Burgundy – highest risers

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Burgundy just keeps on climbing. In 2016, the Burgundy 150 index gained 26% after hitting new highs in eight consecutive months. Its current level of 371.40 represents an increase of 41.9% over five years. Only the Rest of the World 50 index has been stronger.

But what are the top risers?

The table below shows which wines of the Burgundy 150 index gained the most last year. They have each have increased by at least 60%; top riser DRC, Grands Exchezeaux 2004 has nearly doubled. DRC increased its presence in the top table for 2016: eight are from DRC compared to just one the previous year.

Top_burgundy_movers


 

Fine wine merchants underestimate price rises in 2016

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Every January in the Liv-ex members’ survey, we ask fine wine merchants to estimate the closing level of the Liv-ex 100 index that year. For the first time since 2013, when we first asked for predictions, the index has performed better than Liv-ex members expected. It gained 24.8% to close on 297.33; on average, merchants predicted a rise of just 5.4%.

This year, almost all merchants underestimated the gains made by the index: 98.9% thought it would perform worse than it did. The lowest guess was for a closing level of 215; the highest estimation was 300 – just 2.67 points too high. Several expected the market to decline last year, with 14.1% predicting that the index would drop.

The winner in 2016 was the person that made the second highest guess of all those surveyed – he who dares, wins. In this case, he won a magnum of Louis Roederer Brut 1990.

predictions_v_reality


 

 

Quantifying Lafite’s brand value

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Last week, we looked at how the “Lafite premium” has declined. The Lafite Premium was calculated by comparing current Market Prices for Lafite Rothschild against the average for other First Growths.

Despite this decline, Lafite continues to command a significant premium relative to quality, using score as a proxy.

To show this, we have plotted the prices for each First Growth wine since the 2000 vintage against its respective Wine Advocate score. We then derived the individual trend lines for each of the First Growths, shown in the chart above.

The trend lines highlight the relationships between Wine Advocate scores and prices for each wine. Since the trend lines compare wines with equal scores, the distance between lines can be attributed to differences in relative brand value as opposed to differences in quality.

The chart clearly shows that Lafite continues to command a higher brand premium compared to other First Growths.

Interestingly, Haut Brion, Latour and Margaux appear to be more sensitive to very high scores: they begin to close the gap as their scores approach the 100-point mark. Lafite Rothschild and Mouton Rothschild see less of an incline, perhaps because they enjoy a particularly strong following in Asia where brand buying is more prevalent and high scores are relatively unimportant.


Talking Trade: Bordeaux slows, Burgundy rises

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The Fine Wine 50 Index saw renewed momentum this week with Sterling dropping to a 31-year low against the Dollar. The index increased 0.5%, closing Thursday at 337.73. Trade by value and volume was up, but it was not a strong week for Bordeaux with the region’s trade share at 59.1%.

Regional

Meanwhile, this week saw the Burgundy 2015 En Primeur tastings kick-off in London with early consensus suggesting the vintage will be very good. Jancis Robinson said “the 2015 reds are seriously impressive – though for those paying in pounds they will also be seriously expensive.”

Activity for Burgundy was solid on the market. The region saw a mix of young and old vintages trade with Dominique Laurent Chambertin Vv 2006, Armand Rousseau Chambertin 2014, and high-value DRC Romanee Conti 1996 all finding the bid. Neal Martin has awarded DRC Romanee Conti 1996 a score of 99-100 and said it was “perfectly balanced.”

It was also a strong week for Champagne. Salon, Mesnil 2002 was the top wine traded by value and Verve Clicquot, Yellow Label NV was in the top five wines traded by volume. Other Champagnes that traded this week included Moet & Chandon, Dom Perignon 2006 and Louis Roederer, Cristal 2006.

Value

The value and volume tables were mixed this week with wines from Champagne, Bordeaux, Italy and Burgundy all finding the bid. San Guido Guidalberto 2014 was top by volume. Antonio Galloni said the wine, “doesn’t have the richness or overtness of most years, but it makes up for that with its understated, silky personality.” He scored it 88 points.

Volume

95-point Pichon Baron 2008 hit at an all-time high of £890 per 12×75 this week. This is 2.3% above its previous high of £870 it struck in July 2011 during the China-led boom. Robert Parker said the wine was “gorgeous” and “well-proportioned”, upgrading it from its original barrel score of 92-94 points.

Pichon Baron

Looking for weekend reading? This week, Liv-ex published a blog on Lafite’s premium. You can also view a Spotlight on Beychevelle and read about Vine’s 1,000,000th case.


 

Lafite’s premium – falling

Lafite Premium

Driven by demand from Asia, Lafite Rothschild’s price premium over the average of the other First Growths peaked at 129% in November 2010. This followed the announcement that the 2008 bottle would carry the Chinese symbol of the figure of eight, representing good fortune. Its premium has since dropped considerably and currently stands at 24.6%.

The sharp drop in Lafite prices from mid-2011 onwards coincided with a decline in buying from Asia, the market that favoured the wine most. This is well documented.

The scores of Lafite versus other First Growths has been explored less. The chart below shows Lafite’s scores (Wine Advocate) against the average for the other First Growths since the 2000 vintage. Assuming that a wine’s score is a reasonable proxy for its quality, Lafite’s quality was higher on average than the other First Growths until the 2009 vintage.

Since the 2009 vintage, however, Lafite has underscored relative to the other First Growths, perhaps helping to explain the decline in its premium. This is shown in the chart below.

Scores lafite

This topic will be explored further next week.


 

Vine sees 1,000,000th case

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Last week, Vine International handled its millionth case of wine since 2009 when it introduced unique case identifiers (UIDs). UIDs give every case stored in one of Vine’s facilities – London, Bordeaux and Hong Kong – a unique numerical code. These allow the simple validation of case identity and ownership, giving certainty in case tracking and location.

Every time a case of wine is received into a Vine warehouse, the case is issued with a UID before being condition checked and photographed.

Last week the UIDs became a seven-digit figure, indicating that 1 million unique cases of wine had travelled through the Vine system.

The wine that took this landmark trade was Burgundy’s Meo Camuzet, Vosne Romanee Cros Parantoux 2014.

uid_mg_0699

Each year Vine and its clients undergo a stock take which is audited and certified by an independent auditor. The most recent audit by Venners – a stocktaking specialist – found that, “the standard of warehousing and storage is high and it appears that Vine is still setting the bar for which others may aim”.

Further reading:

The case for efficiency by the drinks business – how technology is revolutionising the logistics behind the sale of fine wines.


Spotlight on… Beychevelle

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Owner: Grands Millesimes de France

Appellation: Saint-Julien

Classification: Quatrieme Cru (Fourth Growth)

Vineyard area: 90 hectares

Average annual production: 40,000 – 50,000 cases

Colour: Red

Grape varieties: 52% Cabernet Sauvignon, 40% Merlot, 5% Cabernet Franc, 3% Petit Verdot

Second wine: Amiral de Beychevelle

History

Chateau Beychevelle was built in 1565 by Bishop Francois de Foix-Candale. The property was later inherited by his niece, wife of French Aristocrat Jean-Louis de Nogaret de la Valette. Due to de Nogaret de la Valette’s importance, ships sailing by the estate were required to lower their sails as signs of respect. This was how Beychevelle’s name originated as “Baisse Voile”, meaning “lower the sails”.

In 1970, after several years of changing hands, Beychevelle fell under the ownership of Aymar Achille-Fould, French Postmaster General and member of Parliament. He decided to create a second wine in 1974: Amiral de Beychevelle.

When Achille-Fould died in 1986, the GMF group purchased 89% of the estate. The remaining 11% belongs to the pension fund of the Societe Generale Bank.

In 1989 professor Roberto Gnozzi sculpted the emblem for Chateau Beychevelle: a ship with a griffin figurehead and a lowered sail. The figurehead is a fitting emblem as, according to Greek mythology, a griffin was the guardian of the Greek God Dionysus’ wine goblet.

Market performance

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The Beychevelle index – which tracks the price movements of the last ten physical vintages – is up 31.4% year-on-year. It has outperformed both the Bordeaux 500 and the Left Bank 200, which are up 23.1% and 23.7% respectively over the same period. Demand for Beychevelle has been strong in Asia, due to brand-based buying and the dragon-like similarities of the wine’s emblem.

Beychevelle MP v WA score

The chart above compares Beychevelle Market Prices against their Wine Advocate scores. There is little difference in price between wines with high scores and those with lower scores. For example, the 2011 (WA 87) and 2012 (WA 92) are both similarly priced despite varied quality. This indicates that brand buying is active here.

However, buyers that are interested in higher-scoring wines might find relative value in the 2010 (WA 94). It is the highest scoring of the last ten physical vintages and is priced in the mid-range at £845 per 12×75.

While critic scores appear to have little influence on price, age is important. When Beychevelle Market Prices are plotted against age, the trend line shows a strong positive correlation. The three wines that drift furthest below the trend line are the 2006, 2011 and 2012. These might be considered undervalued compared to Beychevelle vintages around the same age.

Beychevelle MP regression chart

Vintage prices

Of the recent vintages, 2014 and 2013 have been the top performers over the past twelve months, up 52.5% and 51.6% respectively. The 2011 followed close behind with a 43.9% increase. Despite this significant increase for the 2013 and 2014 vintages, these wines remain the cheapest vintages available on the market.

Beychevelle vintage performance one year


 

Talking Trade: Montrose and Mouton lead the way

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Trade by value and volume increased this week with Bordeaux activity remaining solid. The region took 76.4% of the market, but First Growth trade was lower at 19.2%. In December, Bordeaux’s monthly market share was at its lowest for the year at 66.1%.

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Champagne’s share of trade was weaker at 0.7% after a strong month in December in the lead up to the festive break. Trade for the ‘Others’ was up at 6.6% with the USA representing 3.4%. Dominus 2010, Screaming Eagle 2012 and Opus One 2013 all found the bid.

value

Bordeaux dominated the value table this month with high-scoring 99-point Mouton Rothschild and 98+ point Leoville-Las Cases all active. Carruades Lafite 2014 also continued to see activity.

100-point Montrose 2010 was the top traded wine by value and hit at an all-time high of £1,990 per 12×75. It is still available at a 6.9% discount to its 100-point 2009 sibling, but looks to be bridging the gap.

montrose

The top five price risers from the Liv-ex 1000 in 2016 were split across a number of regions. Pape Clement 2009 received 100 points from Robert Parker in the Hedonist’s Gazette in April, a week after he officially announced his retirement from tasting Bordeaux. He had previously awarded the wine 95 points.

top-risers

Looking for weekend reading? This week, Liv-ex published its January Cellar Watch report. You can also view the closing levels for the Liv-ex 100 and Liv-ex 1000.


 

Cellar Watch January 2017 Market Report released

Fine wine market report - January 2016The Cellar Watch January Market Report has been released.

Containing all the latest Liv-ex research and analysis, the full issue includes:

  • Burgundy’s back
  • Vintage variation
  • Tignanello rising
  • Jancis Robinson on 2002 Champagne
  • Final thought: The year that was – 2016

To access the full report, please log in or subscribe to Cellar Watch.

You can download page one – with charts and data – here, or read the text below:

All-time high trades

Trade this month was down on November by both value and volume as the market slowed down for Christmas. Despite the December lull, trading activity remained higher than in 2015 and the indices closed in a strong position moving into the new year. A number of wines traded at all-time highs this month, including Beychevelle 2011 and controversial Pavie 2003.

Burgundy’s back

Regional share of trade for Burgundy bounced back, having fallen behind either Italy or Champagne each month since August. The region accounted for 10.1% by value, compared to 7.3% in November. Champagne and the USA also rose this month, boosted by high value trades for Salon, Mesnil and Screaming Eagle. Bordeaux dipped from 73.7% to a below average 66.1%.

Vintage variation

Lafite Rothschild was once again the most traded wine this month, accounting for 5.7% of market activity by value. Mouton Rothschild (5.0%) and Carruades Lafite (4.7%) followed. Two of the top Bordeaux years—2010 and 2009—were the most traded vintages. The recent 2013 vintage followed close behind, thanks in part to high volumes of trade for Leoville Poyferre 2013.

A year of index highs

The Liv-ex 1000 gained 1.1% to close December at another all-time high of 299.8. Among the sub-indices, the Burgundy 150 was the strongest performer of 2016 after gaining 2.6% in December to close the year at 317.4. The Liv-ex 100 saw modest gains, edging up 0.4%. The Champagne 50 (-0.9%) and the Italy 100 (-0.2%), recorded small declines this month.

For current and historic issues of the full report, please subscribe at www.cellar-watch.com


Opportunities at Liv-ex: fine wine data intern

Liv-ex is currently looking to hire a highly motivated, enthusiastic, and organised individual to join Liv-ex as a fine wine data intern for six months.

The successful candidate will be a team player with strong computer and communication skills, as well as relevant wine knowledge.

Key responsibilities:

  • Data content enhancement
  • Internet based research
  • Work alongside the data team on the LWIN project
  • Document and review naming standards
  • Validate and create new LWINs
  • Explore third party sources to gather additional LWIN information

Skills and experience:

  • Relevant wine knowledge (WSET certificate preferable)
  • Computer literate with strong Excel, Outlook and internet skills
  • Very good research skills

This will be a paid internship, based at the Liv-ex company office in Battersea SW8.

To apply, or for further information, please email Andreas Neder with a short covering letter and CV.