The Bordeaux wine investments marketplace is on a roller coaster ride today. “Roller coaster”, an adjective, “marked by numerous ups and downs, ” is the perfect term for the collectible Bordeaux wine today.
A roller coaster ride is fun, thrilling, and scary. It starts off slow and is chock-full of an often byzantine array of surprises. When the ride is over, passengers disembark safely at the same place they started.
The world wine market and the Bordeaux wine investments marketplace has been a roller coaster ride since late 2008. Is the ride over? Did it return to where it started?
At the top of the market during the summer of 2008, prices for fine wine reached an all time high. Similar to stock market prices that came to a crashing halt later that year, wine prices also plummeted. Prices remained depressed for months.
Today, the Bordeaux wine investment market continues picking up steam , losing traction and gaining ground, again and again. One of the useful thermometers taking the Bordeaux wine investment market’s temperature is the success of Bordeaux futures. In the spring of 2009, when 2008 Bordeaux futures were first offered, the First Growth producers tried setting an example of extreme caution because of the world’s deepening economic crisis. Their wines were offered for sale to the public at the lowest opening price since 2002, at $2,400 per case. Sales of the First Growths were brisk, with Lafite and Latour leading the pack. Thanks to strong Asian demand coupled with high scores from Robert Parker, the 2008 Lafite rocketed up over 300%. The 2008 Latour has doubled in price. The majority of 2008 Bordeaux, however, have not budged much in price. With the start of the campaign for the much talked about 2009 Bordeaux wines, consumers will get a clear idea on where the fine wine market is headed, based on the success of the futures campaign.
There are other barometers worth looking at too. Chateau Lafite Rothschild remains the most collectible Bordeaux. Three cases of 2000 Lafite, which received 100 pts from Robert Parker, sold at an April Sotheby’s sale in Hong Kong for an astounding HK $266,200 ($34,300). That world record price is almost 300% over what the same wine sold for in October, 2008, at the bottom of the wine market. 1996 Lafite and 2003 Lafite, both also scoring 100 pts from Robert Parker, sell for relative bargains at approximately $1,000 per bottle.
While Lafite continues leading the rebound in the world wine market, other collectible wines have also jumped dramatically in price. Petrus, the legendary wine from Pomerol, hit an all time high in the same Hong Kong sale when 3 cases of their 2000 vintage, scored 100 pts by Robert Parker, hit an astounding $49,900 per case.
Prices for in demand wine continue rebounding at all levels. The London based “Liv-ex 100 Fine Wine Index”, after dropping 22% between October and December 2008, has regained a large portion of its value. The index charged up 27.6% year to year and 11.7% year to date.
Farr Vintners are potentially the dominant trader of fine Bordeaux wine investments in the world. Formed in 1978, with offices in London and Hong Kong, they sell to a myriad of clients all over the world. Their experience allows them unique insight into today’s marketplace as well a look at future trends. Stephen Browett joined the firm in 1984. He’s been a director of Farr since 1985. If you think things have come a long way since Stephen became a director at Farr, in the famous words of Al Jolson from “The Jazz Singer” (1927), the first movie featuring a sound track, “You ain’t heard nothin’ yet, folks”!
According to Browett, the market keeps shifting to meet demand. Previously, much of the top Bordeaux was sold to Northern Europe and America. This situation no longer holds. Emerging markets appear to be emerging.
After the 2008 fall in wine prices, does Stephen think the Bordeaux wine investment market has recovered?
“Yes, thanks to strong demand from Asia. The market is still quite weak in the London and The United States.”
Where does he think prices for Bordeaux and other collectible wine go from here?
“At the very top end, the Bordeaux wine investments marketplace should continue rising thanks to ever-increasing demand from wealthy, but not very knowledgeable, new customers in Asia”.
Do recent, record setting prices realized for sales of Lafite Rothschild in Hong Kong matter to the rest of the wine market?
“The fact that every single bottle in the world is now heading for China will have a knock-on effect on the other First Growths and then further down the chain. The higher Lafite continues to sell for, makes it less likely people in the west drink it any more. This will put pressure on the prices of the four other First Growths. I think every bottle of Lafite and Carruades Lafite, (The second wine of Lafite Rothschild) that is being traded today is headed for China”.
Most of the wine being sold to China remains at the top end. Do you expect that to continue, or do you see potential for other wines to become popular in the future?
“China is a very young market. At the moment the people who are buying are mega-rich, but very uneducated wine-wise. They will learn Lafite Rothschild is not the only fine wine in the world. Gradually they will buy a bigger range of wines”.
In 2010, does Stephen expect most of the money to chase 2009 Futures? Or will it be spread out to other areas of collecting?
“The new Chinese players are much more interested in physically available wines than in primeurs, so no”.
How much of your business today comes from your Hong Kong office? Do you plan on opening offices in China as well?
“About 50% by value. We don’t need an office in China as Hong Kong is where wine enters China.
What advice is he giving his clients today?
“Buy Haut Brion to drink. The Chinese don’t like it and it’s lagging behind the other First Growths. The quality is great. Sell every bottle of Carruades Lafite that you have”.
Are there wines collectors should take a look at for drinking and for investment?
“They are opposites, really. Buy to drink what the Chinese don’t know about and what Parker underestimates. Buy to invest in what the Chinese will buy tomorrow. We think that Latour could be the next Lafite”.
With sound advice from Stephen Browett, juxtaposed against current market conditions, what should consumers be focusing on today?
Backfilling (purchasing older vintages) is a great idea. Many wines have not fully recovered from their all time low prices. Some of the best 2005, 2003, 2000 wines are available for good prices. Fair prices are still available on many of the top wines from 1990, 1989, 1982 and older vintages as well. There is value in wines that are ready to drink and can be opened today.
Smart money will buy the better 2008 Bordeaux. Some of these wines are stunning, and they remain well priced for their quality. Pomerol was the most successful appellation. Look for Clinet, L’Eglise Clinet, Le Gay, Bon Pasteur, La Fleur de Gay, Hosanna, Providence, and Feytit Clinet. Troplong Mondot, Larcis Ducasse and Pavie Macquin from St. Emilion are top class wines at low prices. From the Left Bank, Haut Bailly from Pessac Leognan, Ducru Beaucaillou, Palmer, Malescot St. Exupery and Pontet Canet from Pauillac belong in any Bordeaux lover’s cellar. 2008 is a drinker’s vintage. Most of these wines will offer immense pleasure for your palate and relief for your bank account. But they are not the wines that investors focus on, which is great news for wine lovers.
2009 produced several great wines with unique character. But unlike 2005, the vintage is not homogenous. Some appellations, as well as individual chateaux, made better wine than others did. Purchasers need to be selective. The Left Bank and Graves were more successful than the Right Bank. But some sublime wines were produced in Pomerol! If you buying for investment, depending on the price, consider the First Growths, along with Ausone, Lafleur, Petrus, L’Eglise Clinet, Cheval Blanc and La Mission Haut Brion. If you looking for the best wines that deliver the most pleasure for the money, these are a few wines worth considering, Haut Bailly, Feytit Clinet, Leoville Poyferee, Pontet Canet, La Lagune, La Fleur Petrus, Vieux Chateau Certan, Clos Fourtet, Lynch Bages, Malescot St. Exupery and St. Pierre, to name a few. As you can see, there are numerous wines from 2009 worth taking a look at, provided you find them at fair prices. If not, remember, “You ain’t heard nothin’ yet”! There will always be another great vintage.