The Wine Market Investment Report - June 2019

by Wine Owners

Posted on 2019-07-08


The highlight in June for the wine world was clearly the Daily Telegraph event ‘Wine; for profit or pleasure?’. A sell out crowd witnessed excellent talks from four leading experts from the wine world, including two of us from Wine Owners (Miles and Nick). Please contact us for a copy of the presentation.

Otherwise June was again tranquil with trade bobbing along just fine but with no particular surges or dips anywhere. Global stock markets enjoyed a rise after Messrs. Trump and Xi found some accord but this doesn’t seem to have inspired the wine market as yet! Wine stock levels are healthy amongst Asian traders so not even a continuing depressed sterling is bringing about much marginal demand from that corner although most indices are in positive territory in June.

The Bordeaux en primeur campaign came to an end with an almighty whimper. En primeur gets under the skin of the wine trade and all involved spend far too much time talking, writing and moaning about it…yet even so, I shall continue! Within the wine market(s) it has represented very poor relative value for a decade, prices are just too high, yet merchants don’t dare turn their back on this once great provider. It was a great system for all involved, including the man on the street. Now only a very few wines ‘work’ each year (whereby they make sense to the supply chain and the end buyer). And now, to compound the problems of high prices, the Chateaux have decided to retain more and more of their own stock. How this comes to market, when and at what price will fuel debate but based on the evidence of the mighty Chateau Latour, the market may just turn its back. The feeling of stock overhang may easily outweigh the feeling of short supply and it’s not as if the world is going to go thirsty, there will always be alternative choices.

If only our Italian friends came together with a synchronised offering, we could have a proper old school primeur market again. All the market players would have to be involved at the same time, jostling for position, scrapping over every six pack and would still be able to sell at a price that would make everyone happy. The hype that the merchants used to create in Bordeaux primeur markets, that we are still hungover from, could be regenerated. We all miss the hype and the excitement which created such fear amongst the white-faced, panic-stricken collectors and consumers who couldn’t possibly stand even the faintest whiff of FOMO (fear of missing out). 

As it is, Italian releases come to market in no organised way and importers and merchants release when they feel like it. It’s all very Italian really but it does make buying easier. We have been acquiring some 2015 Barolo new releases from Fratelli Alessandria, whose reputation is markedly on the up. Prices are very reasonable for these high scoring wines, ranging from c.£35 per bottle for their basic Barolo (94 Wine Advocate points) to nearer £60 for their top cru, Monvigliero (96+). Outside of the very top group, Luciano Sandrone is another producer worth mentioning - consistently high scores at affordable prices. Their equivalents in quality in either Bordeaux or Burgundy would be far more expensive.

Piedmont is easily our favourite region at the moment, due to the demand/supply equation and the blue chips remain well bid. Whilst Bordeaux and Burgundy remain lacklustre, Champagne and Rhone have attracted some attention. There is no question we would recommend the brilliant 2008 vintage in Champagne and the recently released Sir Winston Churchill looks a good bet with the ’96 being double the price.

Please see the Blog for more articles about the wine investment market.

Also, any enquiries about my Professional Portfolio Management services are most welcome.

Miles Davis

8th July 2019

miles.davis@wineowners.com


Focus on: Haut Brion 1990-2006

by Wine Owners

Posted on 2019-01-24


Haut Brion has always been referred to the connoisseur’s choice amongst the upper echelon and indeed it averages the highest scores across multiple vintages within its peer group. Yet strangely, and more often than not, it trades at a discount to its peers.

Looking at this Relative Value Score the 2006 (£3,500 per 12) stands out but good investment rationale can be argued for the ’90, ’95, ’96, and ’01 also.

The case for the ’90 (£8,900) is that it is currently trading at its widest ever discount to its chart-topping sibling of ’89 (£25,000) and the scarcity force is strong!

1995 (£4,300) because it’s getting on a bit now, is not that challenging in price terms and is drinking very nicely, as personally witnessed at Thanksgiving.

Last week the ’96 (£4,200), in my view a better wine than the ‘95, gave an effortless history lesson in classicism and has a long and charming life ahead. It was allowed five hours in the decanter which was richly rewarded and is a stupendous wine albeit not so overtly fruit driven as Mouton ’96, but that wine is £1,000 more per case at a similar rating level.

The ’01 is £3,700, so very low for a first growth and has been drinking well for some time. Its relative value score above 8 makes it look interesting.

The giants of ’05, ’09 and ’10 are exactly that and deserve to trade in another price bracket altogether. This commentator’s view, however, is that’s where they will stay for the time being and price performance in the short to medium term will evade them, as it has done in recent times:

Buy: Haut Brion ’90, ’95, ’96, ’01 and ‘06

Sell: Haut Brion ’05, ’09 and ‘10

Haut Brion 2000 will be included in a separate post.


Focus on: Haut Brion 2006

by Wine Owners

Posted on 2019-01-23


WO Score: 96

Price: £3,500 per 12

Haut Brion 2006 is cheap, working relatively on a vertical basis by comparing it to other similarly rated vintages of Haut Brion and also on a horizontal basis, comparing it to its first growth peers. Its absolute relative score of very close to 10 is a leading indicator - anything in double figures for a first growth positively screams a buy. This falls marginally short of that magical figure but its consistent notes and firm scoring of 96 gives it a buy recommendation.


The problem with high releases

by Wine Owners

Posted on 2016-06-08


Remember spring 2011. In Bordeaux there was an early April heatwave, that added to the feel-good factor felt by producers and merchants alike. All agreed, this was a golden age for Bordeaux.

The wealthy were getting wealthier, raiding the post–Lehmann EU Agricultural Support Fund, citing 'agriculture' status so that they could construct new chais. It seemed taking the piss had become institutionalized.

By the late summer, barely 4 months after that balmy spring, it was over. The bubble had burst, but not before the world and his wife had piled into overpriced Classed Growths.

Fast forward 5 years, and the negative market sentiment created by those purchases by traditional and new En Primeur buyers has all but dissipated. The good news is those who were deeply under water on the back of 2009 and 2010 purchases are now in the shallows and feeling rather more positive about their purchases and their outlook.

This has been helped by the fact – there, I said it, by the FACT - that there hasn’t been a vintage to touch those two monumental years since. Not 2011 and 2013 of course, neither 2012 nor 2014, and surely not 2015 either. To be a great vintage Bordeaux needs to be uniformly wonderful across its communes, and 2015 was far from uniform. It’s a very good vintage overall, but not a great one. It will not join the pantheon.

The prime reason why Bordeaux suffered so badly over the period 2011-2014 was negative sentiment, and nothing fuels negative feelings like losing money on paper.

It is for that reason 2015 may well prove to be a watershed in the history of En Primeur.

Many Chateaux released at realistic prices that made their wines sensible buys – wines like Pape Clément, Rauzan-Segla and Canon, Leoville Barton, Pontet Canet, even Lafleur and Tertre-Rotebouef.








More Chateaux than not released too high. What do we mean by “too high”? After all, it’s a relative term. Our definition of too high is a price that will prove not to give a discount against future market value or which could end up having been more expensive than the future discounted secondary market value in 2-5 years’ time.

In the last few days, a few Chateaux have pushed the boundaries of credulity, releasing wines at such a high price that there is 90%-99% downside attached to buying early.

Wines such as Pichon Baron, Lynch-Bages and Palmer. As the graphs show, none offer much by way of upside and plenty of downside risk.







None of this matters to the informed, rational fine wine buyer. They simply need to say ‘no thanks’ and move on, selecting affordable back-vintages to enjoy, lay down for future drinking, or to use as a store of value.

What does matter is when less well-informed buyers are badly advised and sold into the vintage’s more expensive releases, only to find out a few years down the line that the wine has fallen in value, those losses further exacerbated by broker commissions. If you end up with enough buyers “under water” goodwill built up painstakingly over time evaporates.

In this campaign some merchants are saying things like:

Qualitatively, 2015 has been compared to previous greats of this century - 2010, 2009, 2005 and 2000 – when looking at price compared to these greats, the wines of 2015 have broadly represented good value with most estates benchmarking against these years and releasing at lower prices – which is quite refreshing.

Not only is the premise wrong, it encourages irrational buying behavior based on unrealistic expectations and stores up future negative sentiment.

This is a shame, for Bordeaux has the greatest, largest single body of wine in the world to offer. The greatest expressions should bring the greatest joy, not deliver disappointment.


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