Personal Finance

Lock, stock and barrel

PRAVEEN KRISHNAMURTHY | Updated on March 16, 2014 Published on March 16, 2014

Track the rack Top merchants are able to trace the source of all cases stored in warehouses. - DARIO LO PRESTI/SHUTTERSTOCK.COM

Storage and provenance add value to a fine wine

Imagine you are hosting a private dinner at your house and decide to open a bottle of 1996 Chateau Latour from your cellar for your guests. The moment you open it you realise something isn’t right. It hardly tastes like the top-notch wine it is meant to be.

Setting aside the initial embarrassment that you may face, the next thing you do is to remember when and how you came to acquire this bottle. And you wonder if you could have checked for its authenticity then.

Veblen goods - high quality, exclusive products - have always been susceptible to fakes, be it watches, pens, designer handbags or perfumes. Fine wine is no different.

That is why it is important to know the provenance - the chronology of ownership - for consumable luxuries such as wine and champagne.

The supply chain

Let us first understand how a bottle of wine ultimately reaches a buyer. Consumers till date have never bought Grand Cru Classe wines — premier wines — directly from the chateaus. Neither have the chateaus sold the wines directly to them.

There is a fixed route that fine wines have followed for centuries in Bordeaux.

The chateaus first sell their wines to wine merchants or wholesalers.

Each merchant is allocated a finite number of cases. These cases are then sold to the end customer — who can either be a retailer or a private collector. Hence, a cursory look at a bottle of wine can rarely tell you the path it has traversed.

A detailed history of every change in ownership and location is the only way a buyer can establish its authenticity.

Each member in the supply chain - right from the chateau to the final buyer - is vital. The stock of wine is moved and stored in different places. To determine the provenance, every link in the chain should be known. Storage of wine at every stage determines its quality.

It is generally recommended that wine be stored between 12°c and 14°c with humidity of around 72 per cent. So through the entire supply chain, wines must be stored only in such conditions. This includes transportation as well.

Aymeric De Gironde, Directeur General, Cos D’estournel, a second growth wine estate, says provenance is indeed a key issue in the world of Grand Cru Classé wines and the entities involved in the supply chain are aware of the importance of proper storage.

Cos D’estournel has put stringent checks in place. It only accepts pick-up of wines by temperature-controlled trucks and only selects wine merchants who have proven temperature-controlled cellars.

Gironde notes that over the past five years, all top wine merchants have been investing in state-of-the-art warehouses with temperature and humidity controls.

They are, in turn, selecting importers who have a well-equipped supply chain.

Tackling counterfeits

Despite all efforts to curtail counterfeiting, fake wines still find their way into the market.

The chateaus have thus put in place various measures to battle counterfeits.

Most of the top chateaus use cutting-edge technology to prevent counterfeiting. Engraving bottles using laser technology to embed a symbol or name is one such method. Watermarks printed on the final label or use of invisible markers akin to those used in currency notes is another.

Strong network

Proof tags - a physical lock on the bottle - use the bubble tag technology. Radio Frequency Identification (RFID), with a laser-etched bar code, is yet another method used by the chateaus. Argonne caps contain a small electrical circuit, that triggers an electric pulse and warns you that someone has tampered with the bottle. Different chateaus use different methods. And not all chateaus disclose what they do for security reasons.

One of the main pain points that consumers and merchants alike have pointed out is that there isn’t a uniform method used to ensure authenticity. However, many chateaus do offer a verification service.

Knowing one’s source of purchase and the relationship with merchants is also critical to avoid wine frauds.

Top merchants forego a sale if they are uncertain about the source of the wine they are buying, as they value their reputation over sales.

Merchants send bottles back to producers for verification too. Most top merchants are able to track the source of all cases stored in their warehouses.

The cost involved for such due diligence is high. And thus there may be two different pricing structures for wines — one for wines with good provenance and another with more risk.

Decanter magazine recently reported that at an auction at Sotheby’s Hong Kong, wines with a provenance guarantee saw a 38 per cent increase in prices compared to those without a guarantee.

Hence, one must be ready to pay a little more for authentic wines. The risk in buying a cheaper wine is that it could be damaged.

Gironde from Cos D’estournel notes that it is important for chateaus to know their partners well to ensure that the wine travels in the best of conditions. Each entity in the supply chain should demand the same level and quality of service from its retailer or distributor.

Storage too can make or break a wine. You may have a genuine bottle of 1959 Petrus, but if it has been stored in a hot garage, drinking it is unlikely to be a positive experience.

The writer is Associate Vice-President, Metis Family Office Services. The views are personal

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on March 16, 2014
This article is closed for comments.
Please Email the Editor