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.


Ten years on: Sauternes 2007

Over the past few weeks, Liv-ex has examined the price variations – the highest and lowest Market Prices against the current and release prices – of Bordeaux wines from the 2007 vintage. The chart below displays the same data for the highly rated 2007 wines of the Sauternes 50 sub-index of the Bordeaux 500.

In contrast to the other sub-indices of the Bordeaux 500, all five of the wines in the Sauternes 50 index have dropped in value since En Primeur.

Yquem 2007 has fallen the most and is now available for £2,100, a 46.2% decrease on its release price of £3,900. The equally scored Climens 2007 (NM 98) sees the second largest variation in price. At peak, its Market Price was 37.1% above release. Since then, it has nearly halved to £650.

Suduiraut is now trading at £319, 23.1% below release.

Despite modest rises after En Primeur, Rieussec and Coutet have fallen over 23% and are now available at £295 and £225 respectively.

Sauternes07

Previous analysis on 2007 – ten years on:


 

Ten years on: Right Bank 2007

Last week Liv-ex looked at how the prices of various Left Bank wines have moved since release. Below, we examine those from the Right Bank 50 and Right Bank 100 indices.

There are significant variations in the way these wines have performed. Those lucky enough to have secured allocations of Le Pin or Petrus at En Primeur would have seen significant returns: they have risen by 162.1% and 73.8% respectively.

The other three wines from the Right Bank 50 are each available below their release prices. Ausone and Lafleur have fallen more than any other red 2007s in the Bordeaux 500 since release.

Right_Bank_50

Angelus 2007 also stands out. Its release price of £995 per 12×75 was not significantly higher than the majority of other wines shown below. However, like other Angelus vintages, the wine has made major gains and is now strides ahead of its peer group. This is despite a mediocre score of 92 (RP).

Over the last ten years, few of the wines below have dipped far below their release prices. Pavie 2007, one exception, was available at discounts of up to 64% on release at various points, but has climbed considerably since.

Right_Bank_100

Our final report, on Sauternes 2007, will be published this week.

Previous analysis on 2007 – ten years on:


Ten years on: Second Wines 2007

Second wines

Last week Liv-ex analysed the price variations – the highest and lowest Market Prices against the current and release prices – of the Bordeaux First Growths from the 2007 vintage. The chart above displays the same data for the wines from the Second Wines 50 sub-index of the Bordeaux 500.

All five of the First Growths’ second wines have made staggering gains since En Primeur. Like its first wine, Carruades Lafite 2007 has risen the most – 283.3% since release – and sees the largest variation in price. At peak in August 2011, its Market Price was more than six times higher than its release of £600.

Similarly, like its first wine, Clarence Haut Brion 2007 has gained the least since release, but is still up by 113.8%. The 2007 was the first vintage from the estate to be named Clarence, rather than Bahans Haut Brion.

Petit Mouton and Pavillon Rouge are both around 10% off their peak and command Market Prices of £1,646 and £1,350 per 12×75 respectively.

Second_wines_2007


Bordeaux 2007: performance of the First Growths

In his Bordeaux 2007 En Primeur report, Robert Parker predicted that “most consumers will probably love the style of the vintage’s top wines because they are so flattering, seductive, and fruit-forward”, adding that they “should age surprisingly well for 10-15 years”.

As we enter the tenth year since the vintage, there is some interest in how the wines have progressed. In a series of short blog posts, Liv-ex will examine how the prices of the wines have moved since release.

These posts will examine price variations – the highest and lowest Market Prices against the current and release prices – for wines within the Bordeaux 500 Index, starting with the First Growths.

At a glance

On average, the wines of Bordeaux 2007 are up 69% since release. Their performance has outpaced the broader market: since Spring 2008, the Bordeaux 500 index has increased by 41.9%.

The wines are 15.6% off their peak levels on average. Seven of the 50 examined are currently at their highest ever Market Price. These are Angelus, Cos d’Estournel, Grand Puy Lacoste, Le Pin, Palmer, Pavie and Vieux Chateau Certan.

Just one wine, Climens, is at a record low.

First Growths

Bordeaux 2007

The chart above shows how prices for the 2007 First Growths have varied since release. Lafite’s Market Price has varied the most over time. In April 2009 it hit a low of £1,900 per 12×75, but by July 2011 it had climbed to £8,200. Its current Market Price of £6,100 – still the highest of these wines – represents a 25.6% drop from peak.

Both Mouton Rothschild and Margaux are within 6% of their record Market Prices.

Bordeaux 2007 First Growths

For analysis on the remaining wines of the Bordeaux 500 index, check back over the next week.