The Bordeaux wine investment market is a rollercoaster ride right now. “Roller coaster,” an adjective “marked by numerous ups and downs, ” is an appropriate description of the rare Bordeaux wine available today.
A roller coaster is exciting, thrilling, and frightening. It begins slowly but is filled with a bizarre array of delights. Once the adventure is complete, passengers can disembark safely where they started.
The global wine market and the Bordeaux wine investment market have been on a rollercoaster journey since the beginning of 2008. Did the ride end? Did it go back to where it began?
At the peak of the market in the summer of 2008, the prices for wine of the highest quality reached a record. Similar to the stock market price that crashed the following year, the prices of wine dropped. Prices were depressed for months.
Today, we see that Bordeaux markets for investing in wines are growing, losing momentum, and then gaining now and then. One of the most valuable thermometers that measure the Bordeaux market’s temperature is how thriving the market of Bordeaux futures is. In the spring of 2009, when the 2008 Bordeaux futures were initially offered for sale, the first Growth producers attempted to set an example for the world of prudence due to the global economic crisis. Their wines were put up on sale to the general public at the lowest prices since 2002, which was $2,400 for a case. The sales from those First Growths were extremely high, and Lafite as well as Latour at the head of the group. Because of the high Asian demand and excellent ratings by Robert Parker, the 2008 Lafite increased by more than 300 percent. Lafite in 2008 Latour has risen by a third. However, most of 2008’s Bordeaux has been relatively unchanged in price. Since the beginning of the campaign to promote the much-discussed 2009 Bordeaux wines, the consumers will have a clear view of where the premium market for wine is heading based on the success of the future promotion.
Other barometers are worth taking a look at as well. Chateau Lafite Rothschild is the most sought-after Bordeaux. Three bottles of 2000 Lafite that received 100 points at Robert Parker sold at an April Sotheby’s auction in Hong Kong for an astounding HK $266,200 ($34,300). The world record price of more than 300% more than similar wines was offered for sale in October 2008, at the bottom of the market for wine. The 1996 and 2003 Lafite, scoring 100 points with Robert Parker, sell for relatively low prices, ranging from $1,000 to $1000 per bottle.
While Lafite remains the leader of the rise in the global wine markets, other rare wines have also seen huge increases in value. Petrus, the legendary Pomerol wine, reached an all-time record in that same Hong Kong sale when 3 cases of their 2000 vintage received 100 points from Robert Parker, hitting an incredible $49,900 per case.
Prices for wines in high demand continue to rise in all areas. The London base “Liv-ex 100 Fine Wine Index” dropped 22 percent between November and December of 2008 and has recovered significantly. The index was up 27.6 percent year-to-year and 11.7 percent from the beginning of the year.
Farr Vintners is the largest trader in fine Bordeaux investment in wine worldwide. Established in 1978 and with office locations in London and Hong Kong, they sell to various clients worldwide. Their experience gives them a unique insight into the market today and a peek at future trends. Stephen Browett joined the firm in 1984. He has been the director of Farr since 1985. If you believe that things have been a step forward since Stephen was appointed director at Farr and his famous lines from Al Jolson from “The Jazz Singer” (1927), the first film with soundtracks, “You ain’t heard nothin’ yet, folks”!
According to Browett Browett, the market keeps changing to meet the demands. In the past, many of the most expensive Bordeaux were shipped to Northern Europe and America. The situation has changed. Emerging markets are emerging.
Following the fall of 2008 in wine prices, Does Stephen think that the Bordeaux investing market in wine is now recovering?
“Yes due to the high interest from Asia. However, the market is fragile in London as well as The United States.”
What is his opinion of where the prices of Bordeaux and other wine collectibles will be able to go?
“At the 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 the recent record-setting prices for sales from Lafite Rothschild Hong Kong matter to the other markets for wine?
“The reality that each and every bottle around the globe is headed for China could impact all the First Growths and then further down the chain. The more expensive Lafite remains in the market at, making it less likely that those in the west to drink it anymore. This puts pressure on the price of the other four First Growths. I believe that each bottle of Lafite and Carruades Lafite, (The second wine of Lafite Rothschild) that is traded today is heading for China”.
The majority of wine shipped to China is in the high range. Would that trend be the case? Or is there a chance that other wine types could be popular shortly?
“China is a relatively new market. In the present, the buyers who are buying are wealthy however, they are not educated in the wine world. They will soon realize that Lafite Rothschild isn’t the only top-quality wine available. In time, they will be able to purchase more wines”.
In 2010 will Stephen expect the bulk of the funds to go after 2009 Futures? Or will it disperse across other areas of collecting?
“The new Chinese players are much more interested in physically available wines than primeurs, so no.”
What percentage of your business is based out of your Hong Kong office? Do you have plans to open offices in China in the future?
“About 50% of the value. There is no need for an office in China because Hong Kong is where wine is introduced to China.
What advice would he give his clients right now?
“Buy Haut Brion to drink. The Chinese dislike it, and it’s not as good as similar First Growths. The quality is excellent. You should sell every bottle of Lafite Carruades you own”.
Are there any wines that collectors can consider consumption and investment?
“They are two opposites, actually. Purchase to consume what Chinese do not know about and also what Parker thinks is a mistake. Purchase to invest in what the Chinese will purchase in the near future. We believe that Latour may be next Lafite”.
With solid advice from Stephen Browett, juxtaposed against current market conditions, which do consumers need to pay attention to right now?
The practice of backfilling (purchasing earlier wineries) is a brilliant idea. Some wines have yet to recover from their low prices. The best 2005, 2003, and 2000 wines are now affordable. Fair prices are available for many of the best wines from 1990, 1989, 1990, 1982, and even older vintages. There is value in wines ready for drinking and open to drinking today.
The smart money will purchase the top 2008 Bordeaux. Specific wineries are breathtaking and remain reasonably priced for the quality they offer. Pomerol is one of the more popular appellations. 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, all from St. Emilion, are top-quality wines for a reasonable price. They are from the Left Bank, Haut Bailly from Pessac Leognan Ducru Beaucaillou Palmer, Malescot St. Exupery, and Pontet Canet from Pauillac should be in every Bordeaux collector’s cellar. The year 2008 was a vintage for drinkers. Many of these wines will provide great pleasure to your taste and a sense of relief to your savings account. They aren’t the ones investors are focusing on, so this is fantastic news for those who love wine.