Liv-ex Fine Wine Market Blog

Liv-ex Claret Chip losses in context

The Liv-ex Claret Chip Index descended -0.99 per cent last week to 421.27. Having to-ed and fro-ed since late February, the index has increased less than two per cent in the year to date. How does this sit with historical changes over this period? 
As you can see from the chart above, which shows the index's movement between January and August each year, price growth has varied considerably over the years. The Liv-ex Claret Chip Index (which measures the performance of top-rated First Growths only) recorded its worst performance in the eight months to August 2004. Prices moved rapidly in 2006 and 2007, though subsequent years saw the index record more moderate increases before upping the pace again in 2010.  

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Comparing Apples and Grapes

Spurious correlation No. 7: The Liv-ex Fine Wine 50 and Apple's share price.

So what effect will the resignation of Steve Jobs have on the price of fine wines?

Super Second prices soar

For every action there is an equal and opposite reaction. Newton may not have had the fine wine market in mind when he penned the third law, but it seems particularly apt in light of the First Growths and the Super Seconds divergent fortunes. Over the past few months, First Growth prices (and those for their second wines) have been relatively static. But where demand for the First Growths has faltered, and buyers have been disinclined to invest in the top-tier (and most expensive) Left-Bank wines, the so-called Super Seconds have picked up the pace.

As you can see in the chart below, prices for the Super Seconds have risen by an average of 23 per cent in the year to date, compared to eight per cent for the First Growths (as measured by the Liv-ex Fine Wine 50 Index) and six per cent for their second wines.

 
The last ten vintages of Pichon Baron have led the charge, rising in value by an average of just under 40 per cent since the start of the year. Ducru Beaucaillou and Pontet Canet (considered a Super Second or Flying Fifth) have gained 37 per cent each, whilst Montrose and Cos d'Estournel are up 30 per cent and 25 per cent respectively. Despite their ascent, a number of vintages continue to offer strong value. A selection of these are displayed below. Liv-ex trading members can view live markets here.

 
All prices are for 12x75cl cases stored in bond.

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In order to better tailor its services to your requirements, Vine, Liv-ex’s settlement and logistics provider, is looking for feedback on its services. We would greatly value your thoughts. To take the Vine Survey, please email konstantin@liv-ex.com. All responses will be treated confidentially.

All Liv-ex transactions are processed and settled by Vine (and hence all Liv-ex trading members are Vine customers). Additional services include organising transport worldwide, long-term storage in our new temperature-controlled chamber at LCB Tilbury and at Vinothèque, high-resolution photographs, strip labelling and other warehouse services. Click here to find out more.

  

Lafite 价格回落：深入探讨

在昨天的博客上，我们显示了 Lafite 的价格下跌对 Liv-ex 指数产生的权重影响。 不过，正如一位读者正确地指出，各酿造年期价格的表现并不一致。该一级酒庄的一些酿造年期自年初至今下跌幅度超过 15%，而其他一些酿造年期的下跌幅度则要温和得多，甚至没有什么变化。 以下图表显示了 Lafite 之前十个酿造年期的价格变动情况。

 

 

*数据基于 12x75cl 装箱关栈中存货 Liv-ex 中间价。

正如第一张图所示，Lafite 2008 在今年跌幅最大，价值下降了 26%。 尽管其中有一些具有正向的年初至今回报，但所有十个酿造年期自六月底以来价格均有不同程度的回落。

Claret Chip signals further price drops

The Liv-ex Claret Chip Index descended for the third consecutive week on Friday, closing at 425.45 - down 0.95 per cent on the previous week. The index is constructed of top-rated Bordeaux First Growths only.

Though the Lafite camp saw continued volatility, it was Margaux that posted the largest price falls. Margaux 2003 dropped six per cent, a loss that was exceeded only by Latour 2006, which declined from £5,525 per case on the 12th of August to £5,050 at the close of trading on Friday.

The 2008 vintage in general performed poorly, with Mouton falling five per cent. There were, however, one or two bright spots, most notably Haut Brion 2006 and Lafite 1996, which gained five per cent and six per cent respectively.  

 

Chateau owners top French rich list

French journal Le Nouvel Observateur recently published a list of France's 500 wealthiest families (and individuals). As the top Bordeaux chateaux are clearly powerful luxury brands in their own right, we thought it would be interesting to see how many of these families count major estates among their portfolios. In our June study, "Valuing the great estates of Bordeaux", we suggested that Bordeaux's biggest names have a combined market value of more than €15 billion. Unsurprisingly, then, the list of chateau owners in "Le palmarès des grandes fortunes" runs into the dozens.  

The richest of the rich, it seems, is Bernard Arnaud of LVMH - the luxury goods company at the helm of Yquem and Cheval Blanc. François Pinault of Latour is the second chateau owner to make the top five, whilst those in the top 40 include Alan Wertheimer, head of Chanel (which owns both Canon and Rauzan Segla); Robert Peugeot, a shareholder of Guiraud; and Martin and Olivier Bouygues of Montrose and Tronquoy Lalande. There is, of course, place for the Rothschilds in the top 100, as well as for Corinne Mentzelopoulos of Chateau Margaux.

A number of famous names from outside Bordeaux also make the top 200, including Champagne's Moet, Chandon and Hennessey families, Domaine Romanee Conti's Leroy and Villaine families, and the Nonancourts of Laurent-Perrier - owners of Salon Mesnil.

The table below shows some of the chateau owners that have made this year's rich list.

  

Spotlight on...Salon Mesnil

 

Owner: Laurent-Perrier
Average annual production: 50,000 bottles per vintage
Blend: 100% Chardonnay

History

One of the world’s best-known Blanc de Blancs, Salon Mesnil was conceived in 1911 by a wealthy gastronomist and Champenois, Eugene-Aime Salon. Production was initially for his own amusement, but in 1921 Eugene was persuaded to produce his first commercially available vintage.

Salon’s death in 1943 saw the baton pass to his niece and thereafter, in 1988, to the Laurent-Perrier Group. Today, Salon is the only Champagne house to produce vintage Blanc de Blancs exclusively. Grapes are sourced from the village of Mesnil along the Cote de Blancs, including the house's own vineyard, the Jardin de Salon. To date, less than 40 vintages have been produced. And with an average production of no more than 60,000 bottles per vintage, the ultra-exclusive cuvee is one of the region’s most expensive exports.

The 1997 vintage

Though the ’96 is admittedly a difficult act to follow, the 1997 vintage of Salon Mesnil did not receive the same sparkling scores as its predecessor. The wine was awarded 91 points from the Wine Spectator and 93 points by Josh Raynolds of Stephen Tanzer’s International Wine Cellar. Nonetheless, at just 60 per cent of the price of the 1996 (volumes of which are beginning to dwindle) the 1997 may be a judicious buy.

Market Trends

Recent vintages of Salon Mesnil have made strong progress this year. The 1995, 1996 and 1997 have all outperformed the Liv-ex Champagne 25 Index in the year to date, led by the 1996, which has posted a 40 per cent price rise. As a result, the wine is now considerably more expensive than surrounding years and is trading at upwards of £3,000 per 12x75cl case. The 1995 (£2,400 per case) and the 1997 (£1,860) have also upped the pace - though not with the same urgency - and have increased in price by 14 per cent and seven per cent respectively. Both look well priced next to the 1999, which has yet to hit the secondary market, but is available from selected merchants at £250 per bottle.  

The chart below compares the price performance of Salon Mesnil 1995, 1996 and 1997 to that of the Liv-ex Champagne 25 Index.

 

The upside of down

With concerns over the global economy weakening investor confidence, the First Growths lost their lustre last week and accounted for just a quarter of total trade on Liv-ex. Reticence and softer demand have, of course, had a knock-on effect on pricing. But whilst the Liv-ex Fine Wine 50 Index (which measures the price performance of the First Growths only) continued its descent today, trade outside the Premiers Crus remains strong.

Over the past few days, merchants have overlooked the First Growths and have opted instead for their second wines, Sauternes and chateaux lower down the ranks of the Crus Classes. Carruades, Forts de Latour and Cos d'Estournel topped buyers' wish lists last week, whilst trade in Yquem moved up a gear (or two) and accounted for five per cent of weekly turnover, placing it ahead of Margaux, Latour and Haut Brion. 

For cautious buyers on the lookout for value, the table below shows a number of wines that don't require deep pockets. Liv-ex trading members can view live markets here.

   
All prices are for cases stored in bond.

Lafite in reverse: A closer look

Yesterday on the blog we showed how Lafite's price decline is weighing on the Liv-ex Indices. As one of our readers rightly commented, however, price performance has not been uniform across vintages. Some vintages of the First Growth have recorded price falls of more than 15 per cent since the start of the year, whilst others have posted more moderate losses, or have seen little change. The charts below show the price movement of the last ten physical vintages of Lafite.

  

 

*Data based on the Liv-ex Mid Price for 12x75cl cases stored in bond.

As you can see from the first chart, Lafite 2008 has seen the sharpest falls this year, having dropped in value by 26 per cent. And though a few wines have recorded positive year-to-date returns, prices for all ten vintages have faltered since the end of June.