Bordeaux 2007: value and performance of the First Growths

This month, Liv-ex has examined the progress of Bordeaux 2007 since release. Previous blog posts looked at the price performance for the 2007 wines in the Bordeaux 500, starting with the First Growths.

The 2007 First Growths have offered a return of 64.8% on average since release. While this may look impressive in isolation, the vintage has underperformed compared to a number of other vintages. Why is this? And how have other vintages performed?

In the chart below we have wound back the clock to Spring 2008, when the 2007s were released. The red bar indicates how each of the vintages below were priced at the time, relative to their quality levels. Those below the line – 1998, 1999 and 2001, for example – might have been undervalued, while those above might have been considered overvalued according to Liv-ex’s fair value methodology.

The blue bar shows the average return to date for each First Growth vintage.

FG 2007s

Five vintages were overvalued (1997, 2000, 2005, 2006 and 2007) around the time the 2007s were released. Of these, the 2005 and 2006 have provided the smallest average returns of all those shown. In fact, the 2005 has produced the only negative return (22%) over the period.

As can be seen, the 2007 vintage was potentially overvalued by 14.1% on release. Hence many back vintages offered better value at the time. Most vintages that fell below the trend line – those that were potentially undervalued – have produced a better average return than the 2007s.

One example is the 2002. It offered the most value in Spring 2008. It was priced 23.2% below the price predicted and has since provided an average return of 102.2%. However, the 1997 vintage has produced the largest average return (125.4%), perhaps suggesting that age and scarcity have also played a role in the performance of certain vintages.

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