Emerging market wine sophisticates?

May 29, 2012

Serving wine instead of beer at its annual rooftop soiree? Is this some kind of subliminal message specialist broker Auerbach Grayson is trying to send, ie: that emerging markets are mature and here’s the vino to prove it?

Or, is the message not in a bottle but in a case? Don’t limit your exposure to emerging markets but increase it for growth. Only a slight problem here in that emerging market stocks are underperforming developed markets so far this year. They underperformed in 2011 as well.

But don’t let facts get in the way of wine.

 

Despite its near perfect AAA rating (S&P has them at AA-plus), you can skip the Austrian offering (and for that matter most of the European samples at this gathering of Auerbach’s clients and journalists on the emerging markets beat)

This intrepid correspondent decided a not so serious, unscientific but no less strenuous investigation was necessary to see if there was some kind of message about the state of the world to be found at the bottom of the eight glasses they served. Here are some of the highlights.

Lebanon is associated more with war, terrorism, armed insurgents, Syria’s recent domination, Islamic militants such as Hezbollah than it is with fine wine. Hezbollah by the way has a stronghold in the Bekaa, the main wine growing region. It is believed that wine has been grown here since perhaps 2000 years before Alexander the Great. But Lebanese wine much like Lebanese debt or credit default swaps can be described as hearty survivors. No one would argue Lebanon’s highly speculative B (S&P and Fitch)/B1 (Moody’s) credit rating is something to boast about. However, even with a recent elevation in CDS prices because of rising violence in Syria, the cost to insure $10 million worth of Lebanese sovereign bonds is about half of what it costs to insure against a default or restructuring in Venezuela. On a trip to Lebanon a few years back, with a visit through the Bekaa on the way to the ancient city of Baalbek, one is struck by the irony that posters of Hezbollah leader Hassan Nasrallah are plastered all over this wine making region. Alcohol is prohibited by Islam. But on this cool New York spring evening Auerbach served a simply delicious 2009 Jeune Rouge Syrah from Chateau Musar. In a straw poll of anyone within earshot, it seemed the favorite of the evening (and mine too). The wine has a very light nose with a medium purple color that masks a deep fruit that had no bite. This was very easy on the palette.

 

Sticking to the Middle East, perhaps the most surprising wine of the evening was the offering from Tunisian, which has a very tiny area for growing in its northern fringes along the Mediterranean coast. The birthplace of the Arab Spring, Tunisia has had wine vineyards for millennia, and much like Lebanon, the French are the main influence here. The 2008 La Vieille Cave Syrah from Les Celliers de Montfleury was like eating a sumptuously thick chocolate cake (think Mississippi Mud variety) with a raspberry reduction sauce on the side. Now, if the government can hold itself together, much like this wine, then the two notch downgrade of its credit rating into junk status by Standard & Poor’s (now at BB) may not last long. (http://r.reuters.com/dem48s) The wine served certainly did not last long in the glass.

Moving from the delights of Lebanon and the surprise of Tunisia, we come to the wet dog from Austria. Now, I know the AAA credit rating from two out of three ratings agencies puts Austria in good company and off the critical list of Europe’s economies, but the Austrian offering, a 2009 Zweigelt from Rosi Shuster, turned out to be a big letdown. OK, the tasting notes provided might say “This wine simply overdelivers,” but all I could think of was a wet shaggy dog on a humid night in August when I smelled it. The taste wasn’t much better. I asked if it was simply a corked bottle but assured this was how it was supposed to taste. Austria may be one of the last sovereigns standing with a near perfect credit score but hopefully there’s other reasons to try offerings from their expanding winemaking efforts. I’m willing to give this the benefit of the doubt and try again, if anyone’s offering.

In the middle, as usual, was the rose from Switzerland (which by the way still has three perfect credit scores). The 2010 Oeil de Perdrix from Chateau d’Auvernier, the tasting notes said is a dry Pinot Noir vinified as a rose. It had a very earthy, metallic nose but brought some complexity that was not too fruity on the palette.

The one dessert wine served hailed from Hungary, a nation that is Central Europe’s most indebted, with a credit rating that has been sub-investment grade for nearly six months. The credit outlooks are negative. It is currently trying to keep the International Monetary Fund sweet on its planned loan deal. Too bad they can’t infuse the negotiations with this wine. Budapest must also be clearly concerned about its biggest trading partner, Greece, possibly bowing out from the euro. But more on that later.  First, the 2007 Royal Tokaji Aszu 5 Puttonyos was robust and syrupy, with a strong hint of oranges. At first I thought tangerines, but there was a contrast to the sweet tasted and the slight acerbic nose on this delicious wine.

Slovenia is one of Europe’s newest democracies, rich in spas and wine making that is nestled between some of the region’s more fragile economies such as Italy to the west and Hungary to the northeast, but also Austria to the north and Croatia to the south/southeast. The Auerbach folks served a 2009 Pino Grigio from Pullus. Not my favorite grape to begin with, but I thought this offering was still a disappointment. There was a little pinch of something at the first movement across the tip of the tongue, and then it disappeared. No notice given, no joy other than watching it swirl in the glass as a breeze broke through the heat of the day. Perhaps Slovenia’s mid-range investment grade credit ratings provide some comfort, although beware, all three agencies have it on negative outlook.

The only Latin American entry in this global trip around the rooftop was from Peru, which has to compete with its better known regional Chilean and Argentinean compatriots. The quality from this part of the globe is constantly improving with the New York price points that make them neighborhood favorites. The low but still investment grade credit rating cannot hurt. The 2010 Tabernero Blanco de Blancos of the Chincha Valley was crisp, without a heavy abundance of fruit. There is a sharpness to this wine but at the same time restrained. Thoroughly enjoyable.

Now for the last: Greece. Can you taste in its wine the disastrous economic situation, perhaps made worse by its European Union partners, as says its chief debt lawyer (http://r.reuters.com/kem48s)? Perhaps. But hold out hope and have patience is what the 2010 Domaine Sigalas Assyrtiko-Athiri is telling you as the first sips are consumed. While for me the wine was almost astringent when I first put it to my lips, the harshness diminishes the more this wine warms up from its ice bowl plunge and has time to relax and breathe. This kind of channels the laid back  image of life on the island of Santorini, where it is grown. Could it be that much like Greece in the currently harsh economic climate, the more you work at this Domaine Sigalas the easier it becomes to drink?

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