A Barolo Investment Thesis: Vajra Is Undervalued
A Barolo Investment Thesis: Vajra Is Undervalued
A deep dive into Vajra's world
In the mood for wine is the only weekly newsletter for the next-gen of fine wine lovers and investors. It’s free. The best way to keep it free is to share it with everyone. Literally everyone.
Hello fine wine lovers,
A friend of mine, who recently got into the expensive habit of collecting fine wines, asked me — What wines should I buy?
And I started listing all my darlings … and then I said:
“Make sure you leave some budget to buy some of Vajra’s Barolos!”
After a few hours, they come back to me, exasperated:
“There are four or five Vajra Barolos, which one do you mean!?!!?!!”
I didn’t have time to explain it then, so here’s an article for my friend and all of you who find Barolo a minefield.
Be warned.
It’s long.
I didn’t have time to make it short.
But I did have time to make a summary:
MGA System Demystified: How Barolo’s MGA System Influences Wine Value
What’s Typicity? How Vajra’s Terroir Expression Enhances Investment Potential
2020 Vintage Analysis: Evaluating Vajra’s 2020 Barolos in Today's Market
Deep Dive into Vajra’s Top 3 MGAs: Exploring Key Single-Vineyards
Top Investment Barolos: Vajra Barolos with the Highest Return Potential
MGA System Demystified
Someone recently told me that wine intrigues people because of its complexity, not despite it, and the discovery journey makes it fun. If that’s true, Barolo may be the most fun of all wine regions and will offer endless entertainment.
Because of this complexity, it’s often been compared to Burgundy. For some aspects, the parallelism holds true.
The comuni of Barolo and villages of Burgundy both delineate regions known for distinctive wine styles. But probably that’s where the similarities end.
Burgundy's climat system and Barolo's MGA (Menzione Geografica Aggiuntiva) denote specific vineyard areas with unique characteristics but operate within different regulatory contexts. For instance, a Burgundy climat like "Les Amoureuses" in Chambolle-Musigny has distinct soil and microclimate that are meticulously defined, affecting the flavour profile of its wines. Similarly, in Barolo, an MGA like "Cannubi" denotes wines from a particular hill with unique geological traits.
However, while climats can be Grand Cru or Premier Cru, indicating quality hierarchy, all MGAs in Barolo must meet the same stringent production standards.
As far as Barolo is concerned, the appellation’s hierarchy is purely based on location and not on quality. Of course, while Barolo experts know which MGAs are better (or worse), there is no way to tell from the appellation system. I suppose this puts the burden (or freedom) on the consumer to discover whether a wine or a MGA is good quality.
I tried to simplify the MGA hierarchical system in the below chart.
You’ll find some iconic winemakers, such as Bartolo Mascarello that always blend grapes from key MGAs — Cannubi (Barolo), San Lorenzo (Barolo), Rué (Barolo) and Rocche (Castiglione Falletto). Others, such as Elvio Cogno, decide to be as specific as possible: their Barolo Vigna Elena (I made the investment case for the 2016 vintage of Elvio Cogno Vigna Elena) is sourced from a vineyard of less than 1 hectare called “Elena” in the comune of Novello, in the Ravera MGA.
The Bartolo Mascarello’s argument blend is one rooted in history. In the past, achieving ripeness across all plots in the Barolo region was harder, and the producers created, a bit like in Bordeaux, a first wine, with the best grapes available to them. On the other side, more and more producers, like Elvio Cogno, believe in the MGAs system and believe in showcasing Barolo’s typicity, Burgundy-style.
What’s Tipicity?
This relatively modern appellation system of MGAs plays into a modern yearning of wine lovers for typicity — the ability of a winemaker to allow their terroir to express itself fully.
And nobody better than Vajra showcases what typicity is all about. Giuseppe (Vaira, the second-generation winemaker at Vajra) depicts it with a beautiful metaphor: the pendulum. When the intervention of a winemaker is too little (in the case of most natural wines) or too much, the hand of the winemaker, or as Giuseppe called it, the shade of winemaking, is revealed. It’s when the pendulum perfectly centred that’s the winemaker's hand is hidden and the wine is in perfect equilibrium.
Vajra produces four Barolos under their name (Albe, Coste di Rose, Ravera, Bricco delle Viole) plus three (Baudana, Cerretta, Barolo del Comune di Serralunga d’Alba) under the Luigi Baudana banner, following their acquisition in 2009 of one of the smallest wineries in Serralunga d’Alba, which is run as a separate property.
The 2020 Vintage & Giuseppe’s Flower Theory
Before delving into the investment case of each of the wines, a quick word on the most recent 2020 vintage.
Giuseppe Vaira says of his 2020 vintage:
The key to this vintage is 'flowery'.
Since 2008, his vintage theory has been based on flowers. The size of flowers is dependent on the weather:
sunny, warm weather means better flowers, and more vigorous growth which means bees are flying more frequently;
the opposite is true when wet conditions occur.
A larger flower’s petal will make a larger berry, which in turn sets the ratio of skin and pulp. And, “no matter what happens through the summer,” continues Giuseppe “the wine always carries an imprint of their flower.” Beautiful flowers — and fruitiness, are what’s key to the 2020 vintage, similar to their 2008. It was also a long vintage, meaning picking happened late in the season.
refers to 2020 as a “climate change trademark vintage, […] a balanced vintage, that produces highly expressive wines from both big botti and barriques.”In terms of longevity, “practically everyone agreed that the warm summer meant that this fruity vintage in one to drink before the 2019s,” writes Jancis Robinson.
A look to Vajra’s MGAs
G.D. Vajra has a perfectly crafted portfolio of piemontese wines, balanced across various price points. The estate offers single-vineyard Barolos, from the more accessible Barolo Albe (a blend), and a range of innovative, creatively designed lower-end wines, such as their wonderful Dolcetto D’Alba DOC.
In this analysis, we focus on their single-vineyard Barolos.
Barolo DOCG Coste di Rose, 2020
COMUNE DI BAROLO
Coste di Rose is the youngest single vineyard from Vajra — their first vintage was in 2015. It has the lowest elevation. This MGA sits between two of the most famous crus in Barolo: Cannubi and Bussia, but it’s only a fraction of their size. With sandstone terroir, one can expect a joyfulness of aromatics but less structure — less of the tannins on the back of the mouth, more on the tip of the tongue.
Barolo DOCG Ravera, 2020
COMUNE DI NOVELLO
“This is a Barolo for the purists.”
The Wine Advocate
Giuseppe describes Ravera’s distinctive soil composition: “It’s like an Italian Lasagna!”, because of the red (iron oxide) & white (marl) layers. Iron oxide gives a kick to the tannins, while white marl soils often gift high acidity, elegance, and a refined mineral quality to the wines.
“In recent years,” writes Alessandro Masnaghetti, Italy's finest cartographer, “there has been a lot of talk about the Barolo wines of Ravera and their almost exponential rise in quality, often related to climate change, which would seem to favour the traditionally cooler and later ripening zones like this.”
Barolo DOCG Bricco delle Viole, 2020
COMUNE DI BAROLO
In March, I attended a wine dinner with a Barolo theme. The line-up included some stellar wines, such as:
Filippo Sobrero, 1967
Bruno Giacosa, 2003
Giacomo Conterno, 2013
I brought Vajra’s Bricco delle Viole 2020, and this young wine held up to the high-quality level of the other wines, receiving great appreciation from everyone.
Bricco delle Viole is Vajra’s highest Barolo vineyard and the closest to the Alps. It ranges from 380 to 480 m along the eastern ridge of the village. Its name, 'Hill of Violets', originates from the flowers that blossom early because of the south exposure. Up above the fogs, it gets the earliest sunrise and the latest sunset. Vines in this MGA used to make grapes back in 1840s.
“Call it genius loci, call it emotion, call it whatever you like, but in the case of Bricco delle Viole, it is what in my opinion best defines this cru.” Alessandro Masnaghetti, explains that “what makes the difference is the sensation of openness, altitude, brightness and freedom that I feel every time I reach the upper part of Bricco delle Viole. This is a different place, as different as are the wines, more tense and fruity than those of Fossati, for example, which is a few hundred meters away with very similar soils, or, at the same time, less lean and composed than a Barolo from Serradenari. One might imagine this as a high place that needs hot vintages to thrive, but that is not the case, as many fine bottles can testify to the contrary.”
The Investment Case
Vajra has shown impressive growth among Italian fine wines. According to I numeri del vino's analysis of Cellar Tracker data, Vajra saw a 13% increase in collector holdings last year, outpacing big names like Tenuta San Guido and Vietti.
Their Barolo “Bricco delle Viole” rose by 16%, and Barolo Albe by 8%.
However, the 2020 vintage is priced higher than previous years, reflecting broader inflationary trends. On the other hand, high interest rates make safer investments more appealing, pulling money away from higher-risk markets like fine wine.
If demand decreases, then the price should also move down. And we find ourselves in a position where prices of the Bordeaux EP have come down substantially — and yet, that’s not enough to convince fine wine buyers to buy into the more recent campaign. As I explained the mechanics in Brief Finance Lesson, the economic shift to high interest rate regime also makes older vintages seem more attractively priced.
Collectors have a broad range of interesting vintage choices, and Vajra is no exception. The 2019 vintage still offers great value in many wine regions, particularly in Barolo. I wrote about it a year ago, and it remains true.
For instance, taking Bricco delle Viole 2020, for it to be considered a good investment compared to the 2019 and other recent vintages, it would need to trade at a 30% discount from the current market price under the current interest rate regime.
As mentioned earlier regarding Bricco delle Viole, 2020 is a very accessible vintage in its youth. However, the 2019 vintage is the one with the ageing potential.
A similar conclusion can be drawn when analysing the Ravera 2020 and the Coste di Rose 2020 against their 2019 counterparts. You can find the analysis in this Google Sheet.
Interestingly, Giuseppe Vaira confirmed that the 2020 release prices remained the same as the 2019 prices, despite a 30% decrease in production for the 2020 vintage.
This begs the question — Why the big difference in prices?
While I have my suspicions, I do not have the answer to that; but I am convinced that the surge in price isn’t connected to an increase in demand for the 2020 vintage.
Whatever the reason, you can use this Google Sheet to evaluate the prices offered to you by your wine merchant, by changing the market prices in Column D.
In addition, pricing for Vajra’s wines is different on each platform — so please note that my analysis uses Liv-ex throughout for the sake of consistency.
Are there any interesting opportunities when looking across the three MGAs? Certainly, Coste di Rose 2018 looks very attractively priced, when accounting for the critics’ score. Also, both the Ravera 2019 and 2017 are interesting, as they trade at a 12% and 14% discount from their Bricco delle Viole counterparts while the difference in score is negligible.
To evaluate the different Vajra’s MGAs, we use Masnaghetti’s list of recommended wines per MGA to compare and contrast.
From the below analysis we can say that their Ravera are priced very favourably (especially the 2019 and 2016) and have an upside of 2x or 200%, when compared to Vietti’s. A similar argument can be made for their Coste di Rose, albeit with lower returns.
As far as the Bricco delle Viole is concerned, I don’t want you to walk away from this analysis thinking that Vajra's Bricco delle Viole wines are too expensive. To the contrary. Bricco delle Viole is Vajra’s first wine, if you will, and, while is relatively more expensive compared to other producers in the same MGA, when compared in absolute terms with the top Barolo wines, it’s very fairly priced.
It has an average upside of 3.75x or 375%.
Final Remarks
This new generation at Vajra is investing heavily in quality and reputation, promising sustained growth. They are making very strategic acquisitions: in 2009, they acquired Luigi Baudana, one of the smallest wineries in Serralunga d’Alba. Situated in the tiny village, with its 2.6 hectares of vineyards, Luigi Baudana is an authentic “garage wine” expression of Barolo.
Not surprisingly, they are winning the heart of wine critics, such as that of Monica Larner, who says: “The most interesting portfolio of wines from Piedmont, in my opinion, is the one thoughtfully put together by G.D. Vajra. Given the variety of flavors and the many local grapes used, my annual tasting at this estate is always one of my favorites. This year I tasted with Isidoro Vaira, one of three siblings that runs the winery with sister Francesca and brother Giuseppe. Parents Milena and Aldo Vaira are also busily involved at the winery, making this a dynamic, family-run reality.”
Other wine-makers in the regions point at Vajra as one the few brands that can produce in quantity while maintaining a pegged focus on quality.
It took me quite sometime (three months!!!) to write this piece on Vajra’s Barolos because the investment case isn’t straightforward and the returns aren’t short-term. However, I strongly believe that they compare favourably with top Barolos in the region, and they currently offer significant upside to the patient fine wine collectors.
I hope you enjoyed this piece. If you did, the best way to keep this newsletter free is to subscribe, re-share it with your wine-lover friends, and follow me on Instagram.
Thank you.
👋 Sara Danese
Comments, questions, tips? Send me a note
Here’s a reading list of some of the most liked content in this newsletter:
Brief Finance Lesson explains the cost of carry, and how a high interest rates regime affects price comparisons across different vintages.
What LVMH sales results tell us about the state of the fine wine market
One for the cellar — Sassicaia & other Bolgheri 2021 vintage successes.
Cash-Equivalent Wines — a.k.a. a list of the best drinkable fine wines compiled by the best people in the wine trade.
A Tuscan Estate to Watch, Tenuta Sette Cieli, and why I believe this tiny Bolgheri Estate will prove a great investment.
Investment Ideas for Barolo 2019. It does what it says on the tin.
Has Fine Wine Hit Rock Bottom? ChatGPT was a fine wine investment analyst for the day, and shared which corners of the fine wine market are undervalued.
The Ministry of Silly Pricing. Discussing a few interesting releases on La Place …
How's the Champagne market looking? (Jul 2023 update) A collaboration withTom Hewsonlooking at 2013, 2014 and 2015 vintages.
The Earliest Harvest Ever. Talking about Bordeaux EP 2022.
My Fair Value a.k.a. Is Cheval Blanc Undervalued? Again, talking about Bordeaux EP 2022.
Hunting for Barolo 2019 bargains. Looking at the Ravera Cru for Barolo 2019.
Building a 36-bottle cellar, with ChatGPT. A starter cellar. (ChatGPT wasn’t a very great deal of help here.)
The Price of Wine. An economic paper on what are the drivers of fine wine prices in the long run.