Bordeaux – signs of a market bounce?
With market sentiment for fine red Bordeaux brightening, we ask, what do the latest market numbers actually suggest?
Let's start with the market as a whole.
The Wine Owners 150 (WO 150) comprises investment grade wines across the top 40 performers of the last 20 years from all key regions of production. This index rose 0.4% in the last month compared with a fall of -4.45% over the course of the last 12 months. Of the most recent bottom 40 fallers, all were red Bordeaux. More positively there were 22 Bordeaux in the top 40 gainers.
The First Growths Index rose 0.98% over the last month, and is now down -9.14% over the last 12 months, off its early August lows of -10.87%
Haut Brion appears to be leading the charge, 1989 and 2006 showing strong double digit growth, with Mouton (1986, 1989, 1996, 1998 and 2010) showing 5%-8.5% growth along with Haut Brion 2003, Margaux 1986 and Lafite 1990. The predominance of older, scarcer vintages among the top movers is notable. Older vintages can show some of the sharpest short-term moves given there is much less of them in the market, so market movements in 25 year old vintages are not convincing bellwethers.
The Medoc classed growth index rose 0.23% over the month and was up 0.72% from its August lows, and is now down -4.8% over the last 12 months.
Palmer saw double digit growth in respect of vintages 2009 and 1998, along with Pontet Canet 1996, Leoville Barton 2006 and Gruaud Larose 2005. Risers however were largely offset by fallers across a broad range of vintages including 1996, 2000, 2005, 2006 and 2009. Although there is increasingly positive support for hard-hit wines from vintages such as 2005, the data does not yet substantiate an upturn.
The right bank also saw a rise comparable with the First Growths, with the Libournais Index up 1.09% over the last month, and up 2.5% from its August lows. It is now down just -0.98% over the course of the last year.
Top movers include Petrus 2010, Beausejour Duffau (1998 and 2010), VCC (2001 and 2010), Tertre Roteboeuf (2005, 2009, 2010), Belair [Monange] (2000, 2010), Latour a Pomerol 2005 and Pavie Macquin 2005.
It’s noticeable that merchants have been talking about restocking since July which can only be positive, but there are opposing views on where the latest data may lead the market.
With the exception of a 0.94 rise in the First Growths Index in December 2013, price declines have been inexorable since then – until now. The trade is split however on how much further First Growths have to fall, especially amongst the previously most inflated wines. With the First Growths down -27% since the peak in July 2011, a small rise of 0.98% may be positive but the inevitable continuing focus on value on the part of buyers favours the possibility of as many - or more - fallers vs risers over the remainder of 2014.
The Medoc classed growths saw a 0.7% uptick in March 2014 in addition to a rise last December in line with the First Growths. Taking all the data into account, it’s hard on that basis to read anything into the recent comparable bounce back from August lows.
The Libournais Index has performed the strongest over the last year with a 2.3% rise between mid January and mid February 2014, comparable with the performance over the last month after a summer of declines. Relative scarcity and a positive 3-year performance (+8%) suggest that the conditions for a broader based recovery are more firmly established for right bank fine wines.
Perhaps of significance, the 22 Bordeaux constituents showing price growth in the WO 150 index since the end of July compares with just 10 Bordeaux wines that have traded in positive territory on a 12 month view.
Posted in: Fine wine analysis, Market news and analysis,
Tags: Beausejour Duffau, Belair, Bordeaux, Bordeaux Right Bank, Bordeaux wines, First Growths, First Growths Index, Gruaud Larose, Haut Brion, Latour a Pomerol, Leoville Barton, Libournais index,