Burgundy Wine Investment Report

Burgundy Wine Investment Report ENG-4-112015

TABLE OF CONTENTS PRE-INTRO By Chairman Of Cult Wines Philip Gearing INTRODUCTION TO BURGUNDY Overview Of Burgundy Understanding Of Burgundy Wines Key Vintages BURGUNDY VS. BORDEAUX Production And Liquidity Scoring Peformance BURGUNDY AT AUCTION World s Top 50 Most Expensive Wines KEY PRODUCERS Domaine De La Romanée-Conti Domaine Leroy Henri Jayer Domaine Armand Rousseau Domaine Du Comte Liger-Belair Domaine Ponsot Domaine Dujac Domaine Jacques Frederic Mugnier Domaine Georges Roumier Domaine Des Lambrays Domaine Georges Noellat Domaine Jean Louis Trapet Domaine Coche Dury Domaine Leflaive RULES OF ENGAGEMENT Risk Returns Investment Term Exit Route How Do Clients Participate? 03 05 05 06 09 11 11 12 12 15 17 18 19 21 23 25 27 29 30 32 35 37 39 41 42 43 44 44 45 47 47 47

PRE-INTRO BY CHAIRMAN OF CULT WINES PHILIP GEARING In 1523 Erasmus reported discovering the Burgundy which became his lifelong favourite drink, noting it s bouquet was neither chilly nor fiery, but moist and innocuous. By all this, so gentle to the stomach that even greater quantities did no harm. Burgundy has often been associated with a special group among the fine wine community, those deep pocketed hedonists searching for their next Pinot Noir or Chardonnay fix courtesy of the region s finest magicians, it s no wonder that buying Burgundy was known as a rich man s sport! One of the reasons for this was the assertion that searching for fine Burgundy would generally yield one great bottle from every 10 purchased, leaving the buyer somewhat frustrated given the lack of consistency from the myriad of wines and producers that form part of this unique region. The current quality of wines now being produced has improved immeasurably across the length and breadth of the Cote d Or. Over the past decade-and-a-half we have seen far greater consistency despite some of the tough growing seasons the producers have faced, and for those vintages where conditions have been kind the results have been quite spectacular! Having said that, the buyer still faces the same minefield that has always plagued those keen to immerse themselves in the Burgundy adventure; it is without question the most complex region in the wine world when you try to get to grips with the structure of the communes, climats*, wines and producers. It is unlike no other and therefore presents the buyer with two simple options, either spend a few years educating yourself, analysing the expert opinions offered by the principal critics, or work with a team who can provide very specific guidance matched to your requirements, whether as an investor, collector or simply as a consumer. Burgundy has always been the focal point of the fine wine world for me. Driven by an insatiable desire to master the region I spent probably far too many hours researching the Cote d Or in an attempt to understand firstly the structure, then the producers and then finally the practical lessons of tasting. These tasting sessions were primarily held in the cellars of many of the region s wonderful producers for Thomas it was a chance to develop tasting skills that started at just nine years of age, clearly fine wine was in his blood from a tender age! Tom Gearing (L) Managing Director of Cult Wines and Phil Gearing (R) Chairman of Cult Wines, visiting Burgundy in 1997. Pre-Intro +44 (0)20 8332 9386 wineinvestment.com 3

PRE-INTRO Continued BY CHAIRMAN OF CULT WINES PHILIP GEARING It is very interesting to see how some of those estates have established a major reputation in the market over the past two decades. One of our favourites is Domaine Dujac in Morey St Denis, visited many time in the nineties and it is amusing to note that our cellar tasting would involve a very young Jeremy who is now co-owner with his father at this highly sought-after estate. It is very interesting to note in 2000 I listed for sale some Dujac wines at case prices which would now fail to acquire a single bottle, an example being the 1996 Clos St Denis at 495 per 12 compared with 5695 per case at today s best market price a very clear example of the demand placed worldwide on the best that Burgundy has to offer. For those investors looking for 5-10 year holds this is a market that can deliver some very attractive returns, but and it is a very big but knowing which wines and producers to focus on does require intimate knowledge of the region, the global status of these estates and their wines, and of course access to stock at the right price. I trust this report will prove interesting reading. As a summary introduction to Burgundy it attempts to guide you through the basics and bring to the fore some of the complexities of this region, some of its great producers and finally some of the fabulous wines which are simply quite unique every fine wine investor should consider Burgundy as essential to their portfolio. Philip Gearing, Chairman. * The Climats of Burgundy are listed as World Heritage sites and compose precisely delimited vineyard parcels on the slopes of the Côte de Nuits and the Côte de Beaune south of the city of Dijon. They differ from one another due to specific natural conditions (geology and exposure) as well as vine types, and have been shaped by human cultivation. Over time they came to be recognised by the wine they produce. This cultural landscape consists of two parts: the vineyards, and associated production units including villages and the town of Beaune, which together represent the commercial dimension of the production system. Pre-Intro +44 (0)20 8332 9386 wineinvestment.com 4

INTRODUCTION TO BURGUNDY Our own journey with Burgundy begun with our chairman Philip Gearing, who launched a specialist Burgundy merchant in the 90s. Today, the company still retains Philip s overriding passion for these wines; his extensive knowledge and expertise have been a key component in facilitating our client s successful involvement in this area of the wine market. Even moderately-informed Burgundophiles often have trouble with the region s complexities. Therefore, the purpose of this report will be to provide a comprehensive overview of Burgundy, focussing on the fundamentals of the market, its producers, key vintages and our proposed rules of engagement for the investor. OVERVIEW OF BURGUNDY By its very nature Burgundy fascinates. The region s idiosyncrasies and complexities have often left it isolated although the wines have continuously captivated an audience of the world s top collectors, offering great enjoyment and financial reward. Burgundy is simplicity and diversity intertwined. There are two major grape varieties used in Burgundy: Pinot Noir and Chardonnay. Producers here create the most beautiful, pure expressions of both without the need for blending that is such an integral feature of Bordeaux. In this way, terroir becomes of the utmost importance. Whilst Bordeaux has long been the target of major corporates and increasingly, estate-buying Asian millionaires, Burgundy retains more of the traditional family ownership structure, the bucolic romance of winemaking and this is a key part of its appeal. Allen Meadows, an American wine critic and publisher of the quarterly newsletter Burghound and its related website, Burghound.com, describes Burgundy as capable of creating wines of unmatched transparency of place that deliver wonderful elegance and refinement. And when the producer gets it just right, it produces a complex and emotional drinking experience that no other grape variety can match. Burgundy is a broad region in eastern France that boasts over 2,000 years of wine-making history. The region, now spanning up to 28,000 hectares, owes a lot to the work of Cistercian Monks in the 11th and 12th centuries, principally in the Côte d Or, who were responsible for identifying some of the finest vineyard plots still in existence today. Therefore, it comes as no surprise that Burgundy is referred to as the holy grail of the wine world. Burgundy Classifications: A short History The year 1855 is a date synonymous for Bordeaux s classification and relatively unknown is that in the same year, Burgundy s first hierarchy was published by Lavalle, detailing his Plan Topographique of Burgundy s Cote d Or a map grading every vineyard from Santenay to Dijon. This led the way for mapping Cote d Or into more than 400 appellations when appellation controllé system was familiarised in 1936. Today in Burgundy, every vineyard has its place in a hierarchy much like Bordeaux, descending from Grand Cru to Premier Cru to Village down to Bourgogne. First classifications are almost always based on price and in the 19th century, a wine simply known as Romanée was top, followed by Chambertin and then Musingy, Richebourg and Clos Vougeot. This order did not change, but finer parameters were poetised, and by the second half of the 20th century Premiers and Grand Crus were distinguished from village wines, and the producer s name had as much effect on price as the appellation. As mentioned, the Burgundian appellations were finalised in 1936 but closely follow the earlier markings. Unlike Bordeaux, Burgundy prototype is based on the study of the terroir rather than a more simplistic Grand Cru pyramid, divided into four classes. Today in Burgundy, every vineyard has its place in a hierarchy much like Bordeaux, descending from Grand Cru to Premier Cru to Village down to Bourgogne. Introduction To Burgundy +44 (0)20 8332 9386 wineinvestment.com 5

UNDERSTANDING OF BURGUNDY WINES a) Grand Cru The best of the best. There are 32 Grand Cru vineyards in Burgundy, accounting for less than 2% of all Burgundy wine production and commanding the highest prices. Grand Cru wines mention on the label only the producer and name of the vineyard as in Montrachet or Musigny the name of the village is not deemed necessary in the case of these great vineyards. The Grand Cru vineyards are found on marl and limestone outcrops which run through the middle of each vineyard. Over centuries, certain plots of land consistently produced stupendous grapes for wine, presumably because of their very particular exposure, soil and drainage. It is wine within this classification that dominate Burgundy s investment market. Some of the most prominent Grand Crus include Romanee Conti, Musigny, Richebourg and Clos Vougeot, with the former Grand Cru a monopole of the Domaine de la Romanee-Conti super brand. Please refer to the list below. Rouge Blanc Côte de Nuits Chambolle-Musigny 1. Bonnes-Mares 2. Musigny Flagey-Échezeaux 1. Échezeaux 2. Grands Échezeaux Gevrey-Chambertin 1. Chambertin 2. Chambertin-Clos de Bèze 3. Chapelle-Chabertin 4. Charmes-Chambertin 5. Griotte-Chambertin 6. Latricières-Chambertin 7. Mazis-Chambertin 8. Mazoyères-Chambertin 9. Ruchottes-Chambertin Morey-St-Denis 1. Bonnes-Mares 2. Clos des Lambrays 3. Clos de la Roche 4. Clos St-Denis 5. Clos de Tart Vosne-Romanée 1. La Grande Rue 2. Richebourg 3. La Romanée 4. Romanée-Conti 5. Romanée-St-Vivant 6. La Tâche Vougeot 1. Clos de Vougeot Côte de Beaune Corton (Aloxe-Corton, Ladoix-Serrigny and Pernand-Vergelesses) Côte de Nuits Chambolle-Musigny 1. Musigny Blanc Côte de Beaune Corton (Aloxe-Corton, Ladoix-Serrigny and Pernand-Vergelesses) 1. Charlemagne 2. Corton 3. Corton-Charlemagne Puligny-Montrachet 1. Montrachet 2. Chevalier-Montrachet 3. Bâtard-Montrachet 4. Bienvenues-Bâtard- Montrachet Chassagne-Montrachet 1. Le Montrachet 2. Bâtard-Montrachet 3. Criots-Batard- Montrachet Introduction To Burgundy +44 (0)20 8332 9386 wineinvestment.com 6

UNDERSTANDING OF BURGUNDY WINES Continued b) Monopole For those unfamiliar with Burgundy, a monopole is Grand Cru vineyard with a single owner; there are only five Grand Cru monopoles in Burgundy: La Romanée, La Grand Rue, La Tache, La Romanée-Conti and Clos du Tart. c) Premier Cru - (Also written as 1er Cru) The second tier of wines below the Grand Crus, there are hundreds at this level (more precisely 585), and the quality varies widely. The best Premiers rival the Grand Crus*, and these makeup 18% of total production. A Premier Cru wine will mention the name of the village and the individual vineyard on the label, as in Pommard Rugiens or Vosne Romanée Les Suchots, and will also bear the mark Premier Cru or 1er Cru. If the wine is a blend of more than one 1er Cru vineyard within a given village, it will simple bear the designation 1er Cru without any vineyard designation. Although, the next in rank there remains a significant investment opportunity within this classification. Henri Jayer Vosne Romanee Cros Parantoux s 10 year performance is a fine example of this. With their superior status, Grand Cru vineyards sell at four or five times the price. Here is a short list of top 1er Cru names that we have identified as performing above their station. Some of these names either adjoin Grand Crus, are very close to, or, at the least, are at the magic point on the golden slope: Clos St Jacques (Gevrey-Chambertin), Les Amoureuses (Chambolle Musigny), Aux Malconsorts (Vosne-Romanée), Les Beaux Monts (Vosne-Romanée), Les Saint-Georges (Nuits-Saint-Georges), Les Perriéres (Meursault). d) Village (Commune) Grapes for a Village wine come from one or many vineyards surrounding a specific Burgundian village, for example Vosne-Romanée or Puligny-Montrachet. These are classified below the 1er Cru level, but can often be lovely wines to drink and offer value for collectors. There are 53 communal appellations which represent 36% of total production. Examples include Puligny Montrachet, Pommard Beaune and Chambolle Musigny. e) Regional Regional wines account for almost 50% of all Burgundy vineyards. In the hands of dedicated and talented producers these can be lovely wines. This is the least specific of labels, and the wine is generally a decent table wine, but nothing more and certainly not the epitome of Burgundy wine. Wines in this classification are to be consumed and fall outside of the Burgundian investment market. Investment-grade Burgundy primarily comes from Grand Cru vineyards although through expert advice, 1er Cru vineyards that falls on exceptional plots under key producers are not to be overlooked. The 1er Cru produced by first tier producers almost always fall into the investment focus, trading at similar prices to Grand Cru made by the second tier producers. *There are a number of Premier Crus that outperform their current status and there is a school of thought which suggests some of these ought to be reclassified to the ultimate Grand Cru stage. A hard sell, given only two Premier Cru vineyards have been promoted in 75 years; Clos des Lambrays in Morey-Saint-Denis and La Grande Rue in Vosne- Romanée. Introduction To Burgundy +44 (0)20 8332 9386 wineinvestment.com 7

MAP OF BURGUNDY WINE REGIONS Map Credit: Wine Folly Source: winefolly.com/review/guide-to-burgundy-wine-with-maps/

UNDERSTANDING OF BURGUNDY WINES Continued f) Map of Cote d or The Cote d Or is the heart of Burgundy, combining the Cote De Nuits and Cote de Beaune. This gently sloping, eastfacing strip of land between Dijon and Santenay (a 35-mile stretch) is home to some of the most famous and evocative names in wine. Prices for these wines are driven first and foremost by quality and scarcity, with many domains producing just a few hundred cases per year. The northern part of the Cote d Or (Cote de Nuits) is renowned for its famous reds, producing Burgundy s most formidable and long-lived Pinot Noirs, and is home to the villages of Gevrey-Chambertin, Morey St Denis, Chambolle Musigny, Vosne-Romanee and Nuit St Georges. Venturing south to Beaune (which is the capital of the Cote d Or) is the famed hill of Corton. The Cote de Beaune is renowned for its whites and although there are some excellent red producers in Pommard, Volnay and Beaune, it is the Chardonnays from Puligny-Montrachet, Meursault and Chassagne- Montrachet that are revered among consumers and collectors. There are seven Grand Crus in Cote de Beaune, apart from Corton, which produce both a red and white, the rest are Chardonnay. KEY VINTAGES The most collectible vintages for Burgundy are 2010, 2009, 2005, 2003, 2002, 1999, 1996, 1995 and 1990. However, great Burgundy vintages do not come along often given the regions typical weather conditions. Burgundy experiences a continental climate, characterised by cold winters and hot summers. The weather is hugely unpredictable, with rain, hail and frost all possible around harvest time. For this reason, vintages in Burgundy vary considerably and many would argue that the overall vintage quality is more important that the individual score bestowed by leading critics. Given the micro-climate issues though, one producer can have their harvest damaged by hail or rot whilst a short distance away a producer can escape the weather conditions completely, creating huge variability in the wines from the same village. Whilst in other regions vintages/scores contribute equally to the investment credentials of specific estates, for Burgundy it is the producer and parcels of land that hold the key to the Cote d Or. Unlike Bordeaux, Burgundy is very fragmented and volumes are small. The vast majority of Grand Cru can often sell out immediately on release and many are prepledged to long-standing clients. The overall quality of Burgundy wines both red and white has improved immeasurably over the past two decades and is noticeably improving year on year, which continues to fuel demand as a result of stronger consumer confidence. With the advancement of winemaking techniques over the past 10 years, Burgundy has continued to produce a conveyor belt of rock solid vintages in harsh climate conditions. One only has to compare the quality of Burgundy s 2012/2013 vintages with the equivalent from Bordeaux. Regions 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 St. Julien/Pauillac/St. Estephe 78C 87E 88E 98T 99E 91E 86E 87E 95T 88T 95T 88T 88R 96T 88R 87T Margaux 80C 88E 87E 95T 97E 90E 86E 88E 98T 87T 88I 88T 89E 94T 89R 86T Graves 81C 89E 86E 99T 98E 91E 87E 87E 96T 88T 88I 87T 88R 97T 88R 94T Pomerol 84R 92E 88R 95T 98E 86R 86I 90T 95T 88E 84E 85E 90E 95T 88R 96T St. Emilion 82R 89I 87R 94T 93E 92E 86I 88E 99T 88E 90I 87E 90E 96T 88R 96T Barsac/Sauternes 92E 88E 93E 90R 97E 89R 94R 88R 96R 87R 91R 85R 93R 88E 88E 87E Cote de Nuits (red) 92E 93E 91E 96E 95E 88I 84E 89I 98T 83C 91T 91R 86I 84R 92R 84I Cote de Beaune (red) 89E 91E 90E 94E 95E 89I 80E 82I 96T 79C 88T 89R 79I 80C 93R 82C White Burgundy 90E 92E 91E 93E 90R 91T 91I 90E 90R 91R 84R 92R 86C 88C 89C 84C Introduction To Burgundy +44 (0)20 8332 9386 wineinvestment.com 9

KEY VINTAGES Continued The 2005 vintage closely followed by 2009 and 2010 are the standout modern vintages for red Burgundy. It is often said that Burghound s coverage of 2005 Burgundy did as much to Allen Meadow s reputation as a critic as did the 1982 vintage for Parker amongst Bordeaux connoisseurs. As most will be aware, the 2005 vintage was a major success for Burgundy as was the case for most regions in France. Many producers have made their best red and white wines in this vintage as a result of favourable growing conditions. The weather in 2005 on the Cote de Nuits was almost perfect, described by Christophe Roumier as a vintner s dream and many of the top producers noted this remarkable vintage. A perfect vintage ought to boast deep gorgeous fruit, ballerina-esque balance and an arresting terroir expression. The reds from 2005 have this and more, a truly top quality vintage, which arguably trumps 2000, 2002 and 1999 of the older comparables. 2010 and 2009 continue the sibling rivalry in Burgundy, with much debate on whether one will eventually triumph against the other. For the reds in 2010, yields were down by about a third and this had inevitably contributed to inflated mathematics. Nonetheless, almost all critics are in agreement that 2010 has all the characteristics of a great Burgundy vintage. Although not as rich and powerful as the 2009s, there is perhaps more depth and finesse (similar in many ways to Bordeaux). Respected critic and Burgundy resident Allen Meadows of Burghound claims that the 2010 Burgundies are notable for their refinement, balance and great sense of energy: It s one thing to have racy acidity and punch but it s another to ally these attributes with real substance. And this is what the 2010s do with such brilliance. The average quality of wine produced across Burgundy in 2009 was exceptional. There has been much hype surrounding Burgundy 2009, comparing it to the late great vintages of 1999 and 1959. Aubert Villaine co-owner and co-director of the Domaine de la Romanée Conti, claimed the 2009 is a once in a lifetime vintage, one of seduction and immediate pleasure, referencing the 1959 as a year which brings a smile to everyone s face, to the vigneron and the consumer. Due to the warmer than usual summer, grapes were full grown and 2009 boasted a larger crop than 2010, 2011 and 2012. It is known as a bumper year for Burgundy. If we also include 2013, Burgundy has had four small crops in a row, taking this into consideration the Burgundians have lost almost the equivalent of an entire vintage of wine. For investors and collectors, the clamour for top Burgundy has never been so fiercely competitive, and lower yields have only fuelled this demand. Of course, vintage considerations are all important when factoring in an allocation of investment funds towards this area of the market. Notwithstanding, it can be dangerous to make any sort of buying decision solely based on vintage generalisation in Burgundy, and we would always advocate a closer examination of the producer and the specific plots of land where these celebrated names are working their magic. Aubert Villaine co-owner and co-director of the Domaine de la Romanée Conti, claimed the 2009 is a once in a lifetime vintage, one of seduction and immediate pleasure. Introduction To Burgundy +44 (0)20 8332 9386 wineinvestment.com 10

BURGUNDY VS. BORDEAUX Among wine lovers around the world there is perhaps no bigger divide: Bordeaux or Burgundy? Driving this rivalry are stark contrasts between the regions that in turn lead to entirely different wines. If the Bordeaux region is polished, precise and corporatised, Burgundy is the complete opposite with a strong family and farming culture still running throughout. Bordeaux is where Cabernet Sauvignon and Merlot wines are blended with Cabernet Franc, Petit Verdot and Malbec to create precise, powerful wines blended for the long term. In Burgundy, only two grapes matter; Pinot Noir for red wine and Chardonnay for white, which both create very unique and highly distinctive wines. The grapes aren t the only major differences; Bordeaux chateaux produce their Grand Vin, often a second wine and sometimes even a third wine reflecting the variability of grapes from the same vineyard. Burgundy is a complex myriad of small individual vineyards, all with varying classification levels, a group of producers making a range of wines, often from a number of the many different vineyards in the region. This fact alone positions Burgundy as the most complex winemaking area in the world today. Therefore there are some fundamental differences that every investor should be aware of when comparing these two rival regions; these are outlined below. PRODUCTION AND LIQUIDITY The Burgundy region has 3,200 separate vineyards, 32 of which are classified as Grand Cru with a further 585 as Premier Cru (1er Cru). For a vineyard that produces a total of 6,000 cases per year, there could be more than 10 producers making wine; this leads to minute production levels per producer, especially for wines from the top Grand Cru and Premier Cru vineyards. Let s take Domaine de la Romanée-Conti (DRC), arguably Burgundy s most famous producer, for example. Across eight separate Grand Cru vineyards they produce a total of around 6,500 cases per year. Domaine Leroy, produces less than 1,000 cases from the nine Grand Cru vineyards, so that for some of the most sought after wines from Leroy there are less than 50 cases to go around. If we compare this to a leading Bordeaux estate such as Mouton, their annual production for their Grand Vin is closer to 20,000 cases per year. With demand far outweighing the supply of these wines, first release buyers receive allocations. In order to maintain their yearly allocation they have to purchase significant volumes of other wines throughout the year. This is in contrast to the Bordeaux en primeur system where aside from some of the low production Right Bank estates, anyone can purchase the top wines. The minute production for Burgundian wines, especially for the top Grand Crus, has some major implications from an investment perspective. Firstly, these wines are in huge demand across the globe, one only has to reference the auction results discussed in the following section to get an understanding of the price that some collectors are prepared to pay for them. Therefore, the supply and demand imbalance that underpins and drives the fine wine market is amplified considerably when focusing on Burgundy approached correctly with the right direction there can be significant returns. For the top Burgundy Grand Crus, low production levels will naturally mean that the secondary market is inherently smaller than that of its Bordeaux counterparts. Quite often there could be a complete absence of original wooden cases listed anywhere in the world for specific wines. Of course, this does have a positive influence on price, however the number of collectors/buyers/investors that are prepared to pay top prices for these wines is inherently smaller than the Bordeaux market. Burgundy Vs. Bordeaux +44 (0)20 8332 9386 wineinvestment.com 11

SCORING As we all know, Robert parker has had a major influence on the price trajectory for Bordeaux wines. His scoring system has been the benchmark for the past 25+ years for judging the quality of wines from this region. When it comes to Burgundy, it s fair to say that there is less of a focus on the scores given to each wine by one critic, and therefore prices are less sensitive to this system. Allen Meadows is seen as the current benchmark critic and of course it is useful to reference his scores and tasting notes. With a similar path to one of Cult Wines directors, Philip, Meadows had a 25-year career in finance before deciding to retire and follow his passion for Burgundy in 1999. Much like Parker, Meadows created a website, Burghound.com, which has a quarterly newsletter offering extensive coverage of the Burgundy region. He now spends five months of the year in Burgundy visiting up to 300 domaines each time. Meadows was once asked about the amount of wines that he tastes: It depends. When I m in Burgundy working it s usually around 75 wines per day spread over 10 hours with a 2-hour break at lunch (without wine). I spit assiduously and drink plenty of water to keep both me, and my palate, fresh and sharp. I typically do visits 5 ½ days a week so in a typical week I would taste around 400 or so. When I m working in my home office with samples, it s significantly less rigorous as it s about 12 bottles per day a few days each week. This rigorous tasting schedule has led to his website now listing more than 50,000 separate tasting notes. In contrast to Parker, Meadows is a little less prolific with is 100 point scores. To date, there is only one wine that he has deemed perfect : DRC Romanee-Conti 1945. Who else to take note of for Burgundy ratings: Neal Martin (The Wine Advocate) Stephen Tanzer (Vinous) Antonio Galloni (Vinous) Jancis Robinson PERFORMANCE What is evident across the past five years is the disparity in performance that we have witnessed between the headline Burgundy and Bordeaux indices. During a period when austerity and anti-corruption measures in China were primary factors behind a Bordeaux market correction, Burgundy prices increased significantly. The Chinese red obsession that drove prices for Bordeaux wines such as Lafite 2008 to record levels within the space of two-and-a-half years did not impact upon the Burgundy market to quite this extent, wines were somewhat insulated from these unsustainable price increases to what can simply be attributed to a lack of market knowledge. The Liv-ex DRC index (which tracks the 10 recent physical vintages for six DRC wines) has witnessed over 50% increase in value over the last five years, compared a drop of 20.8% for the Liv-ex 50 (the 10 recent physical vintages of Bordeaux First Growth). In October, the Burgundy 150 rose by 2.53%, its biggest climb since August 2013. In the same month, the Liv-ex Fine Wine 50 witnessed a contraction of 1.23%. The famous Bordeaux estates received enormous attention from these new entrants to the fine wine market between 2008 and 2011, whereas for Burgundy the steady growth witnessed over the past five to 10 years has been more balanced throughout the wine-buying world without an over reliance on the Chinese market (perhaps with the exception of DRC). In December 2014, the results of Liv-ex s Power 100 study highlighted the value of holding Burgundy for collectors/ investors, accounting for six of the top 10 brands by price performance (September 2013-August 2014). Many of the new entrants on the Power 100 list hailed from the Cote d Or, including Alain Hudelot Noellat and Henri Boillot producers that in a very short space of time have built up an enviable reputation. This would suggest that the Burgundy market is expanding, and the sheer quality of wine being produced by some of the less profile should be highlighted as an area to explore for investors. The Burgundy Index (Burgundy 150) is only made up of a select few wines and producers across the last 10 vintages, and while providing us with a useful benchmark, only really scratches the surface in terms of the wealth of wines offering investment opportunity across Burgundy. Burgundy Vs. Bordeaux +44 (0)20 8332 9386 wineinvestment.com 12

PERFORMANCE Continued The component wines of the index will continue to feature and provide positive price growth opportunity; outside of this group there is an ever-expanding band of leading producers with wines that will exhibit a strong enough reward-to-risk profile to merit attention. S eries Current Value 6m 12m 2y 5y FTSE 100 6,109 - -11% -7% 20% Burgundy 150 293 0% 2% 4% 41% Gold 1,133 - -6% -15% -9% Liv-ex Fine Wine 100 242 0% 2% -11% -20% 5 Year 10 Year Burgundy Vs. Bordeaux +44 (0)20 8332 9386 wineinvestment.com 13

PERFORMANCE Continued One could easily make the assertion that on the back of such strong performance witnessed by Burgundy over the past five years, certain wines have seen price growth which now makes them look rather expensive, so how much further can they go? A strong barometer for the global demand of these wines is invariably through auction results, and as discussed in the next section of this report we are continuing to see world records broken for Burgundy in both Hong Kong and the US. Burgundy has been a consistent performer over the past few years and with this strong level of performance inevitably comes concerns regarding the future growth and the possibility of a price correction. Supply / Demand First is supply, which as summarised earlier is highly regulated with the region currently producing the lowest average case quantity across any major wine growing region in France. This supply cannot be increased under current appellation controlee, but it is also worth noting that it is geographically impossible for these producers to extend their current vines and production levels at any stage in the future. Second is demand. Some interesting numbers for consideration are based on the staggering growth of China s middle and wealthy classes. An article in China Briefing highlights the figures from the Knight Frank 2014 Wealth Report and indicates that 7,905 ultra-high net worth individuals currently reside in China, with predictions that this figure will increase by 80% over the next 10 years. More millionaires in the world means ever higher prices for the best bottles; the emotional power and symbolic force of wine will always win it a unique place in the wealthiest hearts. Figures from Burgundy wine trade council (BIVB) make for an interesting review. In 2014, imports increased by 13.6% in value in the first four months versus the same period of 2013, to EUR 4.00 million. In volume terms, exports dropped by 4.1% to 419,000 bottles. To us this suggests that Burgundy had been affected by the slowdown in Chinese purchasing throughout 2014, however due to the nature of demand being centred on the top end labels, importers are paying significantly more per bottle. Far Eastern interest in Burgundy is not a recent phenomenon: the Japanese Manga series The Drops of God triggered a Burgundy cult-following in Japan which started in 2005 and spread to the rest of Asia over the following several years. With a fixed and finite supply curve versus a rapidly growing global demand and focus on Burgundy as a region, it is difficult to envisage prices going any way but up over the medium- to long-term. Burgundy Vs. Bordeaux +44 (0)20 8332 9386 wineinvestment.com 14

BURGUNDY AT AUCTION Often well-documented in wider press is the sale of top end wine collections at auction. Over the last few years famous names such as Sir Alex Ferguson and Lord Andrew Lloyd Webber have taken their extensive collections to auction with great success. Although the returns achievable on top end collectible wines seem extremely appealing, only very specialist collections are worth selling under the hammer and unsuccessful lots can prove a costly exercise. Such is the rarity and collectability of top end Burgundy that they are an ever-present feature in most fine wine auctions across the key houses globally Zachy s, Acker and Merall, Sotheby s and Christie s to name a few. Some of the examples below highlight a number of top Burgundian lots achieving well over estimate in Hong Kong, London and New York. http://www.decanter.com/wine-news/mature-burgundyfuels-hong-kong-wine-auctions-259611/ Domaine de la Romanée-Conti (DRC) continued to dominate the highest-priced lots at the Christie s auction a seven-bottle collection from the 2005 vintage fetched HK$269,500, well above its HK$220,000 high estimate. Other top lots in the Zachys sale included a 12-bottle assortment case of Domaine de la Romanee Conti 1990, which fetched $67,375, six bottles of La Tache 2005 DRC, which sold for $31,850 and a 6-liter Methuselah of Richebourg 1971 DRC, which achieved a price of $46,550, according to a Zachys statement. http://www.bloomberg.com/news/articles/2015-06-28/ burgundy-drives-acker-merrall-auctions-as-drc-jayer-lead Burgundy accounted for more than 45% of sales at Acker Merrall & Condit auctions so far this year, ahead of Bordeaux on just under 30%, as Domaine de la Romanee- Conti and Henri Jayer swept all of its top 25 lots. Its most expensive lot of the past six months comprised 12 bottles of Romanee-Conti 1988 Domaine de la Romanee-Conti from Burgundy s Cote de Nuits region, which fetched $178,477 in Hong Kong in March, while 12 bottles of Cros Parantoux 1999 Henri Jayer from the village of Vosne Romanee sold for $148,200 in New York in February, Acker Merrall said in a statement. http://www.thedrinksbusiness.com/2015/06/burgundytakes-the-lead-in-acker-auction/ http://www.bloomberg.com/news/articles/2015-03-14/ burgundy-leading-auctions-as-bordeaux-anticipates-2014s Two three-litre jeroboams of La Tache 1971 Domaine de la Romanee-Conti Burgundy sold for $44,100 each at a recent Zachys auction in New York and a 1.5 litre magnum of neighbouring Romanee-Conti 1971 DRC fetched $41,650, all beating estimates, while a Sotheby s sale in London on March 25 highlights wine from Burgundy growers including Ponsot, de Vogue and Meo-Camuzet. With London investors awaiting the release of the new Bordeaux vintage, Burgundy remained centre stage in the auction rooms. A superlot of every bottle made by owner Louis Michel went for HK$494,000, the highest price ever paid for the Vosne-Romanée Domaine as well as four other vintages of La Romanée selling high above the original estimates. Acker s top 10 lots were all Burgundies and from three major producers: Domaine de la Romanée Conti, Comte Liger-Belair and Henry Jayer. Other producers who broke through the record barrier were Leroy, Rousseau, Dujac, Meo-Camuzet, Comte de Vogue, Domaine Leflaive, Comtes Lafon, Bouchard, Drouhin and Jadot. 12 bottles of Romanee-Conti 1988 Domaine de la Romanee-Conti from Burgundy s Cote de Nuits region, which fetched $178,477 in Hong Kong. Burgundy at Auction +44 (0)20 8332 9386 wineinvestment.com 15

BURGUNDY AT AUCTION Continued Selling wine at Auction The first question is which venue? This will depend on the size of the collection, the origin of the wines and the quality of the bottles you are selling. Even assuming that your wines are deemed fit for auction, there are a number of costs that need to be considered seller s fees, insurance and taxes will all be deducted from the hammer price. Have your wines featured at recent auctions? Use various auction price search websites to see if your wines have a history of trading well at auction. With so many auction houses to choose from and various locations around the globe, it is imperative that you find one with a track record of listing and selling your wines. How big is your collection? Most auction houses will not consider taking any collections or lots that fall under a value of $20,000 it has to be worthwhile for all parties. The authenticity of your wine is also imperative and relevant paper trails to prove ownership and source of stock are vital. The makeup of the collection is also key, as many auction houses will want to assemble what they deem the most attractive lots themselves. Odd bottles or mixed cases from odd vintages will rarely be accepted. Most importantly, will you achieve a desirable return? Many houses will offer a free appraisal of what you hope to sell if they have met the above criteria. The sellers fees will vary and are often imposed on a sliding scale basis (ranging from 0-18% of the final bid). All of the following factors are considered; rarity, quantity, quality and condition. If the consignment is of noteworthy significance, the fees may be wavered entirely but this is a rare occurrence. It is important to note that while auction is a valid route to market, it should only be considered under certain conditions. In most cases, it is unlikely that auction is the best route to market, but nonetheless ongoing auction results provide a very useful means for benchmarking prices for the world s rarest offerings and give a good indication of what is trending at the top end of the market. Burgundy is often a topic of discussion with fine wine that throws up contradictory views and hugely differing opinion. There are a lot of people that steer clear of involvement altogether, due to the rare and illiquid nature of production. Access to the right stock is inherently also a key issue. The real returns are only found consistently from the top vineyards, top producers and from top vintages. Those wines are all sold by agents or merchants, some with exclusivity from release. As a buying customer, making your way to the top of the queue can prove almost impossible. For those fortunate enough to receive yearly allocations, these often also come with tied stock from lesser wines that make what is already an expensive acquisition even more costly. However it is without question that many of the top examples of gains made in the fine wine market invariably stem from the Burgundy region. The table below highlights the top 50 most expensive bottles of wine in the world currently. No less than 37 wines are from the Burgundy region across Cote de Nuits and Cote de Beaune. Whilst this clearly highlights that Burgundy buying is an expensive hobby, a lot of these wines were far more humbly priced only a few decades ago. Burgundy at Auction +44 (0)20 8332 9386 wineinvestment.com 16

WORLD S TOP 50 MOST EXPENSIVE WINES n Wine Name Avg. Price (USD) Max. Price (USD) 1 Henri Jayer Richebourg Grand Cru, Cote de Nuits, France $13,580 $21,201 2 Domaine de la Romanee- Romanee- Grand Cru, Cote de Nuits, France $13,196 $56,403 3 Henri Jayer Cros Parantoux, Vosne-Romanee Premier Cru, France $8,473 $13,469 4 Egon Muller-Scharzhof Riesling Trockenbeerenauslese, Mosel, Germany $6,924 $15,514 5 Domaine Leflaive Montrachet Grand Cru, Cote de Beaune, France $5,769 $9,743 6 Domaine Georges & Christophe Roumier Musigny Grand Cru, Cote de Nuits, France $4,935 $10,811 7 Joh. Jos. Prum Wehlener Sonnenuhr Riesling Trockenbeerenauslese, Mosel, Germany $4,867 $9,694 8 Domaine de la Romanee- Montrachet Grand Cru, Cote de Beaune, France $4,458 $14,731 9 Domaine Leroy Musigny Grand Cru, Cote de Nuits, France $4,454 $14,997 10 Domaine Jean-Louis Chave Ermitage Cuvee Cathelin, Rhone, France $4,131 $7,576 11 Domaine Leroy Grand Cru, Cote de Nuits, France $3,401 $61,154 12 George Jayer par Henri Jayer Echezeaux Grand Cru, Cote de Nuits, France $3,140 $15,000 13 Domaine du Comte Liger-Belair La Romanee Grand Cru, Cote de Nuits, France $2,947 $25,488 14 Henri Jayer Vosne-Romanee, Cote de Nuits, France $2,893 $7,045 15 Screaming Eagle Cabernet Sauvignon, Napa Valley, USA $2,865 $12,578 16 Domaine de la Romanee- La Tache Grand Cru Monopole, Cote de Nuits, France $2,699 $18,037 17 Petrus, Pomerol, France $2,678 $101,769 18 Coche-Dury Corton-Charlemagne Grand Cru, Cote de Beaune, France $2,629 $5,357 19 Lalou Bize-Leroy Domaine d'auvenay Chevalier-Montrachet Grand Cru, Cote de Beaune, France $2,513 $3,567 20 Domaine Leroy Richebourg Grand Cru, Cote de Nuits, France $2,398 $6,454 21 Le Pin, Pomerol, France $2,344 $19,017 22 Domaine Faiveley Musigny Grand Cru, Cote de Nuits, France $2,280 $5,500 23 Lalou Bize-Leroy Domaine d'auvenay Criots-Batard-Montrachet Grand Cru, Cote de Beaune, France $2,248 $3,378 24 Krug Clos d'ambonnay, Champagne, France $2,245 $13,359 25 Domaine Leroy Romanee-Saint-Vivant Grand Cru, Cote de Nuits, France $1,942 $3,800 26 Domaine Leroy Clos de la Roche Grand Cru, Cote de Nuits, France $1,837 $6,995 27 Lalou Bize-Leroy Domaine d'auvenay Les Bonnes-Mares Grand Cru, Cote de Nuits, France $1,796 $4,226 28 Domaine de la Romanee- Richebourg Grand Cru, Cote de Nuits, France $1,745 $10,714 29 Domaine Dugat-Py Grand Cru, Cote de Nuits, France $1,678 $3,877 30 Lalou Bize-Leroy Domaine d'auvenay Mazis- Grand Cru, Cote de Nuits, France $1,655 $2,258 31 Moet & Chandon Dom Perignon P3 Plenitude Brut, Champagne, France $1,609 $2,888 32 Domaine Leroy Latricieres- Grand Cru, Cote de Nuits, France $1,587 $2,581 33 Massandra Ai-Danil, Ukraine $1,564 $4,434 34 Egon Muller-Scharzhof Riesling Eiswein, Mosel, Germany $1,562 $3,626 35 Coche-Dury Les Perrieres, Meursault Premier Cru, France $1,518 $3,231 36 Sylvain Cathiard Romanee-Saint-Vivant Grand Cru, Cote de Nuits, France $1,489 $11,377 37 Domaine des Comtes Lafon Montrachet Grand Cru, Cote de Beaune, France $1,450 $4,226 38 Domaine Leroy Corton-Charlemagne Grand Cru, Cote de Beaune, France $1,377 $2,582 39 Domaine Ramonet Montrachet Grand Cru, Cote de Beaune, France $1,375 $5,444 40 Domaine de la Romanee- Romanee-Saint-Vivant Grand Cru, Cote de Nuits, France $1,370 $47,999 41 Domaine Georges & Christophe Roumier Les Amoureuses, Chambolle-Musigny Premier Cru, France $1,367 $5,492 42 Joh. Jos. Prum Wehlener Sonnenuhr Riesling Beerenauslese, Mosel, Germany $1,355 $2,904 43 Domaine Meo-Camuzet Au Cros Parantoux, Vosne-Romanee Premier Cru, France $1,303 $2,966 44 Domaine Leroy Echezeaux Grand Cru, Cote de Nuits, France $1,266 $2,453 45 Domaine de la Romanee- Grands Echezeaux Grand Cru, Cote de Nuits, France $1,264 $6,299 46 Domaine Armand Rousseau Pere et Fils Grand Cru, Cote de Nuits, France $1,254 $12,321 47 Domaine Meo-Camuzet Richebourg Grand Cru, Cote de Nuits, France $1,248 $9,193 48 Moet & Chandon Dom Perignon Oenotheque Rose, Champagne, France $1,238 $3,841 49 Emmanuel Rouget Cros Parantoux, Vosne-Romanee Premier Cru, France $1,223 $3,189 50 Domaine Leroy Clos de Vougeot Grand Cru, Cote de Nuits, France $1,220 $4,557 * Wines highlighted in yellow are wines from Burgundy, France. Burgundy at Auction +44 (0)20 8332 9386 wineinvestment.com 17

KEY PRODUCERS There are a handful of domaines that many people will be familiar with, but possibly more that are relatively unheard of to even the more sophisticated investor or wine aficionado. This does not mean they should be ignored though; quite a few young producers come from serious pedigree and are putting very attractive markers down. The list below offers an overview of the investment grade producers across red and white Burgundy. RED: 32* WHITE: 10* Domaine Henri Jayer Domaine de la Romanee Conti Domaine Armand Rousseau Domaine Georges Roumier Domaine Leroy Domaine Comte de Vogue Domaine Ponsot Domaine du Comte Liger-Belair Domaine Emmanuel Rouget Domaine Méo-Camuzet Domaine Dujac Domaine Emmanuel Rouget Domaine Jacques-Frédéric Mugnier Domaine d Auvenay Domaine Anne Gros Sylvain Cathiard Francois Lamarche Domaine Fourrier Domaine des Lambrays Robert Groffier Georges Noellat Trapet Mommessin Dugat-Py Domaine Marquis d Angerville Domaine Gérard Mugneret Domaine d Arlot Claude Dugat Hudelot Noellat Domaine Faivley Olivier Bernstein David Duband Domaine Leflaive Domaine Coche-Dury Domaine Ramonet Domaine Romanee ContI (Montrachet) Domaine des Comtes Lafon Bonneau du Martray Domaine d Auvenay Domaine Leroy Domaine Neillon Domaine Jobard * region s leading producers in no particular order 18

DOMAINE DE LA ROMANÉE-CONTI Domain de la Romanée-Conti (referred to as DRC) holds a number of positions in the World s 50 Most Expensive Wines list, including the eponymous Grand Cru DRC, Romanee- Conti, which has an average price across its vintages of around 8,600 but at the moment stands at as much as 36,700 per bottle, of which around 5,500 are produced annually. The chart below tracks the 10-year performance of Romanee- Conti vintages 1988-2002 DRC produces seven other Grand Crus: Corton - Price range per 12: 6,950-8,650 (first vintage 2009) - Average annual production level is 6,400 bottles Echezeaux - Price range per 12: 5,500-19,000 - Production 15,000 bottles p/a Grands Echezeaux - Price Range per 12: 6,900-31,000 - Production 9,000 bottles p/a La Tache - Price Range per 12: 13,800-70,000 - Production 15,000 bottles p/a Richebourg - Price Range per 12: 8,800-50,000 - Production 15,000 bottles p/a Romanee St Vivant - Price Range per 12; 7,200-27,000 - Production 10,000 bottles p/a Montrachet - Price Range per 12: 27,000-60,000 - Production 2,800 bottles p/a 19

DOMAINE DE LA ROMANÉE-CONTI Continued NB: there are only ten 100-point Burgundies from Robert Parker and the Wine Advocate. DRC produces four of them: Romanee-Conti 1985, Montrachet 1986, Richebourg 1929 and La Tache 1999 which trade at 115,000, 59,000, 50,000 and 33,000 per 12 respectively. Across all Grand Cru DRC the entire production totals around 7,000 cases by comparison to the top Bordeaux Grand Cru Classé at 20,000 cases per harvest. The Liv-ex DRC index, which tracks the previous 10 physical vintages, has seen an increase of 53.2% over the past five years. Romanée Conti is now at a price where some would suggest that a correction is due, however the audience of Burgundy aficionados are often recognised by staying loyal to the labels they love and this widespread global demand is sufficient to support continued price development. There may be an argument to suggest that there is inherently better value in La Tache, Richebourg and Romanee St Vivant which can be acquired for a fraction of the price of Romanee Conti. DRC dominates the Burgundy auction market and marks the world record auction price for a single wine lot. This was a Sotheby s super lot sale in autumn 2014, including six bottles from each vintage between 1992 and 2010 was sold in Hong Kong to an unnamed Asia-based collector for USD$1.6 million. Year after year DRC is the darling of the auction room and with a constant stream of headline figures, it is a strong candidate to continue to lead the accelerated growth for Burgundy s top producers. 20

DOMAINE LEROY A firm favourite of Cult Wines over the years. Madame Lalou Bize-Leroy is undoubtedly one of the most important and influential (if not always liked or agreed with) producers Burgundy has ever seen. Her upbringing was around the family negociant, Maison Leroy, and at DRC itself, which her father was running before she joined in 1955. After years at the helm, in 1988 Lalou split from DRC (under unfavourable terms) to run her own estate, Domaine Leroy. She has a strict and a painstaking approach to winemaking that not many others globally can match: ultra-biodynamic to the extent that she is involved with every vine on a personal level. The result is ultra-low yields (equating to production levels) with extremely high and consistent quality. Of the 50 most expensive wines in the world, she makes 10 at Domaine Leroy and a further four at her other estate, Domaine d Auvenay more than any other producer worldwide. She boasts nine Grand Crus in her stable, eight Premier Crus and nine Villages (many of which would be considered equal in quality to other producers Premier Crus). Grand Crus: Premier Crus: Corton Charlemagne Corton Renardes Richebourg Romanee St Vivant Cos de Vougeot Musigny Clos de la Roche Latricieres Chambertin Chambertin Volnay Santenots du Milieu Savigny Les Beaune Les Narbantons Nuits-Saint-Georges Aux Vignerondes Nuits-Saint-Georges Aux Boudots Vosne-Romanée Aux Brûlées Vosne-Romanée Les Beaux Monts Chambolle-Musigny Les Charmes Gevrey Chambertin Les Combottes The chart overleaf tracks the last five-year performance of a classic Domaine Leroy vintage 1996 across the most traded Grand and Premier Crus. Growth ranges from 66%-128% over the period. Investors and collectors may find relative value in a host of Premier Crus. In fact Leroy s 1er Cru wins would almost certainly be considered Grand Cru for any other producer. 21

DOMAINE LEROY Continued S eries Current Value 6m 12m 2y 5y Domaine Leroy, Clos Roche, 1996 16,164 68% 68% 68% 128% Domaine Leroy, Nuits Saint Georges Boudots, 1996 5,462 17% 17% 17% 102% Domaine Leroy, Clos Vougeot, 1996 9,372 12% 15% 44% 99% Domaine Leroy, 1996 28,062 0% 0% 11% 66% Domaine Leroy, Vosne Romanee Beaumonts, 1996 5,658 3% -8% 3% 126% Domaine Leroy, Romanee Saint Vivant, 1996 16,344-4% 2% -1% 70% Domaine Leroy, Musigny, 1996 48,456 0% 0% 21% 93% Domaine Leroy, Corton Renardes, 1996 4,419 0% 0% -2% 88% Domaine Leroy, Richebourg, 1996 17,652 25% 25% - 95% Precise production levels are not easy to come by but Lalou makes around 600 cases (7,200 bottles) each year across her whole estate! It is estimated that only around 450 bottles of Musigny are produced each year, for example. Now at the age of 83, she is still fully active around the vines and, yes, an avid rock climber one of the best in the world at her peak, illustrating her absolute commitment to her beliefs. Whether or not the wines will continue to bear her name in years to come is uncertain, but there will undeniably be a higher value attached to vintages produced under her guidance. Whilst somewhat inappropriate speculation, it is unavoidable that Madame Leroy s tenure could be drawing to a close over the next decade. This would throw her wines into a whole new sphere altogether. By means of illustrating the meritorious position the Leroy wines hold, consider that as of 2012, within the top 50 most expensive wines in the world, ten are Domaine Leroy productions. These ten wines represent every one of the Leroy Grand Cru holdings, each expressing the true, unadulterated voice of its terroir and in doing so attaining the most impressive prices anywhere, with her Musigny and Clos de La Roche considered the jewel in her crown these wines trade at three or four times the Premier Cru. Burgundy s Grande Dame is an unwavering devotee of biodynamism and also owns the four-hectare Domaine d Auvenay in St-Romain. Auvenay has a range of Grand Crus but availability is harder to come by than Domaine Leroy portfolio of wines. Leroy has a strong international following but it is the US and Japan that are the most avid collectors. A note of caution, availability is very restrictive and we would advise any clients who are interested in adding the Domaine Leroy wines to their portfolio to join a very long queue! 22

HENRI JAYER (1922 2006) Henri Jayer was a legend of Burgundy. He influenced young producers more than any other and developed techniques that are found across the region now. Similar to Leroy, production levels are around 3,500 bottles each year across all of the wines he made. Currently, he holds the first and third position on the Most Expensive list, for his Richebourg and Vosne Romanee, Cros Parantoux the latter is only a Premier Cru! These average at 8,700 and 5,450 per bottle. Although the quality of Jayer s wines was very high, the values really rocketed after his death, for the remaining bottles in circulation which were made by him and feature his name. Illustrated below are the price gains from the lower to upper end of these two wines. W ine Vintage Current Value 10 Year Richebourg 1980 73,836 288.20% Cros Parantoux 1985 98,268 428.32% Cros Parantoux 1986 85,788 1181.18% Cros Parantoux 1990 100,308 543.00% Cros Parantoux 1996 91,728 855.50% 23

HENRI JAYER (1922 2006) Continued W ine Vintage Current Value 10 Year Richebourg 1978 149,652 2828.04% Cros Parantoux 1999 74,064 3281.92% Richebourg 1976 89,748 3039.17% Essentially the godfather of Burgundy, Henri Jayer was responsible for many of the modern winemaking techniques that have established this region as consistently producing the most expensive wines in the world. Between the six or so wines that Jayer produced, output was only around 3,500 bottles per year (less than 50 cases a year of each wine). Bearing in mind wines stopped carrying his label in 2001, there are very few remaining in the world, and supply can only ever diminish. The emotional power of these wines come into their own on the auction market, as recent figures show: Four-bottle lot of Jayer s Vosne-Romanee 1990 Cros Parantoux and a half-case of the 1993 each sold for 37,600 while a magnum of 1978 Richebourg fetched 28,200 at Sotheby s in London, July 2013. Wines from Henri Jayer double, and in some cases triple, their pre-sales estimates. Two magnums of the Cros Parantoux 1999 (93 score) achieved 15,000 each at Acker Merrall & Condit in Hong Kong, March 2014. A three-magnum haul of Jayer Vosne Romanee, Cros Parantoux 1982 more than doubled its high estimate of HK$200,000, fetching HK$490,000 (over 37,000, 88 pts) at Sotheby s in Hong-Kong, April 2014. 24

DOMAINE ARMAND ROUSSEAU The Rousseau family is Burgundy royalty. Armand Rousseau was born in 1884 into a world of wine, with links to merchants, coopers and winemakers. He inherited several vineyard plots in Gevrey Chambertin and expanded in the subsequent years. Along with Domaine Ponsot, Armand began bottling and selling his own wine in the 1930s and was even the first to sell his wine to the US after the end of prohibition always the forward thinker. Armand suffered an untimely death in a car accident just five years later and was succeeded by his son, who had studied oenology at Dijon. Charles Rousseau proved himself a passionate winemaker and manager, focusing heavily on export sales through constant travel spent promoting his wines. He added a string of plots over the years, more than doubling his father s original holdings and during the 1980s invested heavily in new equipment for the winery and two additional cellars. Now, together with his son and daughter, he continues to uphold the wonderful reputation started by his father: maker of the finest Chambertin anywhere in the Cote d Or. Today the Domain covers an area of 14.9 hectares of which 8.41 are appellation Grand Cru in the vineyards of Gevrey- Chmabertin and Morey St Denis. Interestingly, the average age of the vines is between 40-45 years. Average annual production is high compared to the aforementioned within this category. Famed for the Chambertin Grand Cru and Chambertin Clos-de-Beze Grand, the Armand Rousseau Grand Cru wines are the second most searched-for only behind DRC. The top two searches are DRC La Romanne Contie and La Tache followed by Rousseau Chambertin Grand Cru. Chambertin Grand Cru The limestone rich soils of these plots are tilled by horse and all the grapes harvested by hand. Called the Napoleon of wines, this is a firm, structured and masculine wine with liquorice aromas, which stands up well to ageing, requiring ten years in the bottle to mellow and continuing to mature for 20-30 years. It averages around 650 per bottle. Chambertin Clos-de-Beze Grand Cru Along with Chambertin, Clos-de-Beze has the most powerful reputation of any of the domaine s wines. It is considered the feminine partner of Chambertin, a rich, velvety wine with a long, elegant finish and a wealth of jammy red fruit flavours accented by Asian spice aromas. This subtle and beguiling wine can currently fetch more than 600 per bottle. Mazis Chambertin Grand Cru Thin, gravelly soil on a bed of limestone makes for powerful wine with good minerality and freshness with a rich and sweet meatiness which makes it ideal for pairing with game. Currently averages around 160 per bottle. Charmes-Chambertin Charming and accessible whilst still relatively young, this is a wine with a powerfully complex nose and mineral purity which has made it a favourite of many fine wine connoisseurs who enjoy the label at around 150 per bottle on average across all vintages. 25

DOMAINE ARMAND ROUSSEAU Continued Gevrey-Chambertin 1er Cru Clos-Saint-Jacques Though not a Grand Cru (as the majority of the Armand Rousseau holdings are), Clos-Saint-Jacques has a mighty reputation for quality that has seen many fans calling for its ranking to be upgraded. At close to 300 per bottle, it certainly has out-priced many of its Grand Cru brothers. One taste of the wine is explanation enough. Bearing a significant resemblance to Chambertin, the coolness of the land produces a robust wine with firm tannins and assertiveness in the mouth. Age for 10-20 years to unlock its secrets of red and black berries, yielding to cherries, baked figs and even black tea. The chart below tracks the 5 year performance of the Grand Crus and their leading Premier Cru, Clos St Jacques, for the 2005 vintage. This demonstrates a growth range of 75%-129% over the period. S eries Current 6m 12m 2y 5y Armand Rousseau, Clos 2005 3,852 20% 19% 19% 82% Armand Rousseau, Clos De Beze, 2005 12,600 4% 12% 11% 77% Armand Rousseau, Clos Roche, 2005 3,450 0% 38% 4% 100% Armand Rousseau, Mazis 2005 2,930 0% 0% -4% 75% Armand Rousseau, Gevrey Clos St Jacques, 2005 5,500-2% 0% 7% 86% Armand Rousseau, Charmes 2005 2,460-12% 8% -1% 89% Clos-Saint-Jacques has a mighty reputation for quality that has seen many fans calling for its ranking to be upgraded. 26

DOMAINE DU COMTE LIGER-BELAIR Over the years, Louis-Michel has matured into an assured vigneron, applied his own tenets and successfully installed the domaine within the top tier of growers. Let s not beat around the bush: these are not wines for those counting the pennies. There is no avoiding the fact that they are expensive and virtually unobtainable on the secondary market. You get an allocation of Comte du Liger-Belair you have to be either a fool or bankrupt to sell your cache Neil Martin The history of Domaine Liger-Belair is both young and old. While the estate has only been producing the wines we know today since 2000, when Louis-Michel resurrected the family tradition, the domaine s story really begins in 1815, when General Liger-Belair (General to Napoleon) acquired the Chateau de Vosne-Romanée. The General quickly amassed a small wine empire, at one point owning La Tache, La Romanee, La Grande Rue and significant holdings in Clos de Vougeot and Chambertin, plus an array of Vosne-Romanee Premier Crus. However, complicated succession issues meant that the domaine was sold at auction in 1933, and the Liger-Belair family was only able to salvage La Romanee and small holdings in Aux Reignots and Les Chaumes. With a military ethic continuing to run throughout the Liger-Belair generations, the next successor Comte Henri devoted his career to the army, and so the remaining vines were looked after by sharecroppers, and the wines sold through negociants. In 2000, Louis-Michel decided to recreate the estate s former glory, starting with two plots of Vosne-Romanee and Premier Cru Les Chaumes. Later, he would regain control of Aux Reignots and La Romanee, and purchase further land parcel by parcel, the latest being the fabulous Clos des Grandes Vignes Premier Cru of Nuits St Georges. While in size the estate pales in comparison to its former 40 hectares it s now around 5.5 hectares Louis-Michel s commitment to pure, terroir-driven wines has propelled the domaine into contemporary popularity, and its wines are consistently lauded by critics and drinkers alike. At this point, Liger Belair only produce two Grand Crus La Romanee and Echezeaux but the next few decades will surely see expansion and acquisition of other parcels. As it stands, only 150-200 cases of La Romanee are produced and for the 2013 vintage, this microscopic production was reduced by 40%! La Romanee, in particular, already competes with the long-established DRC and Leroy in terms of quality and to a certain extent on pricing, having averaged 95.5 points from the Wine Advocate since the 2003 vintage. The 2012 vintage has been awarded (99+) points which, at 28,000 per 12, looks like relative value against the other top scoring Burgundies. Excerpts taken from cellar tracker regarding Liger- Belari, La Romanée 2012 provide collectors with rather stimulating comparisons: Perhaps the 21st Century Version of 85 Jayer Cros Parantoux? A case of Vosne Romanée Cros Parantoux 1985 from the private cellar of winemaker Henri Jayer was sold for HK$2.06 million ($265,200) as the top lot at a Christies sale in Hong Kong (2012). This wine better than Romanee-Conti The average price for the last 12 vintages of Romanee- Conti is 25,804.00 per three-bottle case La Romanée can be acquired at a significant discount to this. They somehow have the detail and finess of DRC but with the sexy power of Leroy, says Neal Martin. They remind me of Lalou Bize-Leroy s wines rather than say, Domaine de la Romanee-Conti, which is the obvious comparison. 27

DOMAINE DU COMTE LIGER-BELAIR Continued The quality of Liger Belair is in the company of the truly great wine producers of Burgundy yet it sits at an accessible price point by comparison. The production is smaller than Leroy, DRC and Jayer, so one can imagine the potential of holding this wine over the next 5-10 years. Price graph for La Romanee recent vintages: W ine Current Value 6m 12m 2y 5y Comte Liger Belair, Romanee, 2002 34,514-2% 30% 26% 396% Comte Liger Belair, Romanee, 2004 15,624 25% 30% 12% 137% Comte Liger Belair, Romanee, 2005 32,000 0% 7% -3% 233% Comte Liger Belair, Romanee, 2007 15,600 0% 0% 15% 136% Comte Liger Belair, Romanee, 2006 21,390 34% 14% 94% 234% Comte Liger Belair, Romanee, 2003 18,468-2% 1% 70% 168% Liger-Belair Recommended wines: La Romanee Grand Cru Echezeaux Grand Cru Vosne-Romanee 1er Cru Les Brulees Vosne-Romanee 1er Cru Les Petits Monts Vosne-Romanee 1er Cru Les Suchots Vosne-Romanee 1er Cru Aux Reignots Vosne-Romanee 1er Cru Les Chaumes Nuits-Saint-Georges 1er Cru aux Cras Nuits Saint Georges 1er Cru Clos de Grandes Vignes 28

DOMAINE PONSOT Taking a small step down from those often reserved for the ultra-wealthy, there are a large number of prominent producers who make wine of almost equal quality available for a fraction of the cost. Ponsot one of the first domaines to practise estate bottling is one such producer. Despite taking an organic and even biodynamic approach to winemaking, Laurent Ponsot (the current man in charge) does not wish to be described as such. Outstandingly, Ponsot has 13 Grand Crus (of which two are white) and just three Premier Crus. These include Chambertin Vieilles Vignes (which translates to old vines ), Chambertin Clos de Beze, Clos de Vougeot VV, Clos de la Roche VV, Clos St Denis TVV, Corton Charlemagne and Montrachet. Domaine Ponsot is the largest land holder in Clos de La Roche, holding three of the original four hectares of the original area (although it has since been expanded to 13.4 hectares). We have been fortunate enough to have access to broad parcels of varying sizes over the last several years which have performed outstandingly; however, this may not be surprising given the constant praise that the wines receive from leading critics: The results are as distinctive as the methods, but also profoundly impressive and proven to age magnificently These are perhaps the most powerful wines in Burgundy. it is amazing how phenomenal Ponsot s wines can be Robert M. Parker Jr One of the most distinguished domaines of the Cote de Nuits Anthony Hanson, Burgundy, Mitchell Beazley [Laurent Ponsot] really hasn t missed since 1999 Allen Meadows, Burghound Great vintages of the Clos de la Roche Vieilles Vignes have seen between 150%-250% growth over the last 10 years and will often be found in larger formats, which can add to the resale value, especially at auction. At a Bonhams auction in December 2013, six bottles of the Clos de la Roche 1964 sold for 4,700 against a high estimate of just 350. Then in January 2014, a Hart Davis Hart auction saw six magnums of the 1985 go for an astonishing $71,700 nearly double the high estimate of $45,000. The equivalent 9-litre price of the last few vintages sits at an average of 4,000, representing a potential 1000% increase in value (perhaps more, given the most recent vintage s even higher critic score). With top wines from this region continuing to outperform some of the best Bordeaux, it s little surprise collectors are keen to add Burgundies to their portfolios and Ponsot one of the best performing labels in recent years is a popular choice, boasting consistently strong critic scores and displaying excellent auction performance. 29

DOMAINE DUJAC Founded by Jacques Seysses in 1967, Dujac (Domaine du Jacques = Dujac) is a relatively young estate, yet it keeps up with the more established domaines with ease. Through positive press and Jacque s father s connections, Domaine Dujac became an increasingly popular name on the Burgundy wine scene. It has holdings in many of the familiar vineyards, including Clos de la Roche, Clos St Denis, Charmes Chambertin, Echezeaux, Bonnes Mares, Chambertin and Romanee St Vivant. Morey-St-Denis 1er Cru Gevrey-Chambertin 1er Cru aux Combottes Chambolle-Musigny 1er Cru Les Gruenchers Vosne-Romanée 1er Cru Les Beaux Monts Vosne-Romanée 1er Cru Les Malconsorts Charmes-Chambertin Grand Cru Clos St Denis Grand Cru Clos de la Roche Grand Cru Bonnes Mares Grand Cru Chambertin Grand Cru Boasting seven Grand Crus in the stable, Dujac is unquestionably one of the region s most prominent domaines. Jacque s son Jeremy, who is also one of the leading figures of the younger generation responsible for ongoing development of the region, now runs the day-to-day business,. Many would say he is bringing in a welcome modern touch to a very traditional winegrowing area. The domaine is renowned for its Chambertin which commands extremely high critic scores in recent years, notably 98 points from Galloni for the 2009 vintage. According to Galloni, the 2009 demonstrates a degree of power and finesse seldom seen, even in Burgundy. Burghound recently rated the 2010 effort at 98 points, adding that Dujac has a big part to play amongst the King of Burgundy Grand Crus. 30

DOMAINE DUJAC Continued Average production is around 90,000 bottles per year across the portfolio of Domaine Dujac wines. The chart below tracks performance of five of the most tradable Dujac wines from the same 2002 vintage. S eries Current Value 6m 12m 2y 5y Dujac, Close Roche, 2002 5,400-2% -7% 12% 99% Dujac, Bonnes Mares, 2002 4,450-18% -18% -7% 77% Dujac, Charmes 2002 2,650 0% 0% 0% 104% Dujac, Echezeaux, 2002 5,491 70% 70% 70% 95% Dujac, Clos Saint Denis, 2002 7,186 19% 19% 119% 140% Over the last five years, growth varies from 77%-140%. The 10 year figures vary from 118%-525%. Domaine Dujac can boast the strongest price performance amongst the 2014 Liv-ex Power 100 index, with an average growth of 29.3% across the portfolio of wines. With the average score of 96.14 points (Wine Advocate) and 95.5 points (Burghound) across the last seven vintages for Domaine Dujac Chambertin, and equally consistent scores for the other Grand Cru and Premeir Crus from the stable, gaining access to the right stock can prove to be an exhausting task! Domaine Dujac can boast the strongest price performance amongst the 2014 Liv-ex Power 100 index, with an average growth of 29.3% across the portfolio of wines. 31

DOMAINE JACQUES FREDERIC MUGNIER Frederic Mugnier s philosophy is summarised very simply: let the message in the vineyard come through. He is known for his meticulous attention to detail having had a background in engineering. He actually took up a career as a commercial pilot and started crafting wine as a second profession. He is still a relative newcomer to winemaking by his own admission and in the early stages attended viticulture school in Beaune and put his learnings to practice by experimenting with the process. He continued to work as a pilot until 2000 but found that a hands-on approach to the vineyards provided a far steeper learning curve than schooling. In 2004, Faiveley s lease of the Mugnier family s 9.55-hectare Nuits St. George 1er Cru Clos de la Maréchale expired. This more than tripled the size of Mugnier s vineyard holdings to 13.5 hectares. Although only a Premier Cru, this now became the largest Monopole in the region and meant that significant improvements and developments to the team were necessary. The estate is renowned for its Chambolle-Musigny (despite owning four hectares in Chambolle and a much greater ten in Nuits), and they hold the second largest occupancy in Musigny with a little over 1 hectare (only Comte de Vogue hold more). Mugnier only produce two Grand Crus at present the Bonnes Mares and Musigny. Annual production for J.F Mugnier stable of Grand Cru & Premier Cru: Grand Crus Bonnes Mares: 100 cases Musigny: 400 cases Premier Crus Chambolle-Musigny les fuees: 250 cases Chambolle-Musigny les amoureuses: 200 cases Nuits-Saint-Georges 1er cru Clos de la Maréchale : n/a With high critic scores, upwards trending prices and a host of accolades, the Musigny Grand Cru is the domaine s standout wine. Recent vintages, namely the 2012, have performed exceptionally well. However, prices are driven by demand, and with only around 500 cases of this wine produced every year, demand is high it follows, then, that prices are too. Elsewhere in the domaine s impressive portfolio, the Chambolle Musigny les Amoureuses is well worth a look, with many ardently claiming the Premier Cru is finer than any Grand in the region. Prices here have been rising steadily, too, no doubt reflecting a rise in critic scores, from 88 points from Pierre Rovani for the 2000 vintage, up to 95-97 points from Neal Martin for the 2012. While perhaps not quite as illustrious as the Musigny Grand Cru, those looking for a fine expression of the Chambolle-Musigny terroir, at a slightly more accessible price that s only set to rise in future, could likely do no better than the Amoureuses. The domaine s remaining wines are all Premier Crus; Chambolles Musigny Les Amoureuses, Chambolles Musigny Les Fuees, Nuits-Saint-Georges 1er cru Clos de la Maréchale which is the largest of very few Monopoles across the entire region and still very affordable investment requires serious consideration. 32

DOMAINE JACQUES FREDERIC MUGNIER Continued Spotlight on Clos de Maréchale: Clos de la Maréchale is a Nuits-Saint-Georges 1er cru and the largest monopole in Burgundy, surpassing both Clos de Tart and Clos des Lambrays in Morey-Saint-Denis. Vineyards sat under the radar until Mugnier took over in 2004 from Faively. Things have however changed under the Mugnier management, and Clos de la Maréchale is now an expressive wine even in its youth, although it still deserves a good deal of cellaring to unfold its full potential. Wine & V intage per 12 (LVX) % growth since release Jacques Frederic Mugnier, Nuits Saint Georges Clos Marechale, 2005 720.00 66% Jacques Frederic Mugnier, Nuits Saint Georges Clos Marechale, 2006 525.00 59% Jacques Frederic Mugnier, Nuits Saint Georges Clos Marechale, 2007 599.00 47% Jacques Frederic Mugnier, Nuits Saint Georges Clos Marechale, 2008 550.00 6.6% (2Y = 37.5%) Jacques Frederic Mugnier, Nuits Saint Georges Clos Marechale, 2009 550.00 21% Jacques Frederic Mugnier, Nuits Saint Georges Clos Marechale, 2010 540.00 20% Jacques Frederic Mugnier, Nuits Saint Georges Clos Marechale, 2011 450.00-12% Jacques Frederic Mugnier, Nuits Saint Georges Clos Marechale, 2012 537.00-17% Jacques Frederic Mugnier, Nuits Saint Georges Clos Marechale, 2013 520.00 n/a Avg price per case 555.00 JF MUGNIER - Red wines Average Price ( ) per 12 since 2005 Wine n Average per 12 Jacques Frederic Mugnier, M usigny Grand Cru 10,778.00 Jacques Frederic Mugnier, Chambolle Musigny Les A moreuses 1er Cru 6,683.00 Jacques Frederic Mugnier, Bonnes M ares Grand Cru 3,903.00 Jacques Frederic Mugnier, Chambolle Musigny Les F uees 1er Cru 1,573.00 Jacques Frederic Mugnier, Chambolle M usigny Village 867.00 Jacques Frederic Mugnier, Nuits Saint Georges Clos M arechale 1er Cru 555.00 We believe the Clos de la Marechale Premier Cru will surpass the trading price of the Village Chambolle Musigny (+56% more expensive) over the next few years as Mugnier continues to improve the wine, more people become aware of it and it further enhances its reputation. The wines are unadorned and unadultered. They do not overwhelm the drinker must listen. Most people want volume turned up in wine, but Mugnier s wines are more subtle and the drinker must make an effort to really appreciate them. The wines require plenty of bottle age, said Meadows, who quoted Matt Kramer as saying the distinguishing signature of Mugnier s wines was the absence of a signature. 33

DOMAINE JACQUES FREDERIC MUGNIER Continued The following graph gives some performance indicators for the two Grand Crus from 2006-2008, all of which have seen consistent price development. S eries Current Value 6m 12m 2y 5y Jacques Frederic Mugnier, Musigny, 2006 8,336 0% 0% 26% 128% Jacques Frederic Mugnier, Bonnes Mares, 2008 4,582 46% 12% 26% - Jacques Frederic Mugnier, Musigny, 2008 8,894 17% 14% 62% 125% Jacques Frederic Mugnier, Bonnes Mares, 2006 2,640 0% 0% 0% 32% Jacques Frederic Mugnier, Bonnes Mares, 2007 2,630 0% 0% 24% 62% Jacques Frederic Mugnier, Musigny, 2007 5,960-1% -1% 53% 68% 34

DOMAINE GEORGES ROUMIER In 1924 a young Georges Roumier married a local Chambolle-Musigny girl, and as a dowry he received a selection of Chambolle Musigny vineyards; Domaine Georges Roumier was born. Jean-Marie, Georges son, took over the wine making in 1961, and if both his and his father s wines were good, then they have a reached a new level of quality since Chirstophe, the third generation Roumier, has taken the reigns. Over the years the Roumier family has purchased pockets of various 1er and Grand Cru vineyards to now make the following wines: Grand Crus Bonnes-Mares: 450 cases/year Musigny:30 cases/year Corton Charlemagne: 100 cases/year Charmes chambertin: 50 cases/year Ruchotte Chambertin: 135 cases/year Premier Crus Chambolle Musigny Les Cras Chambolle Musigny Les Amoureuses Chambolle Musigny Combottes Morey Saint Denis Clos de le Bussiere S eries Current Value 6m 12m 2y 5y Georges Roumier, Bonnes Mares, 2001 4,584-4% -17% 2% -3% Georges Roumier, Bonnes Mares, 2000 4,044-4% 1% 7% 88% Georges Roumier, Bonnes Mares, 2006 4,440-12% 27% 12% 40% Georges Roumier, Bonnes Mares, 2004 3,324-8% -15% 26% 64% Georges Roumier, Bonnes Mares, 2007 4,524-14% 8% 46% 43% Georges Roumier, Bonnes Mares, 2005 9,168-3% -2% 3% 13% Georges Roumier, Bonnes Mares, 2003 4,884 6% 16% 16% 24% Georges Roumier, Bonnes Mares, 2002 7,428-5% 3% -7% 46% 35

DOMAINE GEORGES ROUMIER Continued Roumier s micro-produced Grand Cru, Musigny, has an average bottle price of 3,250 making it the fifth most expensive wine in the world. Bonne-Mares is arguably the wine that Roumier are best known for, and over the past five years the recent vintages have certainly performed well on the back of this. The domaine is best known for its Musigny and Bonnes-Mares each has enjoyed impressive scores from Galloni. and stand-out vintages include the 2009 Bonnes Mares (98+) and the 2012 Musigny (97-99). As such, these wines are in high demand, and getting hold of them isn t easy. However, the savvy investor can expect to see good returns on these wines. Prices of Musigny almost tripled between 2007 and 2014, and you can now expect to pay at least 3,000 per bottle for the best vintages. The Bonnes-Mares, curiously, sells for quite a lot less despite offering fantastic quality, high scores and steady value growth. As of November 2014, average prices for this blend remain under 800 per bottle and as low as 200 for some of the lesser vintages but they re sure to offer longer term potential. Bonnes-Mares Roumier: price comparison for exceptional vintages 2010 is the value buy. Vintage Price per 12 Score (Burghound) Price difference Vs 2010 2010 8,200.00 96pts - 2009 8,700.00 96pts 6% 2005 9,800.00 96pts 20% 1999 12,608.00 95pts 54% 1995 18,000.00 97pts 120% 36

DOMAINE DES LAMBRAYS Domaine des Lambrays was established in 1363 yet it was only in 1981 that this climat was finally promoted to Grand Cru. The estate was purchased in 1996 by the Freune family and since then dramatic changes have taken place, leading to an upsurge in quality. At 8.8 hectares, this is the largest Grand Cru parcel in Burgundy under one proprietor. Winemaker Thierry Brouin has been in charge since 1979. In April 2014, Bernard Arnault s Moët Hennessy Louis Vuitton (LVMH) luxury group has made its first move in Burgundy, buying Domaine des Lambrays from Ruth Freund for an undisclosed sum. Jean-Guillaume Prats said LVMH would maintain the current distribution and of course, the existing very competent local team will continue to manage the estate. LVMH already has extensive vineyard holdings, including Cheval-Blanc and Yquem in Bordeaux. It is the first step in Burgundy, with an exceptional terroir and a great historic estate, Jean-Guillaume Prats, CEO of LVMH Estates and Wines, told Wine Spectator. April 2014, WineSpectator Magazine This takeover is one of the main factors that has drawn our focus towards this domaine as one to watch. Although recent vintages are yet to witness the growth seen in some of the other examples in this document, as demand continues to increase for wines from this region, you can be sure with the brand power behind this estate that Clos des Lambrays will soon come into focus. The average price for Clos de Lambrays is around 1,200 per case over the last 10 vintages and this certainly offers relative value against other Grand Cru producers. The release price for the 2012 and 2013 suggest that LVMH have recognised this and provided the quality of the wine continues to improve, prices for back vintages will follow suit. Recommended wines: Grand Cru Clos des Lambrays, production around 3,000 cases per year. Premier Cru Lambrays Morey Saint Denis, production around 750 cases per year The takeover would suggest that the Burgundy estate will be able to benefit and further develop its worldwide market appeal which will push up current prices (scores from Wine Advocate overleaf). as demand continues to increase for wines from this region, you can be sure with the brand power behind this estate that Clos des Lambrays will soon come into focus. 37

DOMAINE DES LAMBRAYS Continued V intage Wine Score Price Per 12 x 75cl 2013 Clos de Lambrays 92-94 (WA) 1,200 2012 Clos des Lambrays 94 pts 1,250 2010 Clos des Lambrays 94 pts 1,750 2005 Clos des Lambrays 94 pts 1,350 1999 Clos des Lambrays 94 pts 1,580 2011 Clos des Lambrays 93 pts 960 2009 Clos des Lambrays 93 pts 1,110 2008 Clos des Lambrays 93 pts 1,040 2001 Clos des Lambrays 93 pts 1,500 2006 Clos des Lambrays 92 pts 900 2003 Clos des Lambrays 92 pts 1,240 2002 Clos des Lambrays 92 pts 1,500 Average P rice 93 pts 1,281 38

DOMAINE GEORGES NOELLAT A NEW STAR IN BURGUNDY IS BORN? Charles Noellat was once the licensee of Vosne s greatest domaine, which eventually formed the vast majority of Domaine Leroy, amongst others. His nephew Georges Noellat sold its production on a 20-year lease to Jadot and Drouhin between 1990 and 2010. Once Domaine Georges Noellat resumed ownership of the estate, 20-year-old Maxime Cheurlin took the reigns as one of the youngest winemakers in the whole of Bourgogne. Having grown up in the Champagne region, Maxime has always had Burgundy running through his veins. A nephew of the Jayer family and a cousin to the sons of Rouget, it was no surprise that he has found his calling back at the domaine, taking over management from his grandmother. Noellat has been a name synonymous with Vosne-Romanee throughout the ages but the appointment of Maxime Cheurlin has brought about some revived attention to the estate with Neal Martin commenting that Maxime is a huge talent, someone destined for stardom. With a desirable clutch of vines Maxime has been making swift work of returning the family name its former glory. The Domaine produces three Grands Crus and six Premiers Crus as well as Village and Regional appellations. Grand Crus Grands Echezeaux - Red 0.99 acres (0.4 ha) Vosne Romanee - Red 2.82 acres (1.14 ha) Echezeaux - n/a Premier Cru Nuits St Georges 1er Cru les Boudots - Red 2.96 acres (1.2 ha) Vosne Romanee 1er Cru les Beaux Monts - Red 1.11 acres (0.45 ha) Vosne Romanee 1er Cru les Chaumes - Red 1.16 acres (0.47 ha) 1985 Vosne Romanee 1er Cru les Petits Monts - Red 0.57 acres (0.23 ha) Production Methods Viticultural Method: Lutte Raisonnee Triage: Vineyard and Cellar Fermentation: Mostly de-stemmed, native yeasts, infusion not extra Aging: 14-20 months New Oak: 30 to 100% Nuits Saint Georges Cras - n/a Nuits Saint Georges - n/a 39

DOMAINE GEORGES NOELLAT Continued Whilst its own domaine wines are always of high quality, George Noellat s great grandson Maxime has only been plying his trade since 2010. Looking at the most relevant vintage since his involvement, the 2012 throws up very interesting value when comparing two of the Grands Crus. S eries Current Value 6m 12m 2y 5y Georges Noellat, Vosne Romanee, 2012 4,584-16% 6% - - Georges Noellat, Grands Echezeaux, 2012 4,044 16% 79% - - With the recent return to the limelight of George Noellat under the stewardship of Maxime Cheurlin it is only the more recent vintages since 2010 that are worth taking note of. Having studied under the watch of his uncle Emmanuel Rouget, we have drawn some price comparisons below and used the three most recent vintages of Echezeaux as an example. W ine George Noellat Emmanuel Rouget % Difference Echezeaux 2013 2,050.00 3,900.00 90. 2% Echezeaux 2012 1,600.00 4,100.00 156. 3% Echezeaux 2011 950.00 3,300.00 247. 4% As you can see, Emmanuel Rouget s Echezeaux trades at a significant premium, but there is evidence to suggest that Cheurlin s emergent tenure at Noellat will cause prices for his Echezeaux and other wines of the stable have the potential to close this gap over the long term. 40

DOMAINE JEAN LOUIS TRAPET This famous Gevrey-Chambertin estate was known as Domaine Louis Trapet when it was founded in 1870. Starting life as a key producer for top negociants, such as Maison Leroy, it made its name as the largest stakeholder in the king of Grand Cru vineyards, Le Chambertin. In 1993 the estate was split in two as one side of the family went on to form Domaine Rossignol Trapet, whereas the remnants of the original estate were named Jean-Louis Trapet Pere et Fils. Now producing three Grand Cru and three Premier Cru wines, it has become one of the most well established producers in Gevrey Chambertin. Best known for its Chambertin, since 2003 this wine has an average price per case of 1817, and with an average score from Burghound over the same period of 93.6 this certainly represents good value against some of the other producers from this vineyard such as Rousseau and Dujac. Total annual production: 5400 cases per year. Grand Crus Chambertin: 700 cases Latricières-Chambertin: 290 cases Chapelle Chambertin: 200 cases Premier Crus Gevrey Chambertin Petite Chapelle Gevrey Chambertin Clos Prieu Gevrey Chambertin Les Corbeaux While the Chambertin appears to offer strong value in comparison to some of the other well established producers that make wines from this vineyard, Latricières-Chambertin is arguably the top pick from an investment perspective. With an average vintage score of 93 from Burghound since 2003, the average case price is 1,412. The 2009 vintage is particularly interesting with a joint highest score of 95 from Meadows (joint with Leroy), while the case price of 1,300 is the fifth most expensive. P roducer Avg Vintage Score (2002-2011) Avg Case Price (2005-2011)* Domaine Leroy 96.8 26,941.00 Domaine Bernard Dugat-Py 95.8 12,589.57 Domaine Dujac 94.7 11,720.00 Domaine Armand Rousseau Pere et Fils 95.5 9,409.14 Domaine Ponsot 92.7 4,090.83 Maison Louis Jadot 92.9 1,913.85 Domaine Henri Boillot 93.5 1,900.67 Domaine Trapet 93.8 1,776.71 Domaine Pierre Damoy 93.2 1,638.86 Domaine Tortochot 93.4 1,018.20 *prices for vintages between 2005 and 2011 were used, as sourcing reliable data for older vintages is challenging The data provided above certainly indicates that Trapet Chambertin offers an attractive average case cost for the output of the wines that the domaine has been producing over the past 10-plus years. One could also make a compelling case for the wines from Boillot, Tortochot and Damoy based on this criteria. 41

DOMAINE COCHE DURY Jean-François Coche-Dury produces arguably the greatest white wines coming out of France, acknowledged by a cult status and following. Robert Parker describes him as the greatest wine maker on the planet and his reign in Meursault follows a family dynasty established in 1924 and greatly expanded in the 1960s by George, Jean- François s father. Jean-François inherited the estate in 1972 and now runs the domaine with the help of his son Raphael, following semi-retirement in 2010. The domaines sizes up at just 10.5 hecatres, nine of which lie in Meaursault, with the remaining plots in Puligny- Montrachet, Corton-Charlemagne, Pommard, Omnthelie and Auxey-Duresses. Total production is only 60,000 bottles across the portfolio of wines. Recommended Wines Corton-Charlemagne Grand Cru Meursault-Perrières 1er Cru Meursault-Caillerets 1er Cru Volnay 1er Cru Jean-François has left a large pair of shoes for son Raphael to fill, since it was under his leadership that Domaine Coche-Dury s wines became, arguably, the most sought-after whites in all of Burgundy. Yields are small, yes, but not exceptionally so, and there s no wizardry during vinification, either. Instead, the wines are simply the product of extreme dedication to the craft of winemaking. The second most highly-rated white wine in the region, according to Wine-Searcher, is the Corton-Charlemagne, also the most expensive white in the appellation, and one that has demonstrated impressive growth in recent years. The 2001 vintage scoring 98-100 from Parker increased by more than 50% in value between 2010 and 2014, and now collectors of this famed wine will be lucky to find a bottle for less than 1,000. Interestingly, however, it s the Meursault Perrieres that has really captured critic attention, and is regarded as the top wine in the region, yet often sells for less than its estate counterparts. It s had a tumultuous value history, but has generally demonstrated growth in recent times. The 2010 vintage in particular offers high quality at a more accessible price. As Neal Martin commented: How this can be a Premier Cru rather than Grand Cru, God only knows. 42

DOMAINE LEFLAIVE Anne Claude Leflaive sometimes, when Lalou-Bize Leroy is not listening, described as the Grande Dame of Burgundy, is recognised as the most famous producer in Puligny-Montrachet and for the majority, is the reference point for white Burgundy. Domaine Leflaive s holdings represent some of the most precious terroirs in the world for the Chardonnay, including legendary Grand Cru vineyards such as Bâtard- Montrachet, Chevalier-Montrachet and Le Montrachet itself, which, most will agree, produces the greatest white Burgundy. Grand Cru vineyards: Chevalier Montrachet, Bâtard Montrachet, Bienvenues Bâtard Montrachet and a tiny holding of Le Montrachet. 1er Cru vineyards: Les Combettes, Les Pucelles, Le Clavoillon, Les Folatieres, Sous le Dos d Ane (Meaursault). Le Montrachet commands around 6,000 per bottle in most years and with the untimely death of Ann Claude in April 2015, the legacy of this great estate has been in the market focus over the past few months. Our head of trade sales Tom Turner has noted a marked increase in enquiries from far eastern collectors. Behind every great wine there is a great women and this is certainly the case with Anne Claude. The estate is now being managed by Brice de La Morandiere with winemaking under Eric Remy. For many years, Anne Claude established a formidable reputation consistently producing some of the region s best wines. This has been reflected in consistently high scores awarded from Burghound, averaging 96 points for Le Montrachet over the past five vintages. Anne-Claude Leflaive ( 17 January 1956-5 April 2015) Back in April of this year, the sad news of Anne Claude s passing rocked the wine world. Only in her Fifties, her life was taken too soon but her legacy will live on for an eternity. Along with Lalou Bize-Leroy, Anne Claude Leflaive spearheaded the Biodynamic movement now ever present across Burgundy today. She was considered one of a kind and possessed enviable people skills and powers of communication alongside her obvious talent for viticulture. The increase in demand tends to be an inevitable consequence of the passing of such a legendary winemaker. Although a macabre injustice, it is without question that Domaine Leflaive s stock will continue to rise since her death. 43

RULES OF ENGAGEMENT Rule number one for buyers/investors/collectors of Burgundy is to work with advisors who understand this unique wine region and can identify where there is investment value, be it through the purchase of a Grand Cru from a top producer or a Premier Cru from one of the relative newcomers to the Cote d Or. The vast complexities of this region make it extremely difficult for those new to Burgundy, although this should not prohibit investors from participating in a market which can be extremely rewarding. You will need to place your confidence in those guiding you through the minefield of the Cote de Nuits and Cote de Beaune and to be ready to make purchase decisions swiftly scarcity of prime stock and a very demanding market requires buyers to move very quickly on parcels as they arise, this is where our advice will be key. RISK As with all areas of the fine wine market it is imperative that the associated risk parameters are clearly spelt out to any buyer or investor. Burgundy provides very similar risk protection to capital investment through a unique store of value that fine wine exhibits, of course the market value of a given wine will change over time and therefore an understanding of the market specifics is essential. Burgundy, in comparison to Bordeaux, can offer insulation from market trends which can impact significantly on price, through drastically lower levels of liquidity. Many wines may not openly trade for long periods of time and when stock does become available prices can spike as high levels of global demand place pressure on offer prices. This has been very visible in the auction markets for wines from top producers, but this aside in the general market place the key wines from the key producers are snapped up once they become available. Entry level pricing is therefore a key element of any purchase decisions. The low liquidity and scarcity also impacts on valuations and it is important for investors to realise that from time to time an accurate valuation of a particular case of Burgundy Grand Cru can be difficult if there is no reliable price data on the market. This can lead to exchanges such as Liv-ex using loose bottle pricing or old listings to provide a valuation for a particular case of wine, which it may undervalue. On the contrary, due to limited availability, a single listing or offer by just one wine merchant worldwide can have a significant impact on the price (or valuation) of a wine, if that listing is the only accurate price available for that wine. We therefore advise caution on valuations going both ways when it comes to Burgundy, I.E. If there is a short term spike or dip. Finally, as with any form of luxury asset there is always the potential risk of counterfeit wines entering the market and in the past few years there have been some high profile cases, most notably Billionaire US wine collector Bill Koch taking convicted wine fraudster Rudy Kurniawan to court for selling counterfeit wines through the auction market. This highlighted the need for investors to work with reputable companies with credible supply routes as well as highlighting the pitfalls of buying in the auction market. Burgundy provides very similar risk protection to capital investment through a unique store of value that fine wine exhibits, of course the market value of a given wine will change over time and therefore an understanding of the market specifics is essential. Rules of Engagement +44 (0)20 8332 9386 wineinvestment.com 44

RETURNS 450 Burgundy vs E & Gold 400 350 300 250 200 150 100 50 0 17/06/2005 17/06/2006 17/06/2007 17/06/2008 17/06/2009 17/06/2010 17/06/2011 17/06/2012 17/06/2013 17/06/2014 17/06/2015 S&P500 Gold FTSE 100 BURG150 Series 6m 12m 2y 5y 7y 10y FTSE 100-7% -3% -6% 12% 47% 18% S&P 500 1% 3% 18% 76% 117% 68% Burgundy 150 3% 5% 4% 43% 56% 175% Gold -7% -3% -13% -16% 54% 124% The unique characteristics of Burgundy that we have mentioned, severely restricted supply resulting in lower liquidity and demand that far outstrips availability has meant that Burgundy as an investment class has not only outperformed its regional counterparts in the wine investment market but has been one of the best performing asset classes outperforming the FTSE100, S&P 500 and Gold over the past 10 years. It terms of the regional data, Burgundy has outperformed Bordeaux in part due to the fact that it s a more illiquid market, which has meant the more speculative funds that entered the Bordeaux market as a result of the emergence of Hong Kong and mainland China as a major player in the wine market did not affect the top end Burgundy wines. Furthermore the more complex nature of the marketplace and knowledge required to enter means that for the most part the market participants which caused a speculative bubble in the Bordeaux market from 2009-2011 largely ignored Burgundy. As a result, Burgundy has enjoyed a consistent level of performance over the past decade, with relatively low volatility, performing within the long-term average growth projections of 8-15% per annum. From the bar chart below comparing the long-term performance over different timeframes, it is interesting to note the increasing escalation in gross % returns on Burgundy the longer it is held. This illustrates that for investors looking for solid returns in the Burgundy market, a longer-term hold is required to achieve the upper-end of our projected 8-15% annual growth. Burgundy as an investment class has not only outperformed its regional counterparts in the wine investment market but has been one of the best performing asset classes. Rules of Engagement +44 (0)20 8332 9386 wineinvestment.com 45

RETURNS Continued Burgundy Best Peforming regional index of the investment grade wine market Burgundy 150 Rhone 100 Champagne 50 Rest of the World 50 Italy 100 Liv-ex Bordeaux 500 200% Compara ve Long Term Peformance 150% 100% 50% 0% 12m 2y 5y 7y 10y -50% FTSE 100 S&P 500 Burgundy 150 Gold Therefore, for new entrants entering this market we would advise that if you are looking at shorter term horizon (three to five years) returns in the region of 6-10% are achievable, those with a medium to longer term horizon (five to seven years) could expect returns from 8-12% and for investors with a long-term horizon of 10 or more years 10-15% returns per annum is achievable. Rules of Engagement +44 (0)20 8332 9386 wineinvestment.com 46