by Wine Owners
Posted on 2018-09-19
This is an extract of Wine Owners' Collecting and Investing in Fine Wine guide. You can download if for free here.
Generally speaking, wine investments perform best over a minimum period of around 5 years.
There is no single ‘right answer’ of course. Some very active collectors sell and reinvest as soon as they see a fixed return, following speculative market momentum. Other collectors tend to hold for long periods of time— and although they may go through periods of flat or negative growth, typically they benefit from shifts in supply and demand; when demand pulls significantly ahead of supply, prices tend to move sharply reflecting that imbalance. Longer-term strategies may also benefit from partial realisation of profits to mitigate the risks of re-ratings.
Wine has periods of both high and low performance, just like any other investment class. Medium- and long-term holds tend to perform more consistently as a result. They also give investors the option to enjoy matured wines (i.e drink rather than sell), if their financial circumstances improve such that personal enjoyment of the wine becomes more significant than the financial value of selling it.
Vintage follower vs. perennial buyer
A common refrain among some investors is “the best wines from the best vintages”. It’s practically a matter of pride having exclusively the best wines in their portfolios.
However, this approach does not fit with the reality of how buyers are allocated wine at first release by merchants. Nor is it necessarily a good idea.
With Bordeaux, this ‘best-vintages-only’ policy is relatively easy to maintain. There is no particular need to buy off-vintages because the wines are produced in volume, and are widely distributed.
But things are different for scarcity-led markets such as top Burgundy, Barolo and cult Californians. Here, supply is low, demand is high and distribution channels are narrow. The net result is that suppliers can apply pressure on consumers to buy a particular wine every vintage, or else lose their right to an allocation next year. With so many customers vying for these wines, merchants can choose to give their best allocations to their best (most consistent) customers. Maintaining an allocation of these wines, therefore, requires consistent buying every vintage, irrespective of quality.
Cherry-picking vintages doesn’t always work, either. Vintages which are heavily touted initially are not always those considered the best in the fullness of time. Piedmont 1997 was considered a stellar vintage early on, but today the favour falls with less-hot vintages such as 1998, 1999 and 2001. And this works both ways; Burgundy 2002 was largely unloved at release, but has now evolved into one of the all-time greats.
Relative value picking
Identifying value is vital for both short- and long-term performance. How do you select which new releases to pick, or determine which vintages of a wine represent the best value?
Picking the best prospects is now simple. Use relative value analysis to find sweet spots between market pricing and (carefully weighted) critic ratings.
To determine whether Le Pin 2017 is a sensible en primeur purchase, the analysis below compares it with four earlier vintages. The Relative Value Score shows that 2017 is a more attractive buy than the higher-rated 2015 and 2016 vintages. It also confirms that 2012 offers better value (at current market prices, factoring in current critic ratings) than any of the other four vintages.
This is an extract of Wine Owners' Collecting and Investing in Fine Wine guide. You can download if for free here.
by Wine Owners
Posted on 2018-09-14
Rioja was Spain’s answer to Bordeaux - incredibly high quality AND quantity produced from noble grape varieties (in Rioja’s case Tempranillo).
Back in the 1950s and 1960s the large Rioja houses were making wine of extraordinary quality to rival their Bordeaux neighbours to the north. By the 1980s and 1990s many Bodegas had let standards slip (with a few notable exceptions) and the outside world turned away from Rioja, creating a self fulfilling downward qualitative spiral. Since the early 2000s the region has turned itself around, make serious investments, and more recent vintages have attained (or perhaps even bettered?) the heights achieved of their great post-war vintages.
Rioja prices are still great value but the world is catching on, the positive cycle is established an the region’s future as a blue chip wine producing region is more or less assured.
The following shows the jump in the last 12 months of Rioja prices compared to the general Spanish Index (in which there is a hefty Rioja set of constituents as well).
For the budding collector, without access to unlimited funds, Rioja is the obvious region to buy into on a 10-year view.
by Wine Owners
Posted on 2018-05-17
An overlooked example of value for money here from the 100 point La Mission 2005. Compared to Domaine Clarence Dillon stablemate Haut-Brion, and the rest of the 2005 First Growths, 2005 La Mission is a clear winner in terms of value as is eminently clear from relative value analysis. The only other 100 point wine on the whole left bank is Haut-Brion, which trades at around £6,500. The other Mouton will cost £5,250, Latour £6,600, and Margaux £6,100, all on 98 points, while Lafite lags behind them all in relative terms, commanding £7,700 for 96 points.
Compared to other 100 point La Missions over the year, the 2005 wins out on relative value as well. Whether any of the 2009, 2005 and 2000 will hit the price highs of the legendary 1989 is a subject on which the verdict is very much out, and will depend on how reputation of the vintages develops. Nevertheless, all three look like relatively sound buys, and the 2005 at the offer price just beats the rest (assuming they can be bought at market level).
“The 2005 La Mission Haut-Brion is pure perfection. It has an absolutely extraordinary nose of sweet blackberries, cassis and spring flowers with some underlying minerality, a full-bodied mouthfeel, gorgeously velvety tannins (which is unusual in this vintage) and a long, textured, multi-layered finish that must last 50+ seconds. This is a fabulous wine and a great effort from this hallowed terroir. Drink this modern-day legend over the next 30+ years. Only 5,500 cases were produced of this blend of 69% Merlot, 30% Cabernet Sauvignon and 1% Cabernet Franc.”
100 points, Robert Parker
La Mission Haut-Brion 2005 is offered £4,300 on the Wine Owners Exchange (£4,435 including fees)
by Wine Owners
Posted on 2018-03-23
The KFFWII is up 9.6% over the year to March 2018, with a 2% gain in the last quarter.
Consolidation of the market at current valuation levels is on the back of the 24 months to December 2017, seeing gains of 38%.
The top of the market is significantly influenced by Asian demand, where a weak dollar is causing bid prices to fall. Changes within secondary market wine distribution into China may create a degree of uncertainty not seen since 2014.
The outlook for the rest of 2018 is one of subdued growth, with the Sterling-denominated index at risk of downward pressure as the currency appreciates against the US Dollar and Euro.
First Growths are up just 3.8% over the last 12 months, half of which can be accounted for by the last 3 months. This broadly reflects the rest of the Bordeaux fine wine market (classified growths and equivalents). However, this subdued performance ought not to detract from 3-year performance (43% price growth) in First Growths, and 55% appreciation in the classified growths and equivalents over the same period.
Risers substantially outnumber fallers in Bordeaux, reflecting the market's continued overall growth. Less new wine is being released from chateaux than ever before, and quality is increasingly consistent. These factors point to continued growth during 2018, although it will remain in single figures, as orderly trading patterns continue.
Burgundy values continue to appreciate, with increases of 21% to March 2018, and 4.6% over the last quarter. To date there are no signs of a let-up in the upward trajectory of top producers' Burgundy prices. We’re about to see Burgundy price appreciation break through the 100% mark over the last 5 years, and reach 257% over 10 years.
Northern Italy (represented in the KFFWII exclusively by Piedmont and Tuscany), is up 9.5% over the last 12 months, of which 2.7% is within the last quarter. The leaderboard is dominated by Monfortino, the standout Italian performer of the last 4 years which is consolidating its position as one of the most investible wines in the world.
Expectations for Northern Italy - Barolo in particular - are that prices will continue to increase into double digits over the remainder of 2018.
Vintage champagne has performed well over the year, up a full 10%, and has kicked up 3% in the last quarter.
The best performers are rarer cuvees from such stalwarts as Selosse, Bollinger, Krug and Pol Roger. Over 10 years Champagne has performed even better than Burgundy, up 283%: demonstrating the liquidity that volume can drive, brand values and early consumption patterns.
California’s moderated growth continues, with annual performance to March 2018 of 6.3%, and is up 2% within the last quarter. After years of bewilderingly strong growth (385% over 10 years), fallers are as numerous as risers within the California index, implying further downsides or a relatively flat outlook.
Top Spanish wines dominated by iconic and traditional large estates in Rioja and Ribero del Douro still represent good value, have good ageing potential, and are produced in large volumes.
These positive trading fundamentals support a market up 8.25% in the last year, and a healthy 3% in the last quarter.
A related effect is that Spanish blue-chips (particularly Vega Sicilia's top wines) are increasingly being traded on exchanges, and markets are being made for these wines through the usual offer and bid mechanisms used by market-makers.
The Spanish index is up 155% in the last 10 years. 45% of that growth has taken place in the last 3 years. The timing of that resurgence coincides with the inflection point in Bordeaux markets in the winter of 2015, when they rebounded from cyclical lows.
by Wine Owners
Posted on 2018-03-05
We would like to echo the sentiments of Lisa Perotti-Brown – the new face of Bordeaux at The Wine Advocate – who revels in reviewing great wines from vintages less hyped than the universally celebrated ones.
A review of past vintages is so much more pleasurable than one of a current vintage. It can be pursued at leisure, far from the madding crowd of en primeur set-piece campaigns. The wines have been in bottle for some years, and have grown into their skins, allowing them to express themselves and harmonise. There is none of the guesswork required when evaluating young wines. And it is not done as part of a tasting Megathon favouring the most obvious, richest wines…
Here follows a spotlight of vintages which hide truly great wines, many of which still represent good value.
Let's start with 2013, the worst climatic year Burgundy has experienced in a long time, characterized by a dreadful summer of cold, sodden weather. But that’s the thing with Burgundy; its growers refused to give up. They never do. They spent the summer in their Aigle wellies desperately battling the filthy elements and sticky, sucking mud. Coaxing what they could out of their precious vines - their livelihood - trying to make the best of a seemingly bad lot. The coaxing process involved leaf thinning, and sacrificing bunches to give the rest a chance at maturing properly. And that is the thing with Pinot Noir; it responds exceptionally favourably to low yields.
Now, if you like dense, sweet fruit with generous alcohols, 2013 may not be the vintage for you. But if you enjoy intensity of flavour without the weight of a hot year, red Burgundies from 2013 will positively surprise you. All the more so if you first tasted barrel samples back in January 2015; the wines are now positively transformed from that first recalcitrant showing.
It’s well known that a warm, accommodating, crisis-free growing season will result in wines that are generous and velvety-textured in their youth. But these aren’t always the wines that develop into fine, complex maturity. Take 1999 for example, lauded as one of the greatest Burgundy vintages of all time. Indeed, some of the wines are astoundingly good. But just as many others are really quite average. Why is that? Over-generous yields. It’s a fine line with Pinot, between harvesting as much ripe fruit as nature provides and allowing the fecund vine to produce as much as it’s wont.
Back to low-yielding 2013, and the best wines are beautifully crystalline, intense and transparent. Think a cornucopia of red fruits, blackberries and gooseberries: the essential ingredients of a refreshing summer pudding – a balancing mélange of sweet and sharp. Add characteristic Burgundy high notes of salinity (and a mineral-tinged, geological nod-in-the-glass to the inland sea of which the Cote d’Or was once a part) and hopefully you’ve formed a fair mental image of 2013 red Burgundy.
It’s no coincidence that blue chip stalwarts such as Eric Rousseau and Christophe Roumier love their 2013s. Aubert de Villaine sees his Domaine de la Romanée 2013s as long distance runners (in contrast to his more ‘forward’ 2014s). And they are delightful.
2013 is also one of the last sensibly priced vintages before Burgundy prices became vertiginous.
Wines from cooler Burgundy vintages often start out rather awkward, and out of kilter. Their acidity may add definition and length, but can also close the wine down, or conspire with tannins to suppress the essential grape characteristics in a wine.
2006 was one such vintage. Its wines were initially hard to taste, and broadly speaking, unlovely. Many of us viewed 2006 Burgundies as unwelcome magpies in our collector’s nest of more comely vintages.
But now, after a decade in bottle, the wines are starting to show very well. They exhibit well-defined fruit, great length and energy. Next to the 2005s, they may lack heft and powerful tannin structure, but they are nonetheless serious, intense wines. And they are beginning to drink well now. You’ll have to wait at least another decade for your 2005s to come around, but 2006 is a fine emerging vintage that will give pleasure now and for the foreseeable future.
For Bordeaux, 2011 was always going to be a tough sell. On release, the wines seemed scrawny and mean in comparison with the monumental 2009s and 2010s.
Yet a recent dinner event hosted by Wine Owners showed how dangerous it is to tar a whole vintage with the same presumptive brush, or to judge a more classic vintage too early. The highlights of that tasting were Vieux Chateau Certan 2011 and La Mission Haut-Brion 2011. They were both easily the equal of their counterparts from better-regarded vintages, and represent great value compared with any more recent vintage.
In Bordeaux, 2006 was a vintage that attracted more than its fair share of negative press, the effects of which are still in evidence today, judging by the affordability of 2006 Bordeaux on the Wine Owners Exchange. The success of a Bordeaux vintage depends on sentiment, and in 2006 combination of negative factors came into play.
First, it came on the heels of stellar 2005. Second, Bob Parker’s favourable rating of the vintage attracted criticism from many pundits, attracting further negative attention. Third, the release prices were too expensive– due at least partly to the high Parker scores. Why else would La Mission Haut-Brion be ready to trade at £1,550 per 12x75cl, yet be overlooked?
[ Top tip: buy La Mission Haut-Brion at this level – half of its opening (mis)price. It is considered a ‘wine of the vintage’, rivalled for this accolade only by the (much more expensive) Mouton. ]
We are fans of the Bordeaux 2006 wines we’ve tasted. They don’t have the powdery tannins and powerful black fruit of the 2005s, but they do have superb energy, and a sappy character that compels you to take the next sip. We see many wines from 2006 as more interesting than their counterparts from 2004 or 2008. Notable examples include Mouton, Pontet-Canet, Leoville Barton, Leoville Las Cases, La Conseillante (just a sampled tip of the iceberg). Whenever tasted comparatively, these showed extremely well alongside relative other vintages.
In our experience, where 2006 performs particularly well is its consistency. Simply put, we’ve never had a poor one. Other low-rated back-vintages produced a number of successes (such as 2007, 2011), but none are as consistent as 2006.
2002 is another Bordeaux vintage which suffered from poor reputation. The year’s poor weather consigned the vintage to the status of ‘restaurant wine’ before any of the wines were even bottled. But it’s easy to forget that the wines were very well priced; first growths were released at around £800 per case (just one-sixth of their 2015 release prices). If you had invested in 2002 Bordeaux 15 years ago, you would be feeling rather smug right now. 2002 is the vintage for the contrarian that lurks inside every wine enthusiast!
While they were never going to be the most profound expressions of Bordeaux (in the light of the meteorological conditions), the 2002s have consistently tasted savoury, fruity, and sweetly spiced with cloves, cinnamon sticks and liquorice root. At all levels of classification, we’ve yet to stumble across a disappointing example.
In 2002 Piedmont, like Bordeaux, suffered from rotten summer weather. Wine commentators have described 2002 in Piedmont in such terms as ‘wiped out’, ‘disastrous’, ‘severely compromised’, ‘a washout’.
But despite all of this, one wine survived the vintage’s humid gloom (and the hailstorms which repeatedly strafed Barolo) with enough salvaged bunches to benefit from perfect autumnal conditions. This is a wine made with such severe selection that yields were just 12 hl/ ha, and which epitomises viticultural triumph against the odds. The wine in question is, of course, the now-mythical Barolo Riserva Monfortino 2002.
Take a moment to consider the sacrifice involved in making wine with yields as low as 12 hl/ ha. Burgundy considers 25 hl/ ha to be painfully low, and in Bordeaux anything under 40 hl/ha is a very short harvest.
Giovanni Conterno – Roberto Conterno’s late father – called 2002 the greatest Monfortino of his lifetime.
The last word must surely go to Antonio Galloni, whose tasting note and review of this wine encapsulates why it’s so rewarding to seek out the greatest wines within those vintages in the shadows:
“…the 2002 Barolo Riserva Monfortino, a wine that may very well turn into a modern-day legend… 2002 was a cold, rainy year that in many parts of Barolo culminated with violent hailstorms in early September. The weather then turned picture-perfect for the rest of the growing season, but by that time most vineyards were severely damaged. The late-ripening Cascina Francia was an exception. Conterno green-harvested aggressively, which gave the fruit a chance to ripen. …The Conternos were so upset by the poor early press reaction to the vintage they announced they would let no one taste their 2002 Barolo. Conterno has fashioned an old-style, massive Monfortino that pays homage to the great wines of decades past. …It is a deeply-colored, imposing Monfortino loaded with dense dark fruit that today is held in check by a massive wall of tannins…classic, old-style Barolo the likes of which we aren’t likely to see again any time soon. Antonio Galloni, October 2008.
by Wine Owners
Posted on 2018-01-10
Burgundy has produced an unprecedented string of excellent vintages during the last couple of decades.
2016 was the third in a trio of such vintages, which complement each other beautifully.
The intense 2016s tend to have an extremely focused core of fruit, and are threaded with acidity that infuses the vintage with notes of blood orange, redcurrants, cassis and spice.
2015 produced deep and richly expressive reds which are now beginning to close down, suggesting a long and glorious future. They are reminiscent of the 1999s with (in some cases) a touch more concentration.
The 2014 reds are very under-rated given how balanced, expressive and subtle they are, with sufficient stuffing to last the course. This is a vintage to satisfy the most ardent Burgundy lover through a very wide drinking window.
The 2014 whites are something else: a mythical vintage that every white Burgundy lover should own. While they didn’t show enormous typicity early on, that was precisely because they were so concentrated and bright. They are now evolving beautifully, with most endowed for the long-term.
2013 produced some excellent top-end reds, and very fine whites for those who like freshness and definition. Although a challenging vintage weather-wise, quality abounds at the top of the tree, among vignerons who respected quality and fought the filthy weather with heavy-handed use of secateurs. Roumier and Rousseau adore their 2013s.
Burgundy’s run of strong vintages began well before 2013, however. 2012, 2010, 2005, 2002 and 2001 all delivered great quality, and there are also some great wines (of both colours) to be had from 2008, 2007. Many 2006 wines are showing better and better as time passes, and the 2011s, which showed a certain hardness in youth, are softening into wines of substance. Once-maligned 2004 is even starting to develop now; the wines are gradually dropping those hard coal-tar flavours that were attributed to pyrazines from a ladybird plague, but which may well be simply a characteristic of a firm, robust vintage in the first 14 years of life: a late developer and an ugly duckling.
Success among the 2003s is very much dependent on producer; look for those who picked early, used refrigerated vans to protect their grapes from searing heat during transit, and employed light-touch winemaking. Great wines were made in 2003, and served blind can fool the drinker into imagining 2005, albeit with a little less structure.
The Burgundy market
Although Burgundy has had a great run of quality, the same is not true of quantity. Most vintages since 2009 have come up short, and 2016 was the worst of the lot, with some villages experiencing reductions of 70%.
Upward price pressure is the natural result of these smaller quantities, yet in context producers have showed admirable constraint; increases over the last 5 years are up by a ‘mere’ 94%. Contrast that with the 10-year picture, which shows price increases among the blue chips of 428%!
Further down the pecking order, back-vintages of Premier Crus have not caught up, except for the best-known blue chip producers.
The outlook for Grand Crus remains solid, in our view, in spite of the elevated prices. Nevertheless, traditional Burgundy buyers are trading down appellations in search of value, which will surely elevate Premier Cru prices over the next 24 months. There are plenty of excellent maturing or fully mature wines on the market, whose prices prove extremely attractive prices when compared with new releases – even more so if you factor in 10 years of storage fees and inflation. If you are interested in investigating, contact us to discuss the options, or check out the Burgundy offers on the fine wine exchange.
Steen Öhman – the new Burgundy critic on the block – wrote a piece on Burgundy wine investment for Wine Owners last year. Everything he said then holds true today. It’s a must-read for the discerning Burgundy buyer, and I urge you to do so.
In days gone by, it took the best part of a decade for a hot new Burgundy producer to become recognised. But times have changed, with buyers more actively hunting out wines with a good quality/price ratio. These days, new discoveries rapidly increase in price over the first 4 to 5 years. Identifying these rising stars early is a great way of buying into Burgundy in a way which guarantees future returns should you choose not to drink everything you have purchased. You might end up with vintages that are ‘works in progress’ compared with more recent vintages, but you can always trade up.
Looking ahead, the 2017 wines will provide generously in both quantity and quality. Stylistically, the vintage will be more akin to 2014 than to the intense, concentrated wines of 2015 and 2016. Thankfully, the prospect of a good-sized campaign for the 2017s has kept 2016 prices in check; and just as well, given current price levels. How successful 2017 will be across the board remains to be seen.
FINE WINE PREDICTIONS 2018 - get your free report
by Wine Owners
Posted on 2017-12-21
2017 was a fascinating year for the wine market: a year of solid growth, consolidation and even a flash of speculation!
It was also a year of broader consumer interest reignited.
Knight Frank’s global Wealth Report includes analysis of the fine wine market provided by Wine Owners. Wine was by far the best-performing collectible asset of 2016,
up 24%. As a result, lots of positive press in 2017 brought plenty of new interest into the market.
After the sharp price increases of 2016, when the Bordeaux market leapt as it rebounded off its 2014 lows following a couple of years of ticking up, 2017 was always going to be a less dramatic year for the classified and blue chip Bordeaux market.
It was encouraging to see a successful 2016 en primeur campaign that saw generally modest increases over 2015 in Euros, even if increases were more substantial for UK buyers due to the weakened currency. Overall gains in 2017 were low single-digit for
First Growths (after the 30% readjustment seen in the previous year). Other Classified growths and Right Banks rose an average of 7%.
Such moderation was less evident in the primary or secondary Burgundy market, the latter up 14.5%. What happens next is anyone’s guess, but the top of the market is holding onto 5-year gains of 100%, thanks in part to enduring Asian interest.
Hard luck stories
Burgundy was really hard hit by frosts in 2016. It’s a super vintage, but with many producer cellars that are 2/3rds empty. Only Vosne-Romanée and parts of Morey-St.-Denis and Gevrey-Chambertin escaped the April ‘gel’. Pretty much everywhere else was
heavily hit. The night-time freeze hit the Grand Crus and vineyards high up, the morning sun burned the buds of other premier crus and villages plots.
That big reduction in volume does add something to the intensity of the reds most noticeably. They are balanced, intensely redcurrant or blackcurrant in character, saline and fresh, with a vein of blood orange pulsing through them. The whites are fine
but don’t quite have the extraordinary rich, bright core of the 2014s, although in their favour the whites show more site specific character at this very early stage.
In 2017 Burgundy narrowly missed a second successive year of April misery, with an abundant vintage of good quality. Instead, Bordeaux was badly affected by freezing night-time temperatures in the last week of April, after a warm spring had encouraged
early growth. Some areas on the Right Bank, Graves and parts of the Medoc away from the warming waters of the Gironde were devastated. Chateaux de Fieuzel in Pessac isn’t making any wine in 2017.
What that will do to en primeur pricing next year remains to be seen, but widespread rises are on the cards, probably even those properties who emerged unscathed.
Notable winning regions
Champagne extended its run with top back vintages (where relative scarcity starts to play) racing ahead, up 13% in 2017. The world’s appetite for Champagne remains insatiable.
It was gratifying to see Northern Italy in rude health, with interest for Barolo Crus broadening significantly and prices of the best producers very sharply up this year on the back of a string of good vintages culminating in the highly sought after 2013s.
Talking of that flash of speculation, Margaux 2015 announced in November that Margaux would release their 2015 as a special edition in honour of Paul Pontallier, the managing director of the estate who died in March 2016.
We saw the first release from the chateau, offered in individual single wooden cases, at a significant premium to the release price.
Based on the Chateau’s announcement, we saw speculative trading in the wine between EP club members rise and rise, with bids climbing from under £6,000 to £12,000, representing more than a 130% increase compared to the release price to UK consumers of
The limited edition black bottles with a variation on the classic Margaux label in gold invited comparison with the 2000 Mouton Rothschild, which attracts a significant market following based on collectability, despite not being in the top flight of Mouton
vintages or even one of the best wines of the vintage.
Looking ahead to 2018
If you're interested to learn more about the health of the fine wine market and are interested in our predictions for 2018, you can now download our Fine Wine Predictions 2018 report, a must-read for collectors, wine lovers looking for value, and investors searching for opportunities.
DOWNLOAD PREDICTIONS 2018 REPORT
* * *
We wish you all a very enjoyable festive season, and much vinous pleasure as you open great wine bottles to celebrate and see in 2018.
Best wishes for health and happiness from the Wine Owners team!
by Wine Owners
Posted on 2017-09-13
After a busy summer including in August our most productive trading month to date, we thought it would be instructive to run some analysis of trading trends and movements, compared to the same quarter in 2016.
Market share between regions remains relatively stable despite a large increase in trading value overall, with Bordeaux holding first place with a 75.14% share of market compared to 78.15% in the same quarter of 2016. That there is a drop is interesting in its own right, perhaps pointing to greater diversity in wines offered for sale, as well as to diversifying demand in export markets.
Burgundy is the major winner in market share, extending from 11.78% in summer 2016 to 17.10% over the same period in 2017, and we’ve certainly seen an increase in Burgundy purchases from Far East markets, showing a 17% increase on 2016 numbers by value.
Other regions remain very much minority sports, with Rhone up to 2.03% from 1.8% and Italy, surprisingly, down from 4.85% to 2.5%.
Within Bordeaux, the share of the market taken up by First Growths has grown from 28.26% in 2016 to 44.05%, perhaps reflecting heightened interest in the top wines, though the real interest is in how the First Growths compare within their own category.
Haut Brion is the major winner amongst the Firsts, increasing its share of the Bordeaux market to 13.35% from 3.2%. As a proportion of the First Growth market, the share increased from11.31% to 30.3%, putting Haut Brion at the head of the market alongside Lafite.
Lafite moved up to a 13.34% share of the Bordeaux market from 11.62%, but lost ground against the other First Growths, slipping to 30.29% from 41.12%, exchanging a clear lead in the class for an almost dead heat with the progressive Haut Brion.
Mouton showed a similar fall-off in share, dropping from an 8.63% share of Bordeaux to 7%, and a 30.54% share of the First Growth market dropping to a 15.89% share. Market and trading values for Lafite and Mouton remain robust however, so this feels more like a positive story about Haut Brion than a negative for the two Rothschild properties.
Latour has benefited too here, growing a very small share of Bordeaux (1.18%) to 5.07%, and increasing its share of the First Growth market from 4.18% to 11.05%.
Margaux has the least movement to comment on, increasing its share of the Bordeaux market marginally to 5.29% from 3.6%, and falling from 12.84% to 12.01% in its share of the First Growths.
by Wine Owners
Posted on 2017-05-24
With the 2015 Burgundies arriving in the market these days and with more to come over the next period the market is showing mixed signals - some of continued excessive demand and some spell disaster for lesser producers trying to claim high prices.
The prices of the 2015 vintage
The price development for the 2015s shows a rather mixed picture at the primary level - some producers have showed great restraint and have in some cases kept the prices at 2014 level, whereas moderate increases have been seen even amongst the top producers in very high demand.
A lot of Burgundy producers are aware of the dangers of high prices even on village level, as these wines are now becoming very expensive in restaurants. If they want to maintain a good representation in restaurants the prices for a village level wine are near the limit - aside from the producers in extremely high demand.
Other producers seem not very aware of these dangers and have increased the 2015 prices by more than 20% - and while this may be viable in the very short run - I have talked to several wine bars and restaurants that have cut allocations already, and many will do so after the 2015 vintage. This will perhaps not have a huge effect on the 2016 vintage as the quantities are very small in some cases .. but in the long run some producers have priced themselves out of the market so to speak.
The 2016 vintage - what to expect
I have tasted some 2016s already and there are plenty of reasons to be optimistic, as quality looks very fine indeed. The wines are cooler than the 2015s, and in that way more classic. It's still too early to be very firm on the quality - but potentially a quite outstanding vintage - very well balanced and enjoyable for both the reds and the whites.
The quantities are very low due to the April frost, but also very uneven across the producers and appellations. My expectation would be that the low quantity will ensure a continued upward pressure on prices for the wines in demand, but the tendency could be trouble ahead for increases in prices for the wines with no real demand in the secondary market.
Francois Millet, Domaine Comte Georges de Vogüé - Picture: http://winehog.org/
The long-term effect of prices
In my view, we will see continued increases in prices on the wines in very high demand - i.e. wines getting high prices in the secondary market thus ensuring a margin for those who buy the wines in the primary market.
These wines will still be in demand, as many people will keep allocations as it's a good investment, but larger share will eventually end up in the secondary market. Some of these wines are now priced beyond the limits of the average quite well off consumer, and will be traded accordingly. Restaurants will do the same, and as it becomes more difficult to sell the wines at the tables - they will also cash-in offering wines on the secondary market.
The wines not in demand in the secondary market will eventually have problems, as consumers will cut allocations and move on to other products.
This is where Bordeaux was 15 - 20 years ago, and while the top Bordeaux wines have managed to increase prices the lesser wines from Bordeaux are struggling with low demand and low prices even though quality and the value of these wines often can be tremendous these days.
Take a look at the wine lists of today and note how limited the Bordeaux offerings often are these days - compared to 20 years ago.
Burgundy will prevail but demand will be more volatile
With the small quantities produced in Burgundy the risk of a full meltdown is not imminent even with the latest increases in prices. Some producers will struggle as they will be caught between the need or urge to increase prices and the restrain shown by some of the top estates regarding the prices on the low-level wines.
A good negociant will be facing the fact that their Vosne village will cost the same as the wines from a top end producer in the primary market. That is not sustainable in the long run - and these producers could well see a collapsing demand within a few years.
As prices go up I expect demand to be more volatile, as the focus on the great vintages will increase. This has happened in Bordeaux and with the globalisation and available price information around the clock this will also be the case with Burgundy.
So, I expect increasing and more volatile prices for the wines in demand, and a sluggish market for the producers with high prices without a good demand from the secondary market.
The calculative consumer
As the prices increase the consumers will be more calculative and look at the historic prices and the development in the prices and availability of back vintages. Is it the right time to buy, can the same wine in an equally good back-vintage be found on the market at a lower cost.
The conscious consumer will check these things, and will search for information, to ensure a good price and ensure a good investment, even though the wine is bought for pure pleasure. Importantly consistency in the prices seen in relation to back vintages will be needed at least for wines produced in relatively large quantities.
This will increase the focus on services that offer historic data on prices and the possibility to validate and research the “true” market price.
The rising stars will emerge and shine brightly
Furthermore, we will see new talented producers pop up - and become in fashion within a very short time - and achieve high demand for these wines in the secondary market very rapidly as the producers get the acclaim from the wine press. So, exciting times where buyers and investors must be on their toes to follow the trends in Burgundy.
As a wine writer, it's exciting times in Burgundy as new talents emerge all the time, and old somewhat lacklustre estates are transformed to a new star within a few years with the arrival of a new generation.
So, stay on your toes, stay tuned in and informed on winehog.org - a yearly subscription is only 29€ - sign up here
Chief Tasting Officer
The team at Wine Owners love Steen’s Burgundy reviews. Just like us, he was an impassioned collector, until he decided to pack in his day job and apply his palate to Burgundy for the good of mankind (and perhaps to gain a little personal enlightenment along the way).
An annual subscription with https://Winehog.org is a bit of a bargain; plus the reviews are accessible, and when we taste the wines that Steen’s tasted, we ‘get it’. Furthermore he’s a real discoverer, so if you're the sort of collector who loves the idea of buying into the next young Burgundy buck before the rest of the world catches on and spoils the price, you really should subscribe!
by Wine Owners
Posted on 2017-04-10
One or two commentators and one famous Bordeaux consulting oenologist are calling 2016 the best red Bordeaux vintage since 1982. Hyberbole indeed.
Bordeaux lovers and collectors have become somewhat inured to these sorts of statements. A bit like Peter, if you cry ‘wolf’ too often no one believes you when you really mean it.
Calling a vintage as a whole so early might be considered a touch reckless or over-enthusiastic, but after all that's part and parcel of the en primeur sales promotion process. It’s the wine marketing equivalent of the Oscars and it’s entirely understandable that on the back of a fine production the main actors and directors will be inclined to think their most recent performances are the best ever. New-borns are always the most miraculous and beautiful in the eyes of mesmerised parents.
But more importantly, for a vintage to be considered truly great, we think it has to be utterly consistent at a very high level across all major appellations, and ideally, relatively speaking brilliant in a number of the smaller, less grand appellations too.
2016 is not a consistently brilliant vintage across the board.
Yet Bordeaux 2016 is in many ways the perfect foil to 2015.
At Chateau Latour. Picture: Wine Owners Ltd.
Whereas 2015 was particularly strong in Margaux and Pessac-Leognan, not to mention some of the satellite right bank communes, 2016 was especially strong in St. Estephe and Pauillac.
I’d go so far to say that 2016 was the best vintage since 1982 – but only in St. Estephe. That appellation really nailed it.
Pauillac was also fabulous, possibly unsurpassed, but we also found the wines to be very consistent at an extraordinarily high level in 2010, whilst it’s hard to imagine more complete wines than the heights achieved by many in 1989. With so many great vintages already present in the Pauillac trophy cabinet, we’re going to avoid phrases such as ‘best ever’. But 2016 Pauillacs are very, very good indeed and we are truly smitten.
St Julien is a commune of great consistency once again. It’s the perennial ‘safe pair of hands’ of Bordeaux, with all the major protagonists delivering very satisfying results with great regularity. 2016 was no different: a fine result all round. Overall we think 2016 is going to be better than 2015 with greater complexity and character, and is certainly the finest since 2010 or 2005.
The bits of the Haut Medoc appellation just north of St. Estephe and south of St. Julien produced a few terrific wines in 2016 as well. But this sprawling catch-all produces 33,000,000 bottles of wines a year from 4,600 hectares and spans 29 communes across the Medoc peninsula from top to bottom, taking in the windswept mouth of the Gironde estuary to the grim warehouse agglomeration north of the city, so don't be surprised that quality is extremely variable.
Moulis and Listrac produced a few strong contenders this year too, showing none of the astringency associated with average vintages.
Margaux is a commune with a range of geographies that commonly delivers a corresponding patchwork of results. This year the wines presented as relatively bland and middle-weight, a bit of a disappointment after the stunning result achieved across the board in 2015.
Those who didn't buy Margaux in 2015 will want to revisit at some point. Nonetheless the small number of highlights were exciting to taste for their aromatic complexity and lightness of feel –consequently they are elegant, refined wines.
Chateau Margaux, framed. Picture: Wine Owners Ltd.
South of the city in Pessac-Léognan, the wines were a bit of a mixed bunch too. Some presented as truly beautiful examples of classic claret, threaded with fine acidity, moreish thanks to sherbetty fruit, but I thought 2015 was a stronger overall vintage for this large appellation, whose production has increased 3-fold in the last 40 years.
On the right bank, in St. Emilion and Pomerol the homogeneity of the vintage is less clear. I tasted less wine here, though many that I did were gorgeous: beautiful wines with up to a full percentage point less alcohol than in 2015. But others with loaded tannins left a faintly bitter fingerprint on the mid-palate, whilst a few seemed just a touch too powerful and black-hued. The impression I got is that the difficulty of the summer drought was much more evident here and there when compared with the left bank.
The summer drought was a period during when the plants shut down and compensated their lack of water by producing more tannins. The best results on the right bank will have been achieved by gentle handling of the fruit during fermentation preceded by a rigorous triage of those berries showing any signs of surmaturité.
Frédéric Faye at Chateau Figeac describes their fermentation process as an ‘infusion’ with the gentlest of extractions achieved from the submerged cap, and no pigeage. This seems to have been an ideal approach in a vintage of climatic extremes such as 2016.
Is it a coincidence that my two favourite right bank wines, Cheval Blanc and Figeac, both include cabernet sauvignon, in the case of the former, for the first time ever? On the other hand I didn’t taste the top Mouiex wines or Le Pin, which I gather all showed brilliantly, so clearly many factors, including resisting picking too early to avoid a harsh edge to the tannins, were at play in this vintage.
Generalising, 2016s show greater freshness than 2015, and so come across as more delineated and complex.
"Saint Estephe made its best wine EVER in #Bdx16". Picture: Wine Owners Ltd.
Finish is one of the most desirable attributes in a wine that is expensive and sought-after in equal measure. Acidity helps in this regard, freshening sweet, ripe fruit, lending energy to the wine, and accentuating a lingering finish. Persistence and focus are the hallmarks of 2016. Whereas 2015 right bank wines tended to a somewhat alcoholic finish, overall there’s more control to the finishes in 2016.
The balance of the best 2016s is exquisite, with a mass of ripe fruit coating the very substantial tannins of the year. The vintage’s trademark freshness makes each wine’s character more discernable, and at this stage of the wines’ evolution it’s natural to want to pick those out as personal favourites.
My favourites were also the wines that combined the vintage’s ripe briar, cassis and black cherry fruit characters with a sense of minerality and a fine line of acidity threaded through the ensemble.
Much has been said of the volume of wine produced in 2016. Production is up on 2015, but much of that comes from a very ‘hard’ and uniform fruit set that led to larger than normal bunches, i.e. with a greater number of berries per bunch than normal, but with berries of only a moderate or smaller than average size. Production volume, assumed by some to be a potentially negative factor, is a red herring in 2016.
Consequently the juice to skin ratio is no higher than normal, and 2016 has the highest ‘IPT’ numbers of any modern vintage. IPT is a measure of the combined phenolic compounds in the juice - principally tannins and anthocyanidans (colorants responsible for the red, purple and blue hues in grapes).
When all is said and done, there are plenty of exciting wines to pick from this year. I suspect many will close down with a bit of time in bottle with all that underlying structure, no matter how well resolved and integrated the tannins tasted at this early stage in a great many of the wines. Nevertheless, the tannins are generally not quite as silky as in 2015, though they are richer. 2015 may therefore turn out to be more immediately gratifying, if ultimately less exciting.
Now it’s going to be down to release prices. After all, without an obvious and sizeable price advantage for buying early, there’s little or no logic in tying up large amounts of cash on unfinished wine. It’s improbable that prices won’t increase, but those increases may be rather more patchy than normal this year appellation by appellation. And if Chateau owners can resist taking too much of the upside off the table, they may well have a winning campaign.
The Bordeaux whispers suggest an early campaign, over by the end of June, which may lead many to hope for moderation of any price increases. We shall have to wait and see.