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Liv-ex Fine Wine 50 remains flat

The Liv-ex Fine Wine 50 continued flat trading throughout August, with the index failing to rise above the 300 level witnessed in early July.

According to Ditton Wine Traders, in the latest Liv-ex reading from August 30, the index was set at 297.87, up 2.21 points or 0.75% on the previous week.

Despite the static nature of trading, those behind the fine wine price tracker noted that market conditions suggest now could be a good time for fine wine investment.

“If we run the Liv-ex Fine Wine 50 against the ratio of bids to offers on the Liv-ex exchange, we can see that the weight of bids has been steadily climbing throughout the summer,” said the Liv-ex blog.

“Historically, a high bid-offer ratio has been a feature of a rising market,” it added.

While the company urges caution among would-be investors, both Sotheby’s and Christies are preparing to host major auctions in the coming weeks, with vintages from across the Bordeaux region set to hit the block.

Trade predicts limited demand for 2011

Liv-ex’s trade survey has revealed that its members predict little demand for the new vintage and rated Lafite as the major disappointment.

Wine of the vintage?

The key points in results labelled Latour as the best wine of the vintage, Grand Puy Lacoste as (hopefully) the best value for money and for release prices to be on average 42% down on 2010.

The vintage was also given an average rating of 91 points overall, the same as 2008.

Lafite may have been given the “most disappointing” tag but reports so far seem to indicate that its £5,500 trading price, which makes it the cheapest of any Lafite on the market at present, has done it no harm.

As the first big name to release merchants were quick to add that its 30% cut in price was not a model to be followed by other estates.

This seemed to have fallen on deaf ears when Cos d’Estournel released at €100 p/b, a drop of 45% on 2010.

More expensive than 2008, 2006 and 2004 among others, it has been widely decried on Twitter and elsewhere as merchants state their inability to sell any.

That there is little demand for the vintage was countered by Justerini & Brooks’ Bordeaux buyer, Tom Jenkins, who told the drinks business that customers would buy if the wines were at the right price.

As the campaign is yet to pick up a gear it is perhaps too early to say whether or not the demand will fail to materialise.

Meanwhile, with Latour being hailed as, once again, the wine of the vintage and with the château’s impending retreat from the en primeur game all eyes will be trained on what it does, how low it releases and more importantly how much of its wine it chooses to release.

Expect very little.

Predicted 2011 Bordeaux price cuts may not be enough

Drastic price reductions will be needed to make Bordeaux 2011 good value for money.

Photo credit: Michel Guillard

Despite claims that prices will be slashed in comparison to 2010 and 2009, 2011 is likely to remain more expensive than 2008.

The news from Bordeaux is that prices for 2011 could fall anywhere from 20% – 50% on 2010, although around 30% is more likely from initial reports.

the drinks business has already reported that Christian Moueix might lower prices by up to 50%, Sylvie Cazes has announced drops at Pichon-Longueville and Lafite has said it would release at a “early and low”.

However, prices rose so far over the course of the 2009 and 2010 campaigns that those hoping for much of a bargain in 2011 are likely to be left disappointed.

Recent analysis by Liv-ex clearly shows that the release price of 2010 was still anywhere between 13% to 80% above even the current prices of 2008 – to which 2011 is often compared.

Cazes stated that the 2010 prices were 10% – 12% up on 2009 and as 2011 was not of the same quality as either of those vintages, a 10% to 15% drop would be in order – meaning 2011 will be roughly the same price as 2009?

With 2008 Pichon-Baron and Pichon-Comtesse currently trading on Liv-ex for £730 and £673 respectively, their 2010 equivalents were released at £1,500 and £1,400.

As 2008 Pichon-Baron and Pichon-Comtesse were released at £475 and £455 the difference between then and 2010 was already over 200% and even when comparing the release price of 2010 and the current price of 2008, the difference is still 61% between the Pichon-Barons and 55% between the vintages of Pichon-Comtesse.

Therefore, even with Bordelais appearing magnanimous with assurances of a 20% to 30% price drop, Liv-ex reported that, “on average, 2011 London release prices will need to be 47%-52% lower than those of 2010, at a minimum, for the wines to be a worthwhile purchase.”

Other gaps between 2010 release and current 2008 prices include an 80% disparity for La Mission Haut-Brion; 63% for Mouton Rothschild; 69% for Cos d’Estournel and 56% for Pontet-Canet.

The Right Bank in particular appears to have a very large discrepancies in pricing with Conseillante, Figeac, Eglise Clinet, Cheval Blanc, Lafleur, Ausone and Vieux Château Certan all having differences of 70% or more between the vintages.

The other first growths have differences of 64% for Haut-Brion, 66% each for Margaux and Latour and 48% for Lafite.

Potentially, therefore, there exists a vintage of the same quality as 2008 or 2007 (depending on those commentators who believe that 2011 was either better than expected or distinctly average) priced above both regardless of the trade’s opinion.

One château has already released. Château Angludet a cru bourgeois in the Médoc released at £198 a case, a 20% reduction on 2010 but it is not considered likely that this will be a standard percentage decrease across the region, particularly as it does not sell through négociants – it was still more expensive than 2008, which was released at £150.

More generally, 2008 has proven that it still has room to appreciate, with nearly all of the major châteaux showing increases of several hundred or even several thousand pounds – despite some hiccups on the way.

By contrast, 2010 has often realised a decrease by the same margins – although this may of course change once the wines become physical next year.

Parker: influence is “scary”

Wine critic Robert Parker has admitted that sometimes he finds his own influence “scary”, referring to himself as “just the messenger”.

Speaking to Liv-ex, Parker said of his potential to impact on the market: “I really try to never think about that. I am gratified that people give credibility to what I write; a lot of hard work and passion goes into it.

“I don’t have any hidden agendas and I try and be as fair as possible to both the producer and consumer when I taste the wine. But I do know the impact my scores can have, particularly in Bordeaux. It’s scary sometimes; no one should have that kind of influence.

“It’s also a double-edged sword. It creates a lot of criticism of me when in fact I’m just the messenger.”

However, Parker has spoken before about those that attack what he does and defended his style of writing and his points system, arguing that quality across the region has improved enormously during his time as a critic and he is pleased to see smaller estates garnering higher praise.

He said: “I think that by writing about high quality in Bordeaux, whether it’s a petit château, a cru bourgeois or a cru classé, you are doing a service and trying to recognise the effort that people are putting into it.

“A revolution of quality has taken place over the last few decades. When I first went to Bordeaux to taste the 1978 in March 1979, finding a dozen great wines was no easy task. The quality of the crus bourgeois and many of the classified growths was mediocre at best.

“We can talk about jealousy among Bordeaux chateaux and the competition in the pricing of their wines between neighbours, but this jealousy has a positive side in that they keep pushing quality higher and higher.

“We are in a very, very fortunate place today in that you do not need to buy first growths or super seconds to get exceptional quality Bordeaux.  It sounds absurd, but the quality of the first growths’ second wines is better today than their first wines were thirty years ago.”

On the subject of 2009 he said that his two favourite wines were Latour and Cos d’Estournel. As db has previously covered, Parker has made clear his love of the vintage before, both at last year’s “Magical 20″ tasting in Hong Kong and with the release of his in-bottle scores.

He thought Latour’s 2009 effort was “a very, very special wine – one of their all-time greats. It has a sweetness that you don’t often see in young Latour.”

Meanwhile, his choice of Cos d’Estournel – a controversial wine from the vintage – he defended by saying: “In 10 years I don’t think it will be considered controversial at all, once the baby fat melts away, which it’s already starting to do.

“Sometimes these wines are so overwhelmingly rich in their infancy that tasters can’t find the tannin and wonder where the structure is and think that it belongs in Napa Valley, not Bordeaux.

“But if you look at the evolution of wines like the 2000 Pavie, it’s starting to become very civilised, very St Emilion. I think we’ll see that in 10 years Cos will still be very distinctive and very singular, but there will be no doubt it is a St Estephe – and a great one.”

Overall, he said that 2009 was the first vintage since 1982 that had filled him with “that same sense of joyfulness and almost infantile pleasure”, and had to admit that across the board: “It’s just a magical vintage, a watershed vintage, and so many chateaux did such a great job. Quality is at an all-time high.”

Looking ahead to 2010, he added: “It’s a great vintage – it’s more masculine and the tannins are more noticeable. I think the wines will be more structured and intimidating than the 2009s.”

However he did not think that the scores would be as high as 2009 and didn’t think “they would ever have the charm of 2009”.

The full interview with Parker can be found on the Liv-ex blog page here.

Part two will appear on Monday 19 March.

 

 

 

 

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