Bordeaux 2013: Ready to fly?

Bordeaux 2013 has begun to arrive in cellars and warehouses. The market has recently shown an appetite for strong Bordeaux brands at relatively low price points, regardless of quality: Liv-ex reported that Lafite Rothschild 2012 (RP 91) – the cheapest physical Lafite on the market – has been seeing demand, while the second wines of the First Growths have also been back in focus. If prices for 2013 are compelling compared to vintages already in the market, it will offer further opportunities for buyers looking for accessible entry points to their favourite brands.

In the table below, the current market prices of a selection of 2013 wines are compared to their respective 2011 and 2012s. The highlighted prices denote the cheapest of the three vintages.

2013 Bordeaux prices compared

Of the fourteen wines above, 2013 is the cheapest in ten instances. Haut Brion 2013 offers the greatest discount on its next cheapest recent physical vintage, available at 20.8% below the 2011. Fellow First Growths Lafite Rothschild and Mouton Rothschild 2013 also fare well, priced 17.5% and 12.1% below their next cheapest vintages.

Buyers seeking relative value in wines with some bottle age might look towards labels such as Pontet Canet 2011 and Cos d’Estournel 2011. These have already been lying in cellars for close to two years and are available at discounts to both the 2012 and 2013s.

Bordeaux 2013 prices


Cellar Watch users can follow the prices of these wines as they become physical: search for prices, or add wines that interest you to a second cellar. Not on Cellar Watch? Subscribe here.

Spotlight on … Sylvain Cathiard

Malconsorts

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


Talking Trade 15th – 21st January

Liv-ex fine wine 50 January2016

While global markets whipsawed, the Liv-ex Fine Wine 50 held steady this week (+0.1%) and remains up 1.8% year to date. Both value and volume traded on the Exchange increased, and Bordeaux’s trade share crept up towards 80% after dipping last week.

Regional share of trade by value

100-point (Robert Parker) Montrose 2009 was the most traded wine by value, with activity stimulated by an ex-Chateau release of the wine mid-week. It was offered by negociants at €240 per bottle but last traded on the Exchange for £1,830 per 12×75. This is equivalent to €201 per bottle, a 16.3% discount. This follows the ex-Chateau release of Pontet Canet 2006 in early January which similarly resulted in increased activity for the wine.

Top 5 wines traded by value this week

Italy saw another strong week, boosted by trade for Ornellaia 2010 (97 points, Antonio Galloni) and San Guido, Guidalberto 2012 (89 points). Popular brand Domaine Chevalier was also amongst high volume traders, seeing activity for its 93-point (Parker) 2008 vintage.

Top 5 wines traded by volume this week

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.

Burgundy_wine

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


All eyes on Pontet Canet 2006

Pontet Canet 2006 - market performance

On January 6th Chateau Pontet Canet released a tranche of its 2006 vintage at €95 ex-Bordeaux, or £850 per 12×75. Since this release, increased activity and interest for the wine has been observed: it is the most searched for label so far in January, and it featured in Friday 8th January’s Talking Trade amongst the most traded wines (by volume) over the previous seven days.

As the chart above shows, prices have also been on the rise: before the release, it traded for £521 per 12×75. On January 7th it reached £590, an increase of 13.2%. However, no trades have come close to the recent release price of £850 since the peak of the market in 2011 (Pontet Canet 2006’s highest ever trade price on the Exchange was £848 in August 2011). The recent high of £590 is 30% off this peak.

Robert Parker called the wine “enormously endowed, modern day classic (…) a legend in the making” and awarded it 95+ points. He adds: “Enormous credit is due to proprietor Alfred Tesseron for turning things around at this estate in 1994, and continuing to produce first-growth level wines.”

You can view historic price data for Pontet Canet 2006 on Cellar Watch by clicking here.


Talking Trade: 8th-14th January

Liv-ex 50

The Liv-ex Fine Wine 50 index is up marginally this week by 0.1% at 268.29. The index is now back at the level it was in October 2015 before it dropped around 3% to trade at a five-year low of 261.37.

Regional share

Trade was active, up around 25% on the previous week with First Growth share at 37% of trade by value. Bordeaux’s overall share of trade by value was flat on week and remained under December’s average, but other wine producing regions fared relatively better.

Italy saw a strong pick-up in its share of regional trade by value compared to the previous week and was level with Burgundy, each with 9% of market share.

Bordeaux’s presence was strong in the top five wines traded by value this week, the majority of which were 2009 vintages. 100-point Latour 2009 and 94-point Margaux 2008 (Robert Parker) took first and fourth place respectively, with ‘Flying Fifth’ Growth Pontet Canet 2009 (100-points) and Lynch Bages 2009 (98-points) taking second and fifth place respectively. Spain’s Vega Sicilia 2007 (95-points) broke this trend, taking third place as the only wine from the region that traded this week.

Share of trade_value

In terms of volume, Armailhac 2008 (89-points) took the top spot followed by Pontet Canet 2011 (93+-points) and Lafon Rochet 2009 (94-points).

Share of trade_volume

Second wines – back in focus?

First Growths and second wines over five years

During the bull market that drove the fine wine market to its peak in June 2011, the second wines of the Bordeaux First Growths saw exponential price rises. This was largely due to brand-driven Asian buying: “Little Lafite” and its peers were seen as extensions of the Premier Crus by Chinese buyers. By offering access to the brands at lower price points, they were first in line to benefit from rising prices, as Liv-ex observed in October 2010.

Eight months later as the market rolled over, they were first in line to fall. As the chart above shows, the price movements of the First Growths and their second wines have been following a similar path since: dropping until June 2014 and running roughly flat over the year that followed.

First growths and second wines over two years

Since July last year, however, the two groups appear to have parted course. While the First Growths have dipped – down 1.3% – their second wines have climbed 4.5% since July. When ranked by performance over 2015, three of the top ten wines within the Bordeaux 500 Index are second wines – and Petit Mouton takes the top spot by a comfortable margin. The Chateaux’s first wine, Mouton Rothschild, was the best-performing First Growth but achieved only 16th place in the table.

Performance of the First Growths and second wines in 2015

It is likely that the recent success of the second wines can still be linked to the strengths of their brands in Asia. With the current climate for buyers in China – where a weakened Yuan makes fine wine more expensive – not favouring high-priced First Growths, the more accessibly priced seconds look particularly interesting.


Bid:offer ratio rises above 100%

Bid:offer ratio - historic

The Liv-ex bid:offer ratio has risen above the 100% level this week for the first time since July 2010 with the Liv-ex Fine Wine 50 index also rising 1.33% to 268.41 since the beginning of the year. Over the last week, the value of bids on the exchange has also risen by £1 million. Historically a bid:offer ratio above 50% tends to indicate an uptrend in the market, or at the very least acts a signal for price stability.

The last time the Liv-ex bid:offer ratio moved above the 100% level was during the China led bull run that saw Bordeaux prices reach record highs. While on the surface these developments all look like bullish indicators for the fine wine market, there are a number of factors that put recent events on the exchange into context.

Recent currency movements have definitely been a driver behind trade on the exchange with the Euro strengthening against Sterling from November, helping to push the Liv-ex 50 index higher. The average bid:offer spread is also at a wide 20%. Historically a level below 15% has been an indicator of sustained price rises. In addition, anecdotal evidence suggests the majority of sellers still remain on the side lines, having just returned from the seasonal holiday.

In the build up to the forthcoming En Primeur campaign and with the market appearing stable, it will be interesting to see if any of these bullish indicators will have a longer-term impact on the fine wine market. So perhaps it’s too early to call a directional shift, but the current buy side build is certainly difficult to ignore.


Fine wine prices in 2015: How did merchant predictions stack up?

Merchant predictions of the Liv-ex 100 Index

The Liv-ex 100 closed 2014 on 238.50. In January 2015 Liv-ex asked its merchant members, who represent the majority of the fine wine trade globally, to predict the closing level of the index for the year. At this point, the Liv-ex 100 had closed in negative territory for four consecutive years. Still, those who responded remained generally optimistic: the average prediction was 259.2, which would have represented an increase of 8.7%.

Last week Liv-ex revealed that the index closed the year on 238.26, running flat over the year. As the chart above shows, this is lower than the majority of predictions: 90.3% of merchants anticipated gains.

Although bullish, the merchants’ average prediction this year was more accurate than last year: they were 8.8% too high in 2015 compared to 11.8% over in 2014.

Later this month Liv-ex will send out the annual members’ survey which will ask merchants to predict the 2016 closing level of the Liv-ex 100. With the market appearing more stable at the beginning of the new year, will they continue to be bullish in their responses?


Fine wine market resists Great Fall of China

Indices_one_year

The Liv-ex Fine Wine 100 index closed 2015 largely unchanged from where it started a year earlier at just 0.1% below its December 2014 close. However, with most financial markets coming under considerable pressure in the second half of the year, the Liv-ex Fine Wine 100 fared relatively better than many other financial assets and physical commodities.

Looking at an industrial commodity such as copper — considered by many as a proxy for China GDP growth — the Liv-ex Fine Wine 100 was relatively robust, especially when considering copper hit a six-year low in 2015 and closed down around 27.9% by the year-end.

Likewise, precious metal gold hit a five-year low in November 2015, falling around 11.2% over the year and leaving its status as a safe-haven hanging in the balance, as investors looked towards the Federal Reserve’s much anticipated US interest rate hike that finally materialized in December.

The Liv-ex Fine Wine 100 also compared favourably to key equities despite a strong performance in the first half of the year. The FTSE 100 was down around 4.9% in 2015 having hit an all-time high in April, while the S&P 500 also closed the year moderately lower, down around 0.73% on year, having established an all-time high in May 2015.

The levelling off of the Liv-ex Fine Wine 100 has left the fine wine market cautiously optimistic at the start of 2016. The index closed 2015 above the low it established in June 2014 and Bordeaux’s market share is now back at levels seen in 2004 — before the China bull run and the sharp boom and bust in Bordeaux prices. While other financial markets are currently suffering turmoil on the back of concerns over Chinese economic growth, the fine wine market looks to have made a considerable step towards normalization, perhaps already having suffered the trauma of a China exit?