of ripening occurring during the shorter days of late September and October, as opposed to the longer, hotter days of August. By present-day standards, harvest was on the later side, so the fifth condition was met.

Monfortino Barolo

What Does This Mean For Barolo Investment?

Galloni argues that the 2019 Barolo vintage is likely to bring about a paradigm shift that will have far-reaching consequences in the future. What is being considered here is that producers and vineyards/terroir seem to have adapted to a "new normal" regarding external factors such as extreme heat, which also supports the aforementioned modern style that is gaining more and more popularity in the wine world.

Whether wine lovers swear by the classic or modern style is one thing, but from a commercial standpoint, a more modern Barolo will result in increased sales and consumption. Undoubtedly, a more accessible style and good wines that become drinkable earlier than traditional Barolo will motivate increased consumption and attract far more wine lovers than just the hardcore Barolo enthusiasts.

And this is not mere speculation, but rather a causal explanation of what we have already witnessed the beginning of. According to the British wine exchange Liv-ex, wines from Piedmont have historically been the best-performing in terms of price development, with wines like Monfortino Barolo and Rinaldi Barolo, for example. However, the proportion of Piedmont wines traded on Liv-ex compared to Tuscan wines has been quite moderate, partly due to much smaller quantities being produced. With a combination of high quality, significant volume, and a strong brand, the Super Tuscans have been considered the driving force behind the Italian category in the secondary market.

But this pattern is changing. According to Liv-ex, Piedmont's share (Barolo and Barbaresco) of the total turnover of Italian wines measured by value increased from 11.4% in 2015 to 43.4% in spring 2021*, while the number of unique Piedmont wines traded has increased by 653% to over 700 wines (in 2020) in just five years. Barolo is the major driver here and continues to dominate the trade, still measured by value.

The trading activity reflects an increased interest in wines from the region, which is often compared to Burgundy's Cotes de Nuits (home to Romanée-Conti, Chambertin, Musigny, etc.) due to their similar size, which also allows for parallels to be drawn in terms of small productions.

When combined with strong vintages and the new paradigm of a more accessible wine style and shorter aging time, Barolo is facing an extremely exciting future that wine investors should be aware of.

*Newer data not available

Not Only 2019! Also, The 2020 & 2021 Vintages Are Outstanding

The 2019 Barolos have already been released, although some wines may not be available until autumn. The 2020s are scheduled for release in 2024, and we can expect the 2021 Barolos to hit the market in 2025.

The 2019 vintage stands out due to its highly favorable weather conditions as mentioned above. Notably, the weather patterns and characteristics of 2019 and 2021 share similarities, with both vintages experiencing exceptional conditions, leading to peaks of excellence.

In contrast, 2020 witnessed a warm and vegetative cycle that commenced slightly earlier than usual. Despite the warmth, the acidity levels remained commendable, and the accumulation of anthocyanins and polyphenols benefited from the ideal weather conditions in September, which featured fresher and cooler nights.

When examining the characters of these vintages, 2020 reveals itself to be supple and dense, displaying pleasing complexity and approachability.

In terms of the weather conditions in 2021, a cold and snowy winter, along with ample water supply during winter and spring, set the stage for a robust vegetative cycle that started later than the previous year, 2020. The subsequent summer was characterized by sustained warmth without extremely high temperatures, complemented by cool nights and isolated water storms.

The exceptional quality of the 2021 vintage is evident through its remarkable finesse, elegance, and impressive structure. With its good complexity and extraordinary aging potential, 2021 is even expected to surpass the highly regarded 2019 vintage.

RareWine Invest's Opinion

The 2019 vintage in Barolo is sublime - there is no question about it. What's even more exciting is that the trend seems to be shifting towards a style of wines that appeals to a much broader range of wine drinkers.

If you've tasted a young, classic Barolo, you'll know that it's not for everyone and not something you drink a lot of. On the other hand, if/when these wines become more accessible and don't necessarily require several decades in the cellar, it will drive demand and consumption.

The good news is that we are currently experiencing a fabulous 2019 vintage and are likely looking at a future with some excellent vintages. However, the enthusiasm for weather and warmth in this era is not without its limits, as producers are increasingly concerned about what climate change will bring in the next five to ten years, which could make today's wines even more valuable.

One thing is for sure: We know what is available today, and it is of exceptionally high quality and will undoubtedly become some of the future's wine treasures - provided they can be obtained.

Founder of RareWine Group Rasmus Nielsen has visited more producers in Piedmont than most people during the past few years, and here is his assessment of the current state of Barolo.

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