Cognac, February 14,1998
Happy Valentines to all!

This week, you will find an extremely interesting article that was published in the magazine Wine Enthusiast of December 1997 and written by Terry Robards :

A tiny sector of the auction market has been lying mostly dormant for years and may well hold the best potential for capital gains. While the market for the fine wines has roared into orbit, carrying prices to a record level, the market for collectible brandies, notably Cognacs, has been virtually asleep. Yet there are reasons why certain Cognacs of very limited production are starting to attract the attention of serious collectors and speculators.

Perhaps more important, the supply-demand balance for these rare Cognacs is sharply skewed to react to demand, because the production is often extremely limited, in fact far smaller than the supply of most fine wines. Moreover, with Cognac, the condition of the beverage is rarely an issue because Cognac is a distillate so high in alcohol that it is virtually immune to deterioration from poor storage. On the other hand, storage conditions are crucial to the quality of fine wine, and a purchaser may discover years later that the contents of auction-markets bottles of Château Petrus or Cheval Blanc are undrinkable.

The finest Cognacs usually come in intricately etched crystal decanters made by such renown manufacturers as Lalique and Baccarat. The bottles may be individually numbered and are usually packaged in satin-lined case intended for display. Many are so splendid artistic that no wine bottle can compare, which adds to their collectability.

The most attractive of all from the investment standpoint are clearly those from the Erté Collection from Courvoisier. Erté, one of the founder of Art Déco, was originally commissioned to create a series of seven decanters, each symbolizing different aspects in the making of Cognac, the world's most prized brandy. Thus, there are

Vigne (the Vine),
Vendanges (harvest),
Distillation,
Vieilissement (Aging),
Degustation (Tasting),
L'Esprit du Cognac (Spirit of Cognac)
and la Part des Anges (the Angels' Share).

Each specially numbered decanter features colorfully enameled depiction of a sinuous women into the design, which follows the teardrop (Cognac-drop?) shape of the Crystal bottle. In the design of Vigne (Erté Number One), for example, the women is draped in the gnarled trunk of an ancient grapevine against a salmon-colored background. Limited editions of 12,000 of each design came out annually beginning in 1988, and most went on the market from Courvoisier in the years after Erté's death in 1990 at age 97.

Initially priced at $300 per decanter, prices for the earliest releases, Vignes and Vendanges have now soared into the thousands of dollars. Only the last two in the original series of seven, L'Esprit du Cognac and La Part des Anges, are still occasionally found at retail, but at prices from upward $600 each. Complete sets are worth a premium, although bargains can still be found because the collectability of such items is only now emerging.

Last spring, the Park Avenue Liquor Shop in Manhattan offered a rare collection of eight of the Erté decanters for $13,500. Even though Erté Number One and Two were occasionally selling at auctions for $5,000 a piece and up, the set failed to attract a buyer until early October, when a Belgian couple walked away with it. “They told me the Number One alone was worth $12,000 in Belgium,” said Michael Goldstein, proprietor of the Park Avenue.

Nevertheless, Goldstein still offers complete sets of the Erté Collection through his catalogue for $13,500. “No one is breaking my doors for it,” he says. Considering the bizarre prices in the auction markets for wines and the likelihood that the rare Cognacs will erupt in the same way, Goldstein may be failing to seize an opportunity. In a Davis & Company auction in Chicago, held October 25th, Erté Number One sold for $10,450 (including the buyer's premium of ten percent). The decanter was accompanied by a 19-by15-inch serigraph of the artwork used for the bottle, numbered 23/50 and signed by Erté. Only an expert on Erté's silkscreen could estimate what share of the price can be attributed to the print. But it is becoming clear that shrewd collectors are pursuing the Erté bottles.

In its September sale, Davis also auctioned an Erté Number One for $4,500 and an Erté Number Two for $2,200 , as well as seven-bottle set for $8,800. “There's a big interest from the Far East, and a Las Vegas resort bought the last set,” said Michael Davis, resident of the auction house. He said he first noted interest firing up for Erté decanters two years ago, when an eight-bottle set sold for about $12,000.

Within Courvoisier, the eight Erté bottle is called a Special Edition and is the unusual and potentially the most valuable, because only 4,000 were produced, or one-third the volume of the others. It was not an original member of the Erté collection because it was deemed too risqué to put on the market. In fact, the U.S bureau of Alcohol, tobacco and Firearms, which must approve all alcoholic beverages labels for the American market, rejected it in 1987, so Courvoisier held it back.

When finally released in 1994 after a more permissive BATF gave approval, it was called Inédit, or Unpublished, to symbolize the earlier rejection. It is the only one in the Erté Collection to depict a women with breasts bared, although the tasteful Art Deco depiction would scarcely be deemed risqué even by the most Victorian of critics. In common with the other 3 decanters in the Erté Collection, Inédit was hand-crafted in crystal using such fine materials as 24-carat gold and rare color pigments.

Contributing to the value of all the decanters is what's inside the bottles. The blend consists entirely of well-aged Grande Champagne Cognacs, considered the best of the Cognac district, and includes Cognacs dating to 1892, the year of Erté's birth. The average age of the spirits in the Erté collection is more than 60 years, dating back in the 30's. Potentially even more valuable than the Ertés is a more recent release from Courvoisier called Succession, which consists of one-farmer's unblended batch of 595 bottles of single-vineyard of Grande Champagne believed to be from the 1922 vintage. The Cognac has been removed from its oak barrel at just the right moment and placed in glass demijohns, halting the evaporation of alcohol at 41 degrees, or 82 proof. (the alcohol in brandy continuously evaporates as long as it is in wood, yielding what the Cognaçais call “the angel's share”.)

The batch has been handed down from generation to generation in the farmer's family (the word succession means “inheritance”) until it was sold to Courvoisier, reportedly to finance a dowry. When the demijohns were unsealed to bottle the brandy, a respected bailiff, Jean-Pierre Scurmann, in the town of Jarnac, was called in to witness not only the unsealing but also the transfer from demijohns to the 595 bottles. Each bottle is serially numbered in Scurmann's handwriting and is accompanied by a certificate of appraisal and the bailiff's affidavit. Succession comes in a one-bottle case of mahogany and ebony , and has been priced at $3,600.

Courvoisier, of course, is not the only Cognac producer with collectable decanters. Remy Martin Louis XIII, modeled after a 16th-century royal flask found in the battlefield of Jarnac, brings $250 empty (compared with $1,100 when filled with Grande Champagne Cognac averaging 50 years of age). The Richard Hennessy of Hennessy, blended from Cognacs dating to the early 19th century, retails for $1,500 and up, and the Martell-bottling called L'Or de Martell, in a decanter with 24-carat gold-plated casing and stopper, sells for $1,000.

The Hine vintage Cognacs from the 1950's and '60s are also beginning to show up at auction, although they can also be found at retail for anywhere about $100 to $300 a bottle. Since a vintage comprises a finite quantity, these eventually should appreciate sharply in value. The most collectible Hine at the moment appears to be The Talent de Thomas Hine Family Reserve, in a one-of-a-kind numbered Baccarat decanter packed with four crystal glasses in a mahogany and ebony humidor. Retail: $3,500.

Known almost exclusively to serious collectors are the Perfection bottlings of A.Hardy & C° , which come in signed and numbered Daum crystal decanters that now brings thousands of dollars. The Cognac is unblended and was distilled prior to the Phylloxera outbreak of 1870. The highest prices are paid for a complete set that includes signed authentication certificates, four crystal glasses with crystal tray and a “Perfection” lithograph, all in a lined wooden presentation box.

Retailers recall that they were forced to mark up their fine wine inventories two years ago when auction prices swept past retail prices. The phenomenon is likely in the rare Cognac Market, reflecting the limited supplies that have already begun to attract speculators.

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