Is it time to hit the bottle?

by Wine Owners

Posted on 2019-10-08


At the risk of sounding like a stuck record, the market mood is sombre. It does, however, remain reasonably steady amidst a turbulent sea of macro factors.

Hong Kong is an important market for wine and the ongoing protests are a concern. The original cause of complaint, an extradition agreement between the territory and the Chinese mainland, has long since been retracted but the protests continue, becoming ever more violent. This is about democracy and freedom and the eyes of the world are watching. It is an uncomfortable position for China who cannot afford to handle the situation as perhaps it might in its own provinces but in the long term, remains a very powerful parent. Already the economic effects are being felt; officially occupancy rates in Hong Kong hotels are currently running at about 20%, unofficially they are in single digits. A quick internet search found a room in the territory for US$9 a night, including breakfast!

As we know, Hong Kong, apart from having its own burgeoning wine scene, is currently the gateway to the wine market of China, legally or otherwise. We expect China will open new free ports in time, but the current troubles may just accelerate that process. We think this is a short term problem but in the meantime, trade form that corner of the world is quiet.

U.S./China trade negotiations and Brexit shenanigans continue, and emerging markets are threatened by contagion emanating from Argentina. Thrown in the unrest in various parts of the Middle East and various other more localised scenarios, it’s a right old mess. And what does well in right old messes – physical assets! Here is the Gold price performance so far this year against the WO 150 index.

WO 150 - Gold price performance

We’re not saying there is any correlation, delayed or otherwise, between wine and gold but recent financial history (since the last global financial crisis) has made physical and alternative assets increasingly popular.

We live in an era of negative real interest rates, where buyers of roughly a third of the world’s outstanding bonds will lose money if held to maturity and where even high yielding equities with strong balance sheets are not performing – all very sobering! With all this going on, is it time to hit the bottle?

Within the wine world, my investment themes remain the same; focus on regional allocation, combined with scarcity and relative value is the game.

Please contact miles.davis@wineowners.com with any questions.


Focus on: Screaming Eagle 2009 - 2014

by Wine Owners

Posted on 2019-03-07


In terms of reputation Screaming Eagle is the ne plus ultra of American wines, the equivalent of Petrus on the Right Bank, Romanee-Conti on the Cote de Nuits and Conterno Monfortino in Piedmont.

The prices of the wine varies from £2240 per bottles up to £2600 per bottle for the vintages of 2009, 2011, 2012, 2013 and 2014, but over the last two years it has been the 2009 and 2011 that have made the greatest gains, with 37.9% and 42.7% respectively. Double digt growth seems to be the norm on a CAGR basis.

Screaming eagle index

The 100 point vintages of 2010 and 2007 are roughly £3600 per bottle, and have gown at a slower rate in the last two years, suggesting again that there is better vakue to be had in the 97 to 99 point bracket currently.

Screaming eagle Market versus price

Current market levels puts the 97 point ’09 at £2602 a bottle and the 94 point ‘11 at £2461 per bottle. These prices are at a premium of £350 and £200 respectively to the 97 point 2013 and 98 point 2014, which would seem a little illogical. Hard to see a justification for a discount for equivalently scored wines. As the chart below shows, the 2011 in particular seems over-priced and the more recent vintages would seem to offer greater upside potential.

Screaming eagle Relative value score

Trying to compare Screaming Eagles with other US wines is a rather thankless task as it operates on a different pricing level entirely to every other wine in California. There are several things you can say about it in isolation, however:

  • There is no vintage values at less than £2000 a bottle, and many tip the scales at over £3500 per bottle
  • Three pack OWCs are the norm – almost all stock available comes in this format
  • It has the highest average Parker score over the last twenty years of any wine in the world except Conterno Monfortino
  • No more than 700 cases (12 pack equivalent) are made in any vintage.

It would seem logical to suggest for the medium to long term that younger, higher point scoring vintages offer the greatest potential for capital growth. Not for the faint hearted, of course, but the fundamentals of extremely small production, a style that will see each vintage improve for a minimum of 25 years form bottling and a brand that has cemented itself as the epitome of great modern Californian wine making make this a wine that needs to be considered very seriously as an unavoidable component in any top drawer cellar…


2005 La Mission Haut Brion – pure perfection and a relative value win

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)



Why?

by Wine Owners

Posted on 2014-10-20


Why is there apparently so little wine in Bordeaux when so little of more recent vintages has been selling through? Why buy young wines at release? Will negociants’ balance sheets cope with more vintages that stick? Why would that happen?

Pontet Canet 2013 famously ‘sold out’ within an hour or two of being offered on the Bordeaux Place. Negociants sucked it up and took their allocations. That’s their historical role after all. Merchants generally weren’t having any of it. More relevantly, nor were their private clients. It was a lousy deal for the consumer: 2002, 2004 and 2006 are all cheaper vintages.

Pontet Canet - Wine Owners


Pontet Canet

Now we’re on the cusp of a rather good vintage, the first in a small handful of years. Haut Brion 2008 has been trading at £2,400: a fair price for a lovely wine. To be a good buy, what will Haut Brion 2014 need to be offered to consumers for? £2,000? £1,900? £1,800? If instead it’s offered for £2,500, for example, what would be the point of buying it?

Haut-Brion

Loyalty? Surely not. Would consumers really want to play the stockholder for Chateaux that made extravagant profits out of 2005, 2006, 2009 and 2010 vintages? Some of who pillaged the European Union’s agricultural support fund during the bloody aftermath of Lehmann to construct a new chai or two? Buy into wines that might not drink for 15-20 years and might not be materially more expensive in 2 or 3 or more years’ time? Wines that are made in such benevolent quantities that finding them won't take more than a couple of minutes online? When there are so many back vintages that are coming back down to earth and are challenging our perceptions of value over the last few years?

So let’s imagine that the 2014 vintage proves a tricky sell. Not as thankless a job as the unloved 2013 vintage of course. The really big merchants who have an economic interest in en primeur to succeed and will sell the vintage: the weather, the brilliant Indian summer, the inevitable comparisons with the weather of 1996. Those cool nights, dewy mornings and balmy days under clear skies. But imagine it’s not what you might call a ‘successful’ campaign…

What happens then? How many of the negociants will be able to stomach another huge influx of stock without a corresponding outflux? With credit harder or impossible to come by; stalling European growth; a currency still fairly strong but with a significant downside, undermined by Europe’s recession-states, impatient creditors and a faltering Germany? With banks increasingly wary of lending support?

Of course some negociants will seize the moment to consolidate their position, increasing their market share as they gobble up distressed owners and their stocks. But others?

No one is yet disputing the efficiency of the negociant distribution system via the Bordeaux Place. After all, the huge Tuscan estates were sufficiently impressed by the system to want in. (And if you want your Libournais estate to be Classé, woe betide you if you try to circumnavigate the system.)

But it doesn't automatically follow that you have to believe in en primeur as long as it undervalues the consumer’s stockholding role to adhere to the established Bordeaux distribution model.

Passion-driven many of us may be, but perennially stupid we are not.


January market report

by Wine Owners

Posted on 2014-02-06


Average cellar size £60,000

Total cellars under management £40m

January Overall
Bordeaux 26% of total trades 39%
Tuscany 23% 12%
Rhone 21% 13%
Burgundy 21% 17%

Enthusiastic reviews from Antonio Galloni seem to have piqued interest in the 2010 vintage in Tuscany and Piedmont, with back vintages in Tuscany hanging on the coat-tails of the 2010. The tried and tested Supertuscans seem to be the big winners, with trading users offering and bidding around Sassicaia, Ornellaia and Masseto in mid January, with a high correlation of offers to trades across the region.
The inclusion of some excellent new private collections of Rhone and Burgundy in December and January have pushed up the market share of those regions to rival Bordeaux in those months, with a spread of private and trade buyers picking up top wines from producers like Guigal, including a rare parcel of 1989 la Turque trading at £2,900.
Bordeaux, even in a relatively flat market for the region, continued to account for the largest percentage of Exchange trades in January. Interest focusses around classic wines such as 1982 Latour (recent trades at £13,300), top scorers, and ‘off’ vintages, particularly among the first growths. On the right bank in particular, 2005 appears to be attracting new interest where the price is right, so perhaps the prospect of an uninspiring En Primeur season is already encouraging sparks of interest in great vintages with a track record of quality and performance. Index comparisons show a relatively flat year’s market, with Medoc Classed Growths slightly underperforming, and top level Burgundy slightly bucking the trend by showing 5.6% growth compared to a base value at Feb 2013.

Wine Owners Indices


Degrees of Perfection – Two great vintages compared

by Wine Owners

Posted on 2013-10-18


Wine Owners - Smith Haut Lafitte

Comparing the 2009 and 2010 vintages of the overachieving Chateau Smith Haut Lafitte shows how vintage styles can make a huge difference to market value. The massive and opulent 2009, which wins a perfect score from Robert Parker, is by no means a huge qualitative improvement on the slightly lower rated 2010. In fact, as we’ll see, plenty of reviewers prefer the 2010.

The obvious feature of the price comparison below is that the market price of the 2009 with its 100 point rating from Robert Parker has risen by well in excess of 100%, while the 2010, which gained a few points on its initial rating (95-97, rerated to 98+), has remained steady at close to release price.

Comparison graph Smith Haut Lafitte

One point to take away is that a very good re-rating is not enough to take a price higher in the current market unless it is a perfect rating. While this may be disappointing for those who bought 2010 and not 2009, it does mean the 2010 is considerably less expensive to buy now, in what is a relatively low market. Considering Neal Martin, Wine Enthusiast and Jancis Robinson all rate the 2010 higher than the 2009, albeit marginally, it certainly seems the better buy of the two vintages with a market value of £870 against 2009’s £1,487. For a price conscious buyer, the prospect of spending almost double for an extra 2 Parker points might seem hard to swallow, so unless the particular style of the 2009 appeals very strongly, the 2010 feels more like a reasonable price for a wine of that quality.

2009 2010
Robert Parker 100 98+
Neal Martin 94 95
James Suckling 96 95
Jancis Robinson 17.5 18
Wine Enthusiast 94 96
Wine Spectator 96 96
Wine Owners 95 94


How does it look in comparison to other comparable wines? Similar scores in Pessac were achieved by Haut Bailly (98 RP) and La Mission Haut Brion (98+):

Comparison graph Wine Owners LTD

Haut Bailly has put on a similar amount of weight, but is still quite a bit more expensive to buy at around £80 per bottle. Both wines have outperformed the Wine Owners 150 Index, showing an encouraging ability to hold value in a difficult market. Honorary First Growth La Mission Haut-Brion, on the other hand, has behaved just as one would expect of a top flight wine that didn’t quite make the perfect score, slipping steadily downwards to 15% below the ambitious release price. At around £5400 per dozen, it makes the other two look like good finds. Perhaps the most interesting thing to note here, though, is the huge influence that Wine Advocate scores continue to exert on market prices, particularly in Bordeaux. With Parker’s sale of his stake in WA, and the high profile departure of influential critics like Jay Miller and Antonio Galloni, many might like to think that the journals days as a key market influencer are numbered. Commentary abounds about the future of wine criticism, whether the future lies in collaborative reviewing along the model of Cellar Tracker, aggregate scoring, or whether a new super-critic will emerge to take Parker’s place. The numbers, however, tell a different story, and testify strongly to the market’s desire for a reference point. 2010 Smith Haut Lafitte is available on the Fine Wine Exchange at £820 IB


Data Manager joins

by Wine Owners

Posted on 2013-01-07


We're absolutely delighted to welcome Jonathan Picchi to the team! Jonathan takes on responsibility for our market-leading referential database of fine wine, with a long-term development brief on the top of current processing. A french national, Jonathan has recently moved to London from his native Paris, having completed a masters in statistics and information analysis from the highly regarded ENSAI school in Rennes. His expertise in data modelling will be invaluable as we deepen our analysis and interpretation of market data to help fine wine collectors understand the true value of their collections. Jonathan is pictured in our Old Street offices in London's Shoreditch, EC1.


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