Greg Sherwood MW: The allure of secondary market stock
By Greg Sherwood, 12 March 2021
I was recently asked, “What do I think is the most valuable quality of a fine wine buyer? A great palate? Understanding the global fine wine market? Knowing the top wine critics and journalists that rate wines? Having access to the top wine producers?” After some contemplation, my answer was clear. The most important part of being a fine wine merchant is being able to gauge the market and predict the next “big thing.” And by that, I mean it’s all well and good knowing your product, knowing what you like, and even knowing what your best clients like. But if I had to be totally honest, the greatest asset a fine wine merchant could boast these days is having a fabulously accurate crystal ball that could predict what’s going to become popular and successful. We all want to buy into the hottest property before they are too hot to handle, we all want to identify the top guns before it’s impossible to even contemplate an allocation. Basically, by the time everybody starts to chase a certain wine or winery unless you have already secured a channel and are well established as a recognised supplier/buyer, I’d say you have probably missed the boat completely.
Only probably two or so years ago, I remember approaching a prominent UK importer of fine Burgundy wines, who I had actively been courting and buying a selection of good day-to-day wines from in volume, and asking if I could secure a small but modest allocation of Domaine Coche-Dury for some of my private retail clients. As a gesture of goodwill, I was offered a small selection of Coche-Dury Bourgogne Aligote, Bourgogne Chardonnay and a handful of bottles of village Meursault at release prices… so roughly £35, £45 and £55 per bottle ex-vat at cost to the trade. I was thrilled to say the least. However, between me actually ordering the wine and receiving the wines, the market started to go into convulsions and by the time I had actually received the small amount of stock into my warehouse at these prices, the market had completely turned and prices had risen astronomically, beyond belief. It seems I had simply beaten the clock on the obsessive nature of the market and secured myself a small but veritable gold mine of collectable bottles. Looking back on the time scale of events, I really see that I had struck gold just before the gold rush was being shouted from the hill tops by crazed brokers.
But of course, as we know, you aren’t going to pay off your mortgage, so to speak, with a handful or nuggets. So in the end, I just simply kept most of these bottles for myself to drink with a handful of deserving clients in more appropriate and opportune circumstances. Yes, the market can really turn that quickly! Some might read this and think it sounds a bit ridiculous, but actually, when you find yourself on the absolute precipice of some really serious seismic wine market action, it’s really hard to know how to react appropriately. This was merely one example that comes to mind. I can name several others that occurred roughly over the same time period. One of these was the last allocation I received of Thierry Allemande as a first release, direct allocation, for some of his incredible Cornas Syrah reds. Admittedly, it was, again, a small allocation that landed into my bonded warehouse account precisely as another fine wine earthquake was occurring. Needless to say, this too was the last allocation I received of these wines at miniscule prices compared to the subsequent tsunami market prices that where to follow. For the informed and interested, this was the 2014 vintage. I have been unable to secure primary allocations of these wines ever since. The other example I can proffer is of course my last (affordable) allocation of Clos Rougeard, the superb 2010s, where I can remember offering multiple bottles of Les Poyeux and Le Bourg to my private clients for approximately £65 and £85 per bottle. In today’s money, you can easily splash £330 for Les Poyeux and £480 for Le Bourg.
Certainly, much has recently been written on the winemag.co.za pages about both the pricing of premium South African fine wines as well as the channels of sale of premium South African fine wines. In recent articles by Christian Eedes (“The murky world of wine pricing“) and Tim James (“High wine prices at retail and auction“), reference is made to Handford Wines and the pricing of back vintage stock of admittedly some of South Africa’s most iconic and sought-after wines. So it’s probably only useful that I try and cast a little more light on the current state of play in the UK fine wine market with regards to back vintage wines from producers such as Eben Sadie, Mullineux Family Wines, Kanonkop, MR de Compostella and others.
Firstly, let’s just get this straight. I fully 100% understand the home market dynamic with regards to the allocation and sale of these type of wines. It has long been said, by myself included, that these high demand wines sit in the enviable category of “use it or lose it allocations.” Quite simply, what the local home market cannot or will not absorb, there is a thirsty and attentive private client base across Europe just waiting to absorb any additional stocks producers see fit to “reallocate” to other global markets. No hard feelings I’m sure as this is now well established as a common supply and demand scenario where price parity at cellar door correctly dictates that if local consumers can’t or won’t buy into certain high demand brands, well then, tough luck a canny operator pays a visit and snaffles this stock for an admittedly more affluent fine wine consumer market in Europe or America (or now possibly Asia, too). The even worse news for the pandemic ravaged South African fine wine consumer is that while the UK, my home market, has always been very well positioned to absorb ever greater amounts of South Africa’s greatest commodity fine wines, the “dodgy” markets within massive producing nations like France, Spain and Italy are increasingly growing fond of the irresistible treats from South Africa’s top producers. Baring in mind the normally tiny production of most of these wines, any additional uptake in demand can spell massive disappointment for home market consumers.
So new releases are all well and good. You make a great wine, you allocate it (sometimes as incredibly thinly and widely as possible), and hey presto, Bobs your uncle. Cash in the bank. Not just Randelas… hard, cold foreign currency! But we digress. As a merchant as intent on serving South Africa’s top producers as well as trying to earn an honest crust, the market demand in the UK and EU for South Africa’s top wines has simply outstripped supply. As someone who has enjoyed an almost allocation monopoly on many of South Africa’s top fine wines for one or two decades, I can attest to the demanding situation I find myself in with regards to trying to secure and supply enough of the very top fine wine brands to my customers. It is simply not possible anymore. The obvious solution of course becomes the secondary market.
Increasingly over the past two years, the only way Handford Wines as been able to “retail” bottles from South Africa’s top producers has been to either withhold release allocations purely for retail by the bottle, or simply, try and buy back secondary market stock. Now it will come as a pleasant surprise that almost all of the private client cellars we have purchased in the last two to three years have included increasing amounts of high demand South African fine wines. With little to no back vintage stock available from importers and agents, near to none on the UK auction market, private cellars and the secondary market remains the only secure source of stock.
To recall a little ditty from my good mate Jamie Goode a few years ago, he said, to perhaps paraphrase him a little… “There is no real demand for secondary market South African fine wine in the UK. To develop a secondary market, you need to have not only demand but also fluid supply, and currently the demand is simply not there.” Well, I am sure he will be pleased to hear that this is very much no longer the case. Demand is alive and kicking and anyone who has purchased well stored stocks of South Africa’s top producers can now start to expect a far more easy route to disposing of this stock. Fortune favours the brave, Jamie.
- Greg Sherwood was born in Pretoria, South Africa, and as the son of a career diplomat, spent his first 21 years travelling the globe with his parents. With a Business Management and Marketing degree from Webster University, St. Louis, Missouri, USA, Sherwood began his working career as a commodity trader. In 2000, he decided to make more of a long-held interest in wine taking a position at Handford Wines in South Kensington, London and is today Senior Wine Buyer. He became a Master of Wine in 2007.
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