20% of Petrus sold: was it a good investment?

visuel

In what is the most expensive transaction per hectare on record, Colombian-American investor Alejandro Santo Domingo bought 20% of the legendary Bordeaux cru in a hush-hush deal last year.

Rumours have been flying around Bordeaux since the French magazine Revue des Vins de France announced that the Moueix family – owners of the iconic Pomerol cru – had sold 20% of their stakes. The deal reportedly took place a year ago, and while the estate has not confirmed the amount paid, it is reputed to have been €200 million, making it the most expensive vineyard sale in history.

The purchaser has been named as Alejandro Santo Domingo, a Colombian-American financier and philanthropist with a purported fortune of over 5 billion euros. He is married to the daughter of the Duke of Wellington, Lady Charlotte Wellesley and has ties to the Grimaldi family of Monaco. What’s more, as chairman of Grupo Empresarial Bavaria (Colombia’s leading brewery), the businessman also owns considerable shares in Budweiser brewing giant Anheuser-Busch InBev.

It has been suggested that the Moueix family went ahead with the deal in order to secure the estate’s long-term future. With a total of 11.5 hectares valued at over 1 billion euros, the Petrus estate produces only 30,000 bottles per year, of one red wine entirely from Merlot grapes.

Petrus has been awarded the perfect 100/100 Parker score no less than 9 times, for the legendary vintages of: 2010, 2009, 2000, 1990, 1989, 1961, 1947, 1929, 1921. It is one of the world’s rarest and most expensive wines, regularly coming top-of-the-list in our most prestigious auction sales, with, for instance, 3 bottles selling earlier this year for a total of €11,187.

Was this a good investment?

There are many calculations we could do to try to understand how the sum of the transaction was decided. Related to 100% of the domain, the sum of 1 billion euros represents 21 years of revenue from the en primeur sale of the 30,000 bottles produced in a good vintage, such as the 2010. We have taken inflation into account, but haven’t deducted production costs and taxes, of course. If we compare this to the iDealwine price estimate, 1 billion euros represents 14 years of sales on the whole production of this same 2010 vintage, as the estimate is currently at €2,919 VAT included, or €2,400 excluding fees. These sums could lead us to think that the en primeur prices, set by the Moueix family at attractive prices, could increase in years to come, in order to justify such a high valuation. But wouldn’t that mean changing something that is at the heart of the Petrus myth?

After all, all of the points of comparison, financial reference points, aren’t they supplanted by the legend surrounding the name? By comparing and calculating, we run the risk of damaging the legend of Pomerol. The real question might in fact be: what is the value of a myth?

iDealwine price estimates of Petrus in auction

Wine iDealwine  2013 price estimate Current iDealwine estimate Increase (%)
Petrus 2010 2 359 € 2857.75€ 21.1%
Petrus 2009 2 379 € 3060.08€ 28.6%
Petrus 2005 2 145 € 2656.41€ 23.8%
Petrus 2000 3 009 € 3688.5€ 22.6%
Petrus 1990 2 640 € 3 224 € 22%
Petrus 1982 2 971 € 3 162 € 6.4%

 

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