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.
by Wine Owners
Posted on 2017-03-28
Keen followers of Bordeaux can’t have missed the striking price revivals that have been in progress over roughly the last 12 months, and Mouton Rothschild 2006 makes for in interesting case study.
We’re looking here at what is effectively an over-performing wine in an under-appreciated vintage. 2006 Mouton has consistently been rated highly by both Robert Parker (last scored at 96 in 2014) and Neal Martin (scored at 97 points in May 2016), and compares very favourably to the other First Growths in 2006. Latour consistently scores around 94-95; Lafite at 95 from Neal Martin, 97 from Parker; Margaux at 94 and Haut Brion at 96.
Not only that, it outscores or equals itself in what ought to be better vintages. The 2005 is likewise rated 97 by both Parker and Martin, and 2006 is only outscored in recent vintages by 2009 and 2010. No doubt then that winemaker Philippe Dhalluin did exceptional work in the vintage, and those buying at the nadir of the market in and around January 2015 were picking up a serious bargain at around £3000, the same price as the far less interesting 2007, and rather cheaper than the less well-rated 2008.
However, having risen in value throughout 2016 from £3200 to £4400, the market price has stagnated since October 2016, and now stands at £4500, with bids standing around £4130, which is still the highest this wine has traded at since 2011, but starts to look like the top of the market. For drinkers, this seems to continue to represent good value, but for those interested in wine as a store of value, quite possibly one to swap out.
Click here to see live trading information on Mouton 2006.
Did you know...? British artist Lucian Freud was commissioned to create the label for the 2006 vintage of Château Mouton-Rothschild. "Far from the tormented portraits and nudes for which he is renowned, [he] chose a joyously exotic transposition of the pleasure of drinking, in which the vinestock is transformed into a springing palm tree and the wine lover into a happily anticipatory zebra." Source: Chateau Mouton Rothschild.
INTERESTED IN BORDEAUX?
We will be in the Bordelais covering the en primeur campaign, so don't forget to follow us:
- on Twitter
- on Instagram
- on Facebook
by Wine Owners
Posted on 2017-03-14
In 2009 and 2010 Pontet Canet produced wines of apparently unequalled quality for the property, both hitting an unprecedented 100 points from Robert Parker. Prices have increased dramatically as one might expect, but where next for these two superstars?
Release prices were high for both vintages, 2010 c.1180 and 2009 c.1000. Both bucked the trend of falling prices in 2011, and saw heavy trading in late 2016, with market value hitting an historic high of £1700 for both vintages in November 2016. The top trading prices for 2010 were £1625 in October 2016 and £1630 for 2009 as late as February 2017. Bids have fallen in value for both wines, though, with £1621 the current best for 2009, and £1572 the top bid for 2010 at 10th March 2017. Interestingly, the Asian market seems to value 2009 over 2010, paying up to £1630, while offers of £1620 for the 2010 are considered slightly too high to sell. In the UK market on the other hand, the prices track one another more closely, with UK merchants willing to pay around £1600 for either vintage.
Undeniably, buyers who purchased en primeur have made a very reasonable return, far better than most Chateaux have seen based on the high release prices of 09 and 10. The question, however, is where these wines go next in terms of value. Does the slight downward adjustment in bid prices indicate that they have reached a natural value level and will continue to plateau; will the market correct downwards; or does £1600 represent a pausing point following heavy trading after which the wines will continue to appreciate?
Perceived quality must be a factor here, and it’s hard to make predictions for Pontet when the wine has no precedent of producing wines at the 100 point level. High scorers from Palmer, for example, regularly exceed the £2000 mark (2005, 2009 and 2010), but Palmer has a long history of outperforming its 3rd growth classification, and Pontet Canet which scores at a similar level is priced much lower, with 2005 trading around £980. The question is, will these perfect scoring vintages of Pontet Canet continue to be held in such high regard and turn into truly legendary wines, or will enthusiasm wane as tastes change? Neal Martin doesn’t come close to concurring with Parker on points, rating 2010 at 94 and 2009 at 95, so the jury is hardly unanimous on absolute quality, which has to be a concern.
There are still a number of offers and bids for bothwines on the exchange, though since the end of February buyers and sellers have been standing off, perhaps hesitant to jump one way or the other until there’s a clear indication which way these wines will move.
Many sellers will find themselves holding large parcels of Pontet 10 and 09 will feel motivated to realise some of the value of their position as a hedge against falling prices, while buyers who hold none, and don’t mind taking on an element of risk may feel that there’s further upside here, provided a 3-figure score and high vintage reputation are enough to hold it together for Pontet Canet.
INTERESTED IN BORDEAUX?
We will be in the Bordelais covering the en primeur campaign, so don't forget to follow us:
- on Twitter
- on Intstagram
- on Facebook
by Wine Owners
Posted on 2017-01-06
With the highly touted 2015 Burgundy campaign upon us, we can be sure of two things: it is a superb vintage, and prices will rise.
Let’s be honest, Burgundy is for wine lovers. Although we may have more Bordeaux in our cellars - steady, consistent, blended excellence - it is fickle, flirtatious Burgundy which steals our hearts. And the whole world is now falling in love with Burgundy, courting the tiny quantities and ready to take our place in the queue.
The pure, ripe fruit of the 2015s will tempt early drinking, but if we want to experience the extraordinary range of flavours, textures and sensations that fine burgundy can produce, we must be prepared to wait. Or to seek out mature wines from great producers in other vintages. Remember, in Burgundy more than anywhere, it is the producer who matters more than the vineyard or the year.
So rather than bet the whole house on the latest vintage, now might be the time to review the Burgundies that your fellow collectors have offered for sale on the fine wine exchange.
There is a dazzling range of beautiful wines available, from the most humble appellations to the greatest of Grand Crus. Some are for drinking now, others for keeping for the future, whatever that may bring. Some are in bond and some are duty paid, but DP prices are never more than their In Bond case equivalents and there is no VAT for exchange buyers. All were bought when the pound was much stronger and prices were lower. Prices of Burgundy’s back vintages may never be this low again.
So where would you start?
Chardonnay is arguably easier to enjoy across the board in youth than Pinot Noir. 2014 whites have greater precision and zest than their 2015 counterparts and it is probably the best vintage since 2001. 2014s are only just starting to appear as offers for sale on the secondary market and they are unquestionably worth having in any cellar.
As long as yields of this naturally exuberant varietal are constrained, there is plenty to pick from: 2013, 2012, 2010, 2007 were all very good, whilst there are some terrific 2006s with nerve and energy, in contrast to lush and giving 2008s. Very late malolactic fermentations in 2001 lent plenty of substance to the best wines; they had longer to feed off their nourishing lees. When looking at 2005 and earlier fears of premature oxidation (premox) have really hurt the market. But there are still old bones that are simply thrilling.
Looking to red Burgundy, consider 2005 - considered one of the great vintages and should make fine old bones, but there's tannins aplenty, some more puckering than others depending on extraction, that suggests another 10-20 years will be required. Indeed they may be drinking in the same window as 2015 or later!
Consider 2010, a vintage with the nerve and intensity of 2008 married to the flesh of a vintage like 1995.
If you want to buy into a vintage that was overlooked when released but that has evolved into one of the most exciting we’ve tasted look to 2002, a lesson if ever there was one in how pinot noir loves luminosity more than heat. These are wines with fine intensity and great purity.
Talking of which, if you’re a classicist and enjoy form over flattery, 2001 is starting to climb the upward slope of maturity with wines that are sappy and crystalline but may have yet to reach their peaks.
The truly great 1999s are lusciously fleshy, sweetly spiced and dense, but at the same time so coiled, that most Grand Crus will surely need another 5-10 years. Many premier crus and village wine are gorgeous now.
2012 is a successful recent vintage that had really low yields (a very good thing for Pinot Noir) but will be cheaper than 2015. Producers love 2012 thanks to their fabulous balance and flattering ripe fruit, which nonetheless blankets an underlying structure for mid term appreciation.
The top tips for 2015s (whatever we say, we know you’ll want to buy some!) are that the lesser appellations, cooler climates and colder soils will excel. You don't need to stretch to the top of the tree to find great Pinot Noir in 2015 to drink over the next 15 years, which is great news for Burgundy lovers and something to be thankful for in a very expensive vintage.
Buying back vintages vs new releases
Other than exceptionally hard to find Grand Crus and Holy Grail producers’ best wines – that you’re either allocated or you’re not – it’s worth looking to premier crus from producers with good reputations for quality and value-hunting.
Take Beaune Grèves L’Enfant Jésus from Bouchard Père et Fils. Whilst back vintages were much cheaper at release than they are today, there isn’t much between the release price of 2015 or any number of superb back vintages.
As the chart below shows, the superb 1999 vintage is still cheaper today than the release price of 2015, the equally acclaimed 2010 is the same price, but you can drink it in 10 years instead of having to wait until the 2030s for the 2015; and only the 2005 and 2002 are a little more expensive – but not hideously so.
by Wine Owners
Posted on 2016-12-13
2015 is the best Northern Rhone vintage in 55 years, according to this article on JancisRobinson.com. That’s some statement given the quality of vintages over the last 15 years or so, including the superb 1999, which at the top end is just coming into its drinking window.
Great though 2015 is, it isn’t going to satisfy drinking requirements in the short term, even at more modest levels, whereas my bottle of Chave Offerus (St. Joseph) 1999 is melt-in-the-mouth gorgeous now.
Outside of the Rhone elite and their blue chip labels that can appreciate markedly in value over the medium-to-longer term, along with some of the region’s special cuvees and bottlings, these are not wines to use as a store of value. They do not appreciate in value. They are wines to enjoy. But they need time to come around. As impressive as new vintages are, they express in youth only a general sense of the wine they will become.
In our estimation these are wines that are depressingly under-appreciated. As you’d expect from such a large region of production, styles vary enormously. They variously show varietal character, complexity, precision, texture, and depth of flavour with more than just a touch of minerality.
If you’ve not tasted mature white Rhone recently, you could well find the waxy texture, floral and white peach character refreshingly braided with acidity an exciting experience. For the quality and complexity these great wines offer, many are cheap. Not a word I use lightly, but they really are terrific value and hold their own in the company of any of the world’s great whites.
Though it’s tempting to buy into great new releases, and potentially worthwhile at the top of the tree, there’s no kudos in hanging onto cases of wine and paying a decade or two’s worth of storage, when you can drink the real thing without playing stockholder.
There really is something for everyone.
View Rhone offers on the exchange
by Wine Owners
Posted on 2016-11-09
Is wine an effective safe haven?
With markets braced for a correction following a Trump victory, in anticipation of a more protectionist United States and slower global growth, will wine continue to do a good job of preserving and being a sound store of value?
The fine wine market is up well over 24% this year, building on last year's single digit rises and is currently seeing very strong levels of trading activity as more and more private individuals with discretionary wealth seek to diversify and enjoy the fruits of their hard-earned cash.
Scarcity driven markets such as Burgundy, Northern Italy and California have seen consecutive annual rises in each of the last 10 years that we’ve tracked the market. Burgundy is up 327% over that period.
Liquidity driven markets, principally Bordeaux, has gone through its correction following the Chinese-inspired bubble of 2009-2011, and secondary market sentiment is once again positive.
Collectors who have bought fine wine in the UK are at a particular advantage thanks to the devaluation of Sterling. The very large body of fine wine stored in the UK - estimated at £6bn - ensures that secondary market prices in the UK are favourable.
Whether you are looking to sell or build, wine increasingly looks like a safe bet in an increasingly uncertain world.
To discuss your next step, contact us now or call us on +44 (0)20 7278 4377.
by Wine Owners
Posted on 2016-10-24
Market context and performance since June 24th
Serving as a general fine wine market tracker, the WO 150 gained 6% in the year to June (6.5% in the previous 12 months) but is now up 19.8% YTD.
Focusing on the all-important Bordeaux market, the world’s single largest region of fine wine production, the WO First Growth Index was up 8.7% year to date on 24th June, but is now up 23%.
As regards Bordeaux Firsts, this performance is on the back of 4 years of decline, following the bursting of a Chinese-inspired bubble in late 2011. The market in these blue chip Bordeaux bottomed in Q3 of 2015, and has soared since. Chateau Latour, released at £11,400 per case of 12 bottles, is now back within £100 per bottle of that release price.
The rest of the Bordeaux market had tested its lows the previous year, and so its performance year to June 2016 was a slightly higher 10.25%, reflecting the additional momentum gathered over the previous 18 months. Looking at all classified growths, the market is now up 22.5% YTD.
Whereas Bordeaux is a market driven by liquidity and large production volumes, scarcity-driven markets such as Burgundy, Piedmont and cult Californians, have enjoyed a long-term run stretching back 20+ years, and these wine markets have not suffered the roller coaster ride of Bordeaux.
The WO Northern Italy index is up 171% over the last 10 years, the WO Blue Chip Burgundy Index is up 311% over the same period, and the WO California index is up a whopping 427%.
What’s going to be the effect on new releases?
New releases are already more expensive to buy due to the pound buying less euros or dollars.
Brexit will cause new releases of two sought after vintages (Burgundy 2015 and Bordeaux 2016) to rise by 30%+, caused by producer increases of, say, around 10% compounded by the 20% effect of devaluation.
First in line: the impending 2015 Burgundies are due for UK release as futures in January 2017. With a compromised 2016 vintage assuring small production volumes, 2015s from some addresses will rocket to compensate for next years’ lower production.
Bordeaux will follow in April 2017.
Given the UK’s preeminent role in global fine wine trading, Brexit has turbo-charged market performance, and given the relatively recent recovery of Bordeaux markets a boost after a prolonged period of decline.
As the pound falls, assuming a rising fine wine market (key as it means there's strong global demand), the price of secondary market wines will rise since they are cheaper to buy for buyers holding currencies such as HKD or dollars.
This increases the value of collectors' current stock since the market is global. London is still one of the most important global trading hubs for fine wine, if not the most important.
Could price rises kill demand?
Because top burgundy from the best producers can double after first release it is unlikely to dampen initial demand – by much. And if it does there’s always the USA, Japan and other markets that’ll mop up the relatively small volumes.
Secondary market prices of older vintages may rise, pulled up by the higher new release prices. But as they rise, the number of potential secondary market buyers may decrease, causing these scarcity driven markets to become less liquid. As a result, it may take longer to sell your wines at these higher prices. The moral of the story is that scarcity driven markets are not for the impatient seller who needs cash tomorrow. These are better seen as long-term holds.
Bordeaux prices of the new vintage (2016) will also rise when they are released next year. Whether the UK Market chooses to buy or sits this one out remains to be seen.
However, the USA is more or less certain to be buying these futures aided by vintage character of ripe, powerful wines from a hot summer that will suit their palates.
As a consequence, enduring weakness of the pound will place further upward pressure on back vintages.
We predict that recent back vintages will increase sooner than is normally the case (1-2 years instead of the more common 5-7 years), as top Bordeaux producers are becoming principal stockholders in an attempt to capture more of the downstream value of their wines and increase the value of their balance sheet assets.
by Wine Owners
Posted on 2016-09-30
We are currently in the midst of a renaissance in both interest and prices in a little known wine growing corner of France called Bordeaux. Having languished in the doldrums since mid-2011 the last 12 months has seen a resurgence of the pre-eminent fine wine producing region. Although still way short of the peaks of May 2011, prices are steadily rising, and a stellar 2015 vintage has breathed life into a moribund en primeur system. It is still some way from leaving the hospital, but at least ‘La Place’ is now out of intensive care. You may have noticed that our introduction to a piece purportedly about Piedmont has focused squarely on Bordeaux. There is a design behind this geographical madness, we assure you.
As Bordeaux has once again become flavour of the month (year?) it seems that Super-Tuscans have suffered by comparison. This is, of course, the equal and opposite reaction to the increase in interest in Super-Tuscans in the period mid-2011 to December 2014, when Tig, Sass, Masseto et al moved ahead in pricing terms as Bordeaux buyers looked for high quality wines in sufficient quantities, and with sufficient liquidity, to adequately substitute in…
(Again, where is Piedmont is all this?)
Bear with us.
The point here is that Bordeaux and Tuscany appear to have a pricing relationship based on the similarity of styles, and a similarity of production levels. They are yin and yang, and if the focus is on Bordeaux, then logically it follows there is an absence of focus on Tuscany.
So, the scene is set; now on to Piedmont. Where the Super-Tuscans are Johnny come latelies, deliberately combining the traditional virtues of Sangiovese with alien plantings like Cab Sav, Merlot and Cab Franc, the best wines of Piedmont – and we're thinking, naturally, of Barolo in particular – are a bastion of hundreds of years of mono-varietal wine making, where Nebbiolo is revered as King to the exclusion of all others. Many wine lovers would agree that the best wines of Barolo, from producers such as Conterno, Rinaldi, Giacosa et al, are a match for anything made in France in terms of complexity, balance, ageing potential and sheer quality. If, as seems to be the case, Tuscan wines are perceived as an alternative to Bordeaux, then it stands to reason Piedmont is a natural counterpoint to Burgundy. Single dominant varietal? Check. Small average production levels per producer? Check. Passionate following by hardcore wine lovers? Check. Both regions have even undergone similar improvements in quality control, with Burgundy improving through the 80s and Barolo a little later, through the 90s. But…stratospherically high prices for the best producers? We're afraid the comparison falls down on this point.
Even the best producers in Barolo can be bought for a fraction of the prices paid for DRC, Leroy, Rousseau or Roumier. Certainly they aren’t cheap, but the huge increases in values that have been seen in the Bourgogne haven’t been replicated in Barolo. But things might be beginning to change. Interest in a broader array of regions by increasingly well-educated global wine buyers has opened doors into markets that didn’t exist a decade ago. Slowly, but with gradually increasing speed, these top Piedmont wines are attracting attention, and if (as many commentators believe) Burgundy prices may beginning to slow, plateau or even fall, then there is every chance that the relationship between Tuscany and Bordeaux may be mirrored by the Burgundy and Piedmont regions. Long term buyers of Burgundy, looking for value, could well switch attention to new areas, and thereby reduce exposure to Burgundy. Piedmont could well be the major beneficiary of any such move…