Talking Trade – Big names at the top

This week trade by value was flat whilst trade by volume climbed 17%. Bordeaux’s share remained fairly constant, but Burgundy’s share dipped back to more usual levels as interest in other regions returned. Champagne increased to 6.5%, while the US accounted for 3.3%, boosted by activity for Screaming Eagle and Opus One. The Fine Wine 50 continues to edge higher – up 0.2% this week.

region

Lafite 2010: Still off-peak

Big names dominated the top of the trade by value table for a further week. Lafite 2010 was the second most traded wine by value. Its last trade was 48% lower than at peak, around the time that it was released. This is in stark contrast to the some other vintages featured in a blog post this week.

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Volume traders

Dom Perignon 2006 saw significant activity this week. It was the top traded wine by volume and third by value. There was also a lot of activity across vintages of Beychevelle, which comprised a total 5.9% of trade by volume, beaten only by Lafite and Mouton.

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James Suckling releases Bordeaux En Primeur 2016 scores

James Suckling releases Bordeaux En Primeur 2016 scores

Today, James Suckling released the first of his 2016 Bordeaux En Primeur scores.

Overall, Suckling confirms that the ‘2016 is an exceptional vintage equal to the exquisite 2015’. He adds that he’s ‘not sure which vintage is better at this stage’.

Analysis of 45 of the wines that have been scored so far – those that featured in Liv-ex’s En Primeur price guide last year – suggests that 2016 is slightly ahead of 2015. The group of wines scored an average of 96.3 points this year compared to 95.5 for 2015.

Mouton Rothschild and Lafite Rothschild occupy the top spots for 2016, having been awarded straight 100 points.

Suckling described Mouton as ‘a phenomenal, muscular red that shows incredible power and depth’, adding that the wine is ‘the new 1986 but better’. Lafite Rothschild received equal praise: a wine ‘even stronger and more toned than the excellent 2015. […] Perhaps the greatest Lafite since the legendary 1959?’

top scores

Next week, Liv-ex will release its 2016 En Primeur pages. Analysis on all of the key releases and critic scores will follow.

James Suckling’s full report and tasting notes on Bordeaux 2016 En Primeur can be found at www.Jamessuckling.com.


First Growths: back to 2011

Last month, the Liv-ex 1000 index reached a record high for the seventh consecutive month. The index previously reached a high in July 2011 at the peak of the China-led bull market before falling to a low in August 2014.

Other Liv-ex indices have not been making the same records. The Liv-ex 100 has been rising, but is yet to surpass its previous highs; the Liv-ex Fine Wine 50 – which tracks the daily price movements of the First Growths – remains 22.8% below its peak in 2011.

Still, several First Growths are now close to or above their 2011 Trade Prices. The chart below shows those that are within £500 of their highest prices during the bull market.

Mouton Rothschild and Haut Brion are both well represented, and a handful of Latour and Margaux vintages have climbed back to levels seen six years ago. As yet, no Lafite Rothschild vintages feature.

FG trade 2017 v 2011

Six of the wines shown above are currently commanding higher prices than during the bull market (2010-12). Mouton Rothschild 2003, for example, currently has a Trade Price of £4,500 per 12×75, marginally higher than levels reached in 2011.

mouton 03

Others are inches away from breaking through their previous highs. Mouton Rothschild 2002, for example, is just 0.6% off its peak Market Price.

As the fine wine market continues its momentum, it remains to be seen if trade prices will continue to rise.

Bull market prices are the highest price that the wine has traded at between the 1st January 2010 and 1st January 2013. The 2011 wines were released towards the end of this period, after the market peaked.


 

Spotlight on… Lafite Rothschild

chateau-lafite-rothschild-pauillac-france-10179204

Owner: Baron Eric de Rothschild

Classification: Premier Grand Cru (First Growth)

Vineyard area: 115 hectares

Colour: Red

Standard blend: Cabernet Sauvignon (80-95%), Merlot (5-20%), Cabernet Franc (0-5%), and Petit Verdot (0-5%).

Total annual production: 420,000 to 480,000 bottles

History

Records show that the first vines were planted at Lafite in the 1670s. Early customers included both British Prime Minister Robert Walpole and US President Thomas Jefferson.

In the years following the French Revolution, Lafite changed ownership numerous times until Baron James de Rothschild purchased Chateau Lafite in August 1868. Henceforth the estate became known as Chateau Lafite Rothschild.

The end of the 19th Century and the beginning of the 20th Century were turbulent decades for the Chateau. The vineyard was severely impacted by the phylloxera crisis and mildew, forcing the estate to declassify certain vintages between 1882 and 1915. Furthermore, during World War I the estate was severely impacted by supply restrictions and the financial crisis of the Great Depression led to a reduction in vineyard area.

During World War II, both Lafite Rothschild and Mouton Rothschild were confiscated and placed under public administration. A German military base was then stationed at the two Chateaux for the entire length of the occupation. By the end of 1945, the Barons de Rothschild recovered possession of Lafite and Baron Elie was responsible for re-establishing operations at the estate. A series of excellent vintages in 1945, 1947 and 1949 helped fuel efforts to re-establish Lafite Rothschild. The 1955 vintage was evidence of the wine’s rebirth. The emerging markets in the US in the 1960s, and Asia more recently have continued to help grow Lafite Rothschild into the brand it is today.

Market Performance

During the Asia-led boom for fine wine (2009-2011), Lafite became a ‘super brand’ in China and prices skyrocketed – even more than the other First Growths – as the chart below shows. Over a two-year period, the Lafite index gained over 140%.

The popularity of the brand during this period is perhaps exemplified by price movements for the 2008 vintage. In October 2010 it was announced that the bottle would carry the Chinese symbol of the figure eight, representing good fortune. The market quickly responded with trades 67% higher than in the previous month.

Lafite v FG indices - ten years

When the market started to roll over in mid-2011, prices for Lafite began to decline. In two years, the index dropped 37%.

Recovery period

At the beginning of 2016, Lafite began to show tentative signs of recovery. It is now the best-performing First Growth over one year, up 29.2%. It has outperformed the Fine Wine 50 which is up 25% over the same period.

Lafite v FG indices

Market Prices

The chart below compares Lafite Market Prices to their Wine Advocate scores. Lafite partly follows the traditional pricing pattern for fine wine, where prices rise as the wine ages and supplies diminish. However critical acclaim also appears to have some influence, with high-scoring vintages such as 2008, 2009 and 2010 commanding premiums.

Buyers willing to wait might consider the 2014 and 2015. The wines have similar scores to older vintages, but their prices are still waiting to catch up. For example, the 2014 vintage is currently trading at a discount of 30.7% to the similarly-scored 2006.

Price v Score bar

Vintage performance

The recently physical 2014 vintage has been the top performer over the past twelve months, up 40.1%. This time last year the wine was the cheapest vintage available on the market. The similarly priced 2013 vintage followed behind with a 32.5% increase. The 2009 and 2011 have been the slowest movers of the Lafite vintages, up 23.7% and 20.3% respectively.

Vintage performance


 

Talking Trade: Bordeaux and Burgundy focus

Trade by both value and volume dipped this week. The market turned its focus to Bordeaux and Burgundy which collectively accounted for nearly 95% of trade by value. Activity for all other regions was reduced. The Fine Wine 50 index edged higher – up 0.6%. It is currently less than 1% below its 5-year high in March 2012.

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Blue chip traders

The Bordeaux First Growths took an increased 31.4% of trade by value this week. While Lafite was the most traded of the Premier Cru overall, two Mouton Rothschild vintages feature in the ‘top by value’ table.

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Latour release – “Mixed reaction”

Absent from the table was Latour 2005. On Tuesday, 3,000 cases of the wine were released from the Chateau at £7,800, a 14.7% premium to Market Price. Previously, ex-Chateau releases from Bordeaux have triggered activity for lower-priced cases in the secondary market. This week, Liv-ex saw Latour 2005 trade at £7,000 per 12×75. This follows a handful of trades the previous week at £6,700.

The Drinks Business reported a “mixed reaction” to the Latour release, suggesting that sales were “apparently very strong in places and merely reasonable in others.”

Bordeaux 2014 – coming soon

Neal Martin’s report on Bordeaux 2014 in bottle is expected at the end of this month. This week, a handful of wines from the vintage traded including Pavillon Rouge, which was the most active by volume, and Montrose which has seen a flurry of trades recently.

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Also in the news

Also in the headlines this week was Laurent Ponsot’s decision to leave the family’s estate in Burgundy to establish his own winery in the region. Liv-ex published a short article looking back at the performances of Ponsot Clos Roche Vv vintages over the past year. The Liv-ex Blog also published an update on the Super Tuscan indices, highlighting a recent drop for Tignanello.


Super Tuscans: Tignanello off peak

Tignanello

The Tignanello index – which tracks prices for the ten most recent physical vintages – increased by 27.1% in 2016. Over a one year period, it remains the strongest of the Super Tuscan indices. However, so far this year the Tignanello index has slumped while its peers have continued to make gains.

Tignanello generally offers attractively lower prices relative to other major Super Tuscans. Its highest priced recent vintages, the 2004 and 2006 – £1,094 and £1,518 per 12×75 respectively – are priced at around the same level as Sassicaia’s low and mid-priced vintages. However, it appears that buyers previously hunting Tignanello value may now be looking elsewhere.

Of the last ten physical vintages, the 2005 has fallen the most so far this year, down 15.5%. It is closely followed by Tignanello 2004, down 15.3% over the same period. The 2008 has bucked the trend by gaining 13.6%.

Italy’s share of trade by value dipped in 2016 (6.1%), but has bounced back this year and was at 6.5% in February. Sassicaia 2012 and 2013, and Altesino, Brunello Montalcino 2012 were the most active Italian wines last month.

A version of this report was originally sent to Liv-ex members in an email update last week.


Ponsot: Clos Roche performance

index

Last week in an interview for Wine Spectator, winemaker Laurent Ponsot announced plans to leave the family’s Burgundy Domaine and establish his own winery in the region. In light of this recent news, Liv-ex has looked at the performance of Ponsot Clos Roche Vv over the past twelve months.

Year-on-year, the Ponsot Clos Roche Vv index – which tracks the performance of the ten most recent physical vintages – is up 25.4%. Its parent index, the Burgundy 150, is up a similar 25.9%.

As shown in the table below, the 2008 vintage has been the top price performer over the past year: it is up 71.4%. Despite this significant increase, it remains one of the cheapest vintages available on the market. The 2010 follows behind with gains of 36.4%. In November 2016, the wine traded at an all-time high of £4,958 per 12×75.

However, performance is not positive across the board: recent vintages 2011 and 2013 have dropped 10.1% and 13.5% respectively.

None of these come close to the heights of the acclaimed 2005 which has edged above £10,000 per 12×75 – a ‘wow’, wine, according to Allen Meadows (Burghound), with a price tag to match.

vintage


Latour 2005 and Forts Latour 2011 released ex-Chateau

Latour 2005

Today, Latour 2005 and Forts Latour 2011 have been released ex-Chateau. 3,000 cases of Latour 2005 are being offered at €670 per bottle ex-negociant, and at around £7,800 per 12×75 by merchants. As the chart above shows, this represents a premium of 14.7% on cases of the wine available in the secondary market.

This price also positions the release above the ‘fair value’ trend line, shown below, and places it above the 100-point Latour 2003.

Unlike many other First Growths, prices for Latour 2005 have stagnated over the past 12 months. It has increased by 4.2% compared to gains of 25% for the Fine Wine 50 index.

Still, anecdotal evidence suggests that merchants are confident the wines will sell through, despite the premium.

Latour 2005 release

Forts Latour 2011 has been released at €140 per bottle ex-negociant, and is being offered by merchants at around £1,650 per 12×75. This represents a premium of 17.9% on the wine’s Market Price of £1,400.

Like many of the second wines, prices for Forts Latour 2011 have risen rapidly over the last year. It is up 29.6% since March 2016.

Forts Latour 2011

Last March, Latour 2000 and Forts Latour 2009 were released at premiums of 12.5% and 20.9% to their Market Prices respectively. In September, 3,000 cases of Latour 2007 were released at Market Price. Merchants reported strong demand for the release of the 2000, and some interest in – though lower sales for – the 2007.


 

Talking Trade: Bordeaux steady, Lynch Bages takes charge

FW50

Activity for Bordeaux was steady at 66.8% this week, but its share of the market by value continues to be low in historical terms. This week Latour announced that it would release its 2005 grand vin later this month. As always, there is market speculation surrounding its ex-chateau release price.

In general, the First Growths have continued to see prices rise. The Fine Wine 50 closed Thursday higher at 341.39 (+0.5%), edging closer to its five-year high of 347.08.

Regional

It was another busy week for Italy and Champagne. The two Montalcino 2012s (Altesino and Argiano) featured again. Poggio San Polo Brunello Montalcino 2010 was also active. The most traded Italian vintages were the 2014, 2012 and 2010s.

Trade for Burgundy was much lower this week and dipped below its average of 7.9% for 2016. The region has seen a strong start to 2017, registering 18.4% and 14.2% of trade by value in January and February respectively. DRC Tache 2012 and DRC Echezeaux 2013 both featured in the top wines from Burgundy this week, alongside Prieure Roch Nuits Saint Georges Clos Corvees 2013.

Value

The top wines traded by value were from Bordeaux and Champagne. Angelus 2011 was top and traded at an all-time high of £2,285 per 12×75. According to Robert Parker, the wine is “supple and sexy with lots of blueberry and black raspberry fruit intermixed with liquorice, barbecue smoke and camphor.” He awarded it 94 points.

Latour 1996 was also active. It is a wine that has divided critics at The Wine Advocate. Parker awarded it 99 points calling it a “spectacular Latour.” It “continues to perplex” Neal Martin who awarded it 95 points.

Lynch Bages 2008

93-point Lynch Bages 2008 hit an all-time high of £1,013 this week. It is up 23.4% year-on-year, and 9.8% on its previous trade price of £923.

Lynch

Looking for weekend reading? This week, Liv-ex published two blogs on the forthcoming Latour 2005 releaseLatour 2005: ‘Fair Value’ among the back vintages and Latour 2005: a chequered past. Liv-ex also published the merchant prediction results from its survey Fine wine merchants bullish in 2017 – survey results.


 

 

Latour 2005: ‘Fair Value’ among the back vintages

Latour

With ex-chateau releases of Latour 2005 expected later this month, yesterday’s blog looked at the ‘chequered’ past of Latour 2005. To continue the Latour 2005 theme, today’s Liv-ex blog examines ‘fair value’ among the chateau’s recent back vintages.

The chart above plots prices for the last ten physical releases of Latour (2002 – 2011). The trend line shows that not all Parker points are equal – lower scoring vintages tend to trade at similar prices, while Parker points become increasingly valuable for higher scoring vintages.

The trend line might be helpful in determining a wine’s ‘fair value’ with vintages below the line potentially offering greater value for money than those above the line, based on the score from Robert Parker.*

The chart highlights that Latour 2005 is only 0.2% above the price suggested by the trend line and may not be considered significantly overvalued at its current Market Price of £6,660 per 12×75. In contrast, the 100-point 2009 and 2010 are both above the suggested price, by 7.3% and 16.8% respectively.

The other high-scoring 100-point 2003 appears to be the most mispriced vintage, falling 24.1% below the trend line. It is also currently offered just above the 98-point 2005 at a Market Price of £7,140. In his 2014 tasting note, Robert Parker said the 2003 is “undeniably the most sumptuous, opulent wine made [at the chateau] since the 1982 or 1961.”

The release price of Latour 2005 will undoubtedly be a major factor in determining its success or failure. The last ex-chateau release was Latour 2007, released at the same level as the Market Price. With the 2005 currently available in the secondary market close to ‘fair value’, a release at this level would likely generate interest from buyers.

 

* Liv-ex recognises there are other factors that influence the price of fine wine such as brand, vintage and age. However, the chart and trend line offer a useful starting point in the identification of wines that might be mispriced.