Ponsot: Clos Roche performance

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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.

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Burgundy – highest risers

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Burgundy just keeps on climbing. In 2016, the Burgundy 150 index gained 26% after hitting new highs in eight consecutive months. Its current level of 371.40 represents an increase of 41.9% over five years. Only the Rest of the World 50 index has been stronger.

But what are the top risers?

The table below shows which wines of the Burgundy 150 index gained the most last year. They have each have increased by at least 60%; top riser DRC, Grands Exchezeaux 2004 has nearly doubled. DRC increased its presence in the top table for 2016: eight are from DRC compared to just one the previous year.

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DRC strikes back

DRC RATIO

The chart above shows the historical relationship between the average prices of the wines in the Liv-ex Fine Wine 50 Index (the ten most recent vintages of the Bordeaux First Growths) and the DRC Index (composed of DRC’s six wines) – dividing one by the other to create a ratio.

At the beginning of the year it was observed that DRC prices looked overstretched and that an adjustment in this relationship was overdue. This briefly proved to be correct.

The DRC:First Growth ratio peaked at 6.11:1 in November 2015 when the Fine Wine 50 Index bottomed out, suggesting the First Growths had reached a point where they offered relative value compared to the wines of DRC. As can be seen from the chart, however, the ratio has recently changed direction and now stands at 6.16:1 – above its peak level last year.

While merchants were preoccupied with Bordeaux 2015, Burgundy sailed on. The Burgundy 150 Index (which contains DRC’s six wines) rose 5.2%. It was the best performing sub-index of the Liv-ex 1000 in June. It is also the strongest performing Liv-ex index over one year, rising 8.2%.

Activity in June was boosted by several big movers from DRC on limited volume. DRC, Richebourg 2003 was up 35% month on month with the 2007 vintage up 24%. Likewise, DRC, Echezeaux 2010 increased 23%. The 2011 that was up 22%. DRC, Romanee Conti 2005 firmed 22% over the same period.

The ratio currently stands at 1.75 standard deviations from the mean of 4.5 for the ten-year period.


 

 

Price ratio: DRC against Bordeaux First Growths

DRC_First_Growths

Market speculation as to whether DRC prices are overstretched has been rife for some time now, but so far the speculation has failed to become a reality. DRC prices have made impressive gains in recent years, while Bordeaux prices have largely stuttered. The Liv-ex Fine Wine 50 index has fallen around 40% since its peak in 2011. Over the same period, the DRC index (composed of the DRC’s six brands) rose 10.9%. Over a ten-year period, the DRC index has increased 285% compared to an overall gain of 144% for the Liv-ex 50.

The chart above shows the historical relationship between the average prices of the wines in the Liv-ex Fine Wine 50 and the DRC Index – dividing one by the other to create a ratio.

As shown, the ten-year average is 4.4:1 and the DRC:First Growth ratio has held above this level since December 2011, reaching a high of 6.11: 1 in November 2015. The recent high was 1.83 standard deviations from the mean average for the ten-year period.

It is interesting to observe that on the flipside, the DRC:First Growth ratio bottomed out at -1.82 standard deviations below the mean average for the ten-year period.

While this alone may not be conclusive evidence to support recent market speculation that DRC prices may have peaked, it does at least add some weight to the argument that it might be time to take a closer look at the relative value of the First Growths.

Given that over the longer-term, ratios tend to revert to the mean, a switch in portfolio weightings might be just the tonic for those lucky enough to have such a portfolio…


 

More on this topic: Cellar Watch subscribers can find analysis on the price differences between the First Growths – the top tier wines – from a number of different regions in the February market report. 

Spotlight on … Sylvain Cathiard

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History

The history of Sylvain Cathiard began in the 1930s when Cathiard’s grandfather moved to Burgundy from the Savoie area of France and found work with Domaine de la Romanée Conti and Lamarche. He later purchased a small number of vineyards which were subsequently managed by his son André, who was the first of the family to bottle his own wine.

Sylvain began working for his father before taking on his own small domaine. He eventually took over the family vineyards following his father’s retirement in 1995. His own son Sebastien has since joined him, and is now making the wines.

Although based in Vosne-Romanée, Cathiard’s 5.5ha of vines also span Nuits-St-George and Chambolle-Musigny. The family’s additional small parcels include plots in Clos Vougeot and Romanée-St-Vivant.

2014 Vintage

Speaking to Allen Meadows (Burghound), Sebastian Cathiard described the 2014 campaign as “much less complicated than either 2012 or 2013 but it wasn’t without some challenges.” Yields were back to levels seen in 2009 and before, potential alcohols were good (11.8-12.8%) and skins were thick. No chemicals were used in the vineyard in 2014, and the amount of new wood and toasting of the barrels were both reduced.

Vosne-Romanée, Les Malconsorts, 2014

“In a word, brilliant”, said Allen Meadows, who awarded it 93-95 points. Neal Martin describes its “cerebral bouquet, beautifully defined”, adding that “the fruit here is very enmeshed with the oak”. He concludes: “Its persistence is awe-inspiring” and scores it 95-97.

Sylvain Cathiard, Romanée Saint Vivant, 2014

Allen Meadows describes this as “a wine of harmony and finesse that is beautifully balanced” (93-96 points), while Neal Martin observes its “dizzying, seductive intensity” and asks “One of the wines of the vintage? Most certainly. Bravo Sebastien.” (96-98 points).

Market Trends

Sylvain Cathiard’s recent secondary market performance is characterised by rapid price increases: in the 2015 Power 100, it climbed to 4th place when ranked by price performance, the highest position for a Burgundy brand.

Price history for Vosne-Romanée, Les Malconsorts, 2004 exemplifies this: it has been available in the market for just under ten years and its market price has jumped from £550 per 12×75 to £2,400: an increase of 336%. Romanée Saint Vivant, 2004 increased from £1,590 to £8,402 – up 428% – over the same period. To put this into context, the Burgundy 150 index is up 168% over ten years; the Liv-ex 100 has gained 107%.

Malconsorts_2004

The Les Malconsorts and Saint Vivant labels are the most active on the secondary market, collectively accounting for over 80% of Sylvain Cathiard trade historically. When comparing scores* against market prices, closer correlation is shown by the lower priced Les Malconsorts. As shown in the first chart, vintages with higher scores tend to demand slightly higher prices, though the 2006 and 2004 vintages do look to offer relative value.

Malconsorts

Less correlation is shown by Saint Vivant, where overall vintage quality appears to have greater impact on prices than its scores: the 2005, 2009 and 2010 vintages command significant premiums on other years.

Romanee

*Where only barrel ranges are available, the mid-point of the score is used.
Sources: www.burghound.com; www.erobertparker.com


Top ten Burgundy movers

Burgundy has been in the spotlight for its rising prices: the region dominated the top price movers within the Power 100 last year, and the Burgundy 150 Index reached a new high in 2015. But which wines have been moving the most?

The table below shows the top ten Burgundy price movers over the past 12 months. Each have gained over 20%, with top riser Emmanuel Rouget, Vosne Romanee 2009 gaining close to 50%. Of the top ten, just one is a DRC label: Grands Echezeaux 2007 gained 22.3%. Domaine Leflaive saw increased interest and activity last year following the death of proprietor Anne-Claude Leflaive. It climbed to 9th place overall in the Power 100, and features three times in the table below.

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A detailed report on Burgundy’s price rises can be found in the November edition of the Cellar Watch Market Report.


New highs in 2015: Champagne, Burgundy, Rest of the World

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While the Bordeaux market has been treading water this year – the Bordeaux 500 is down 0.9% year to date as of the end of November – three sub-indices of the Liv-ex 1000 reached all-time highs in 2015.

In January, the Champagne 50 climbed to a record 276.89, although it has drifted 3.2% since then. Its trade share more than doubled on 2014: it accounts for 6.5% of activity by value in 2015 compared to 2.8% in the previous year.

The Rest of the World 50 reached its highest point in February, when it closed on 220.98. As theNovember Cellar Watch Market Report highlighted, the index has been boosted by strong performances from the USA’s Dominus and Opus One. Activity for wines from “other” regions, including the USA, Australia, Spain and others continues to increase, with the group accounting for 4.4% of trade by value this year, compared to 2.3% in 2014.

The highest level for the Burgundy 150 was recorded at the end of October, when it increased to 303.77. Unlike the other two regional groups, Burgundy’s share of trade on the market has dropped this year: it is down to 5.9% from 6.4% last year. With prices climbing, we asked: how high is too high?

Power 100: USA and Burgundy top price performers

Last week, Liv-ex released the tenth edition of the Power 100 – the annual list of the most powerful brands in the fine wine market. The full rankings – calculated using data on price performance, trading performance on Liv-ex, the number of different wines and vintages traded, and average prices – can be found by clicking here.

The table below shows purely the strongest price performers (top 20).

Top_price_performers

The top two spots are occupied by wines from California, with Scarecrow and Screaming Eagle gaining an average of 19.9% and 15.1% respectively over one year. As November’s Cellar Watch Market report observed, this is part of a wider trend of rising prices for the region.

While California has taken the two highest rankings, much of the table is dominated by Burgundy which occupies half of the 20 positions. This is perhaps unsurprising given the gains made by the Burgundy 150 index: it is the strongest-performing sub-index of the Liv-ex 1000 year to date (+2.1%), and over five years has increased by 39.4%. DRC continues to gain, up 5.7%.

With California and Burgundy featuring prominently, many of the brands with climbing prices are those with low production levels. There is little overlap with brands trading in high volumes: just two of the top price performers also feature within the top 20 traded by volume. These are both from Bordeaux: Pavie and this year’s number one, Mouton Rothschild.

*The wines shown in the table above are those with an overall ranking of between 1-100. Several top price risers did not perform strongly enough in other areas and therefore fell outside of the Power 100.

Click here to view full rankings and methodology.

Liv-ex releases the 2015 Power 100

In conjunction with The Drinks Business, Liv-ex has released the tenth edition of the Liv-ex Power 100 – the annual list of the most powerful brands in the fine wine market.

The Drinks Business’s full report on this year’s Power 100 has been published in the magazine’s December edition.

Key findings this year:

  • Mouton Rothschild took the top spot in the 2015 table, following two years when the Bordeaux First Growths conceded first place to other wines. With good scores across all four categories, it was boosted by the value and volume of trade it saw on Liv-ex.
  • All Bordeaux First Growths, apart from Latour, rose up the table this year, with Mouton Rothschild, Haut Brion and Margaux seeing positive year-on-year price movements.
  • The highest new entrants this year were from Burgundy: the wines of Coche Dury entered the table at number 18, and Lambrays at number 59.
  • Sassicaia was the most traded wine by volume, and the only wine from outside Bordeaux to fall among the top ten wines traded by value.
  • California continues to be a rising star, with two wines from Napa Valley seeing the best year-on-year price performance: Scarecrow and Screaming Eagle. They rose 19.9% and 15.1% respectively, with Scarecrow making its debut in the list at number 83.
  • Angelus and Pavie continue to see the benefits of the 2012 St Emilion Re-Classification, coming in 4th and 5th
  • Buyer diversification continues, with the variety of wines and vintages traded wider than ever before. 166 wines qualified for the ranking this year: an increase of 10% on 2014.

To calculate the scores, we took a list of all wines that traded on Liv-ex in the last year (1stSeptember 2014 – 31st August 2015) and grouped these by brand. We then identified brands that had traded a minimum of three wines or vintages and a total trade value of at least £10,000. Brands were ranked using four criteria: year on year price performance, trading performance on Liv-ex (value and volume traded), the number of different wines and vintages traded, and average price.

The main change we made to this year’s methodology is that we removed scores. With so many wines trading – and from so many different regions – it was becoming impossible to include scores on a like-for-like basis, and the number of critics we had to include was increasing. To keep the consistency of the ranking we removed them.

The individual rankings were then combined with a weighting of 1 for each criteria, except trading performance which had a weighting of 1.5 (as it combined two criteria: value and volume traded). The final 100 brands accounted for over 1,750 unique wines/vintages traded in the past year.

Below are the results in full for the 2015 Liv-ex Power 100. For the purpose of comparing against 2014 on a like-for-like basis, we have recalculated 2014’s ranking incorporating the new methodology.

Liv-ex 2015 Power 100

In the balance

Regional trade shares

In 2010, as the fine wine bull market neared its peak, Bordeaux accounted for 95.7% of trade by value on Liv-ex. It was the year of the 2009 En Primeur release, and that vintage alone accounted for 13.2% of trade. Other regions barely registered: Champagne, the second strongest, took just 1.2%.

Bordeaux trade has been in steady decline since then. Pushed out by unsustainably high prices, buyers sought value from other regions. The market shares of regions beyond Bordeaux have grown substantially since 2010, with Champagne, Italy and the Rest of the World particularly leaping ahead in 2015 to so far account for 6.1%, 6.9% and 4.6% respectively.

As shown above, Bordeaux’s current market share of 74.2% is now back to 2004 levels, before the bull market began. There is little doubt that the emergence of mainland Chinese demand led to a bubble in Bordeaux prices. When viewed purely in terms of market share, one could say that bubble is now well and truly behind us. Buyers have broadened their interests – and the market looks more balanced.