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Allegrini 2018
AGRICULTURE AND ECONOMICS

Wine and investments: the pandemic has not halted interest in the top territories, like Montalcino

The land of Brunello is bustling, where the value of vineyards is stable. While some companies have changed hands, vineyards are beginning to move even higher

The pandemic has undoubtedly complicated things on the wine market. However, it appears that it has not even scratched the value of vineyards in the topmost Italian wine regions. They instead continue to be the target of Italian and foreign investments, wine producers as well as entrepreneurs from other sectors and, now more and more often, investment funds of insurance and finance groups. The classic territories are and continue to be Barolo, Bolgheri and Montalcino, whose Brunello wine has been one of the brightest stars in the wine world for years. Montalcino is in tip-top shape, despite the pandemic, which is also the merit of two consecutive vintages on the market, universally considered exceptional quality: 2015 and 2016. Further, thanks to the success of its wines all over the world, their value, as well as the beauty and genuine character of the territory, where wine is linked to the history, culture and an agricultural and food and wine biodiversity in which more and more companies are investing, not only are the vineyards stable but they are growing in value, and are constantly at the center of animated market negotiations.
WineNews has learned that just in the last few weeks three to four changes of ownership have taken place. One was the Scopone Estate, owned by the Genazzani family, a total of 11 hectares of land, 3.5 of which are vineyards in Brunello di Montalcino. It seems the Estate would have been acquired by an entrepreneur from Emilia Romagna that operates in the sector of distribution of food and wine products in airports. Another one was the Paradisone - Colle degli Angeli, a total of 3 hectares of land, of which 2 are vineyards and 0.8 hectares of Brunello di Montalcino, belonging to the Locati family, acquired by Azienda Agricola and Vitivinicola Novello, owned by Venetian entrepreneurs in the construction field (the real estate company Diamante Group, led by Massimo Magaletta, managed the sale, ed.). These two small transactions could be followed in a few days by two more, as settlements have been arranged, confirming the dynamism of sales in Montalcino and proving, according to WineNews, that investors have a very strong interest to buy in the area, attracted by its prestige and its profitability. At the same time, though, there are not a few wineries that would be eagerly waiting for the right offer to change ownership.
It is a "win-win" situation, as they say, because those buying are sure of investing in a territory of undoubted value, Montalcino, whose wines seem impervious to market crises. Plus, its land values are not only stable, they are definitely growing (one hectare of Brunello vineyards today is going for figures between 750.000 euros and 1 million euros). Those selling, instead, do so at market values that have definitely grown over the years (in half a century, according to WineNews estimates, the revaluation of Brunello vineyards was + 4.500%, meaning the estimated value of the Brunello vineyards, totaling 2.100 hectares, totals over 2 billion euros, according to the estimates of the Brunello di Montalcino Consortium of 2020). Since 1997, there have always been the same number of hectares, and they will remain the same because the Brunello Vineyard Register has been closed and there is no intention of reopening it.
Following this reasoning, companies have created added value today, which, to the classic quality pyramid, conceived at the end of the nineteenth century by the enlightened bourgeoisie, represented and led by the Biondi Santi family, who literally invented Brunello di Montalcino. They put Riserva at the top and Red at the base, adding a further element of distinction: the “vineyard”, or “company cru”, if you wish. This independent space, totally and clearly "made in Sangiovese", has been very well established in the last 10 years, but was actually created much earlier, accepted by all the winemakers according to different and, in a certain sense, personal philosophies, impossible to standardize (beyond the rules provided for by law) and be bound to classifications.
The strategy has obviously paid off, considering land values, even though investing in a hectare of Brunello is still more "convenient" than investing in other big denominations in France. For instance, Bordeaux, where according to the Agrestic agency the value of hectares fluctuates, on average, between 1.6 million euros in Meraux and Saint-Julian and 2.8 million in Papilla (marking peaks of 3.5 million euros per hectare), 2 million in Petrol, or Burgundy, where the average price for one hectare of Grand Cru on the Côte d'Or is 6.7 million euros (starting from 2.9, reaching stratospheric peaks of 16.2 million euros). These figures, especially in Burgundy, are perhaps unattainable; although Brunello di Montalcino is no less prestigious compared to the great French reds, suggest that values in the Tuscan territory (but also in Barolo and Bolgheri) are still underestimated compared to their real and future potential.
As the prices of the vineyards rise, there is a parallel and non-random growth of bottles, certified, month after month, by the prices Brunello di Montalcino in international auctions reaches. The old vintages are, however, the prerogative of Biondi Santi and Case Basse Soldera, while the highest prices are for wines of relatively recent vintages and very few prestigious wineries. Moreover, the Liv-ex index has also recently set the benchmark of the secondary market for fine wines, a segment in which wines that can compete with the great names of Burgundy, Bordeaux, Champagne and Barolo are included in a very small group. These are, in addition to Biondi Santi and Case Basse Soldera, at the auctions, also Casanova di Neri, Pieve Santa Restituta, Poggio di Sotto (Collemassari), Cerbaiola di Salvioni, Luce (Frescobaldi), Fuligni and Altesino.
Values are bound to rise again, and also, physically, so are the vineyards. They could, in the next few years, perhaps to counteract universal global warming, "move", at least partially, though only a few companies, to the base of the pyramid-shaped hill in the center of Tuscany, a little higher than where they are now. Obviously, they will be moving only within the municipal area (the expansion to San Giovanni d’Asso does not fall within the Brunello specification, ed.), as the specification provides, and according to the rules on planting authorizations. Several companies, according to WineNews rumors, still have planting rights in their portfolios that must be converted by planting vineyards within 2023, or they will be permanently lost. Obviously, new hectares cannot be planted and registered in Brunello, because, as we mentioned above, the register has been closed.
On the other hand, some wineries would be planting vineyards that have all the characteristics, starting from 100% Sangiovese, obviously at higher altitudes than the productive vineyards they own, to be able to claim them today, as TGI Toscana. Then, when the new vineyards will have the requisites to be registered in Brunello (100% Sangiovese, and at least in the third year of vegetation to claim the grapes for production in the order of 30% of the ceiling provided for by the specification, rising to 70% in the fourth year and 100% from the fifth year onwards), the prospect is for the company to move the right to plant, exchanging the vineyard claimed in TGI with the one claimed in Brunello and vice versa. The legislation has clearly and logically foreseen this mechanism, which therefore allows the company, after taking all the proper steps, to maintain the balance of its hectares claimed for Brunello di Montalcino unchanged. At the same time, it will find that its vineyards are suited to a higher altitude and theoretically, will have better medium-long term prospects given climate warming that is generally felt especially in the lower and less windy areas of the Montalcino “pyramid”. It is a slow transformation, and not a revolution, however, which interests only a few hectares of vineyard. However, it requires significant investments, considering that quotes for 1 hectare of bare land to be planted in Montalcino, are starting from around 100.000 euros.
It is an investment in perspective, though, like that of many companies in the area, as well as the Consortium, in excellent agricultural biodiversity. An example is the case history of the "Excellence of Montalcino" brand, registered by the Territorial Foundation of Brunello, a socio-cultural emanation of the Brunello Consortium, created to enhance excellent products ranging from white truffles to olive oil, honey, saffron, cheese, plums, pasta, and spelt. And, it will accompany the process not only of companies specializing in this production, but also of the many that believe in an increasingly integrated path between agriculture and food and wine chains, to invest in other productions alongside wine. Therefore, together, they will become stronger on the markets, thanks to the appeal that they feed on reciprocally, as well as to simpler communication and distribution synergies. Plus, at the same time, strengthening the attractiveness of the territory from the tourism point of view (in the meantime, the "Tempio del Brunello" was also founded, an interactive museum signed by Opera Laboratori, leader in Italy in museum services, in the heart of the historic center of Montalcino. It is a perfect blend of art in one of the major historic areas in Tuscany, and the new, applied video technologies, with virtual and real tastings and breathtaking landscape panoramas). As many studies have shown, quality food and wine is one of the topmost reasons that tourists from Italy and around the world choose this destination. As a matter of fact, even in this summer 2021, still complicated due to Covid-19, tourists have stormed Montalcino, the city of Brunello.

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