When points mean prices
- Thursday 21 August 2008
Looking at the impact of wine critics on prices, there can be no doubt that Robert Parker is the world’s most authoritative and influential figure. But what kind of an impact does he exert? And what influence is it having in Bordeaux’s highly traditional and institutionalised en primeur market? Over the past three years I have compiled a set of release prices for the Médoc classed growths and St-Emilion grands crus. This allows us, for the first time, to develop a comprehensive assessment of the influence of Parker, both on initial release prices and on subsequent trends on the secondary market. The insight this gives us challenges many of the myths that have come to surround this most contentious of figures. The first thing to note is that Parker’s influence is exerted in a variety of different ways. In the life of a premium claret it begins early with his annual trip to Bordeaux for private tastings prior to the en primeur campaign. As Parker explains, these tastings are of three kinds: ‘visits to leading châteaux (about 40 or so); tastings with the Union des Grand Crus, the Cercle de Rive Droite, and various syndicates; and tastings with four or five of the leading négociants’. Parker does not taste blind until the wines are in bottle. The ratings and notes from the en primeur tastings, alongside those of other influential critics (such as James Suckling of the Wine Spectator, Jancis Robinson MW and Decanter) are posted online in April. In a sense, they now serve to mark the start of the en primeur campaign in earnest – for virtually no classed growth or grand cru will release its wine to market before its Parker rating is known.
Cog in the wheel
A sense of the significance attributed to these scores is seen in the consternation that engulfed Bordeaux this year when it was feared that back surgery would keep Parker from travelling. It is not hard to see why the prospect of his absence might have worried châteaux owners so much. In the Médoc, for the 2005 and 2006 vintages, Parker’s scores correlated more closely with release price than any factor other than a château’s position in the 1855 classification; for the 2004 vintage, Parker’s score even out-trumped that. In St-Emilion, his ratings correlated more closely with price than any other single factor in all three vintages. Parker’s en primeur ratings are now integral to the process of setting release prices. Yet before claiming Parker scores may one day replace official classifications, look at the table below, showing average release prices and Parker ratings for top Médoc and St-Emilion 2005s at different levels of classification. The table reveals that Parker’s ratings are remarkably conventional – reinforcing, not competing with, the official classifications. Indeed, in 2005 Parker’s scores correlated more closely with the 1855 table than those of any other critic. Raw data like this can be used to construct statistical models of release prices, allowing us to isolate the key factors determining prices. As I reported in Decanter’s Bordeaux supplement last year (and reprinted here, see table p65) such models show that, in 2005, each additional Parker point above 90 was worth an extra £120 on the in-bond price of 12 bottles of a Médoc classed growth. For the 2005 St-Emilion grands crus, the influence of Parker scores is even more pronounced, with each additional point above 90 worth an extra £201 per case. With new data, the analysis can be extended to the 2004 and 2006 vintages. Even after controlling a château’s place in the official classification, this shows the influence of Parker scores on Bordeaux release prices. It also shows considerable variation in the magnitude of the effect from one vintage to another, and suggests that Parker’s influence on prices in the pivotal 2005 vintage may well have been rather less than it was for either 2004 or 2006. This could have been because, in the latter vintages, Parker published fewer scores in advance of the en primeur campaign than in 2005. Those châteaux lucky enough to get a published score (in 2004, this was
only those scoring over 90) benefited significantly, at the expense of those without. Yet Parker’s influence is not confined to his impact on initial release
prices. His scores also exert longerterm effects on trends in the prices on the secondary market. The first finding is that it is his initial, not most recent, scores, that correlate most closely with current prices. Prices do move up and down on the basis of Parker’s retasting of wines as they mature
but, by and large, their price trajectory is set by his initial ratings. In a way this is not surprising: consumers do not slavishly follow Parker ratings, and prices are bound with established château and vintage reputations. The second finding suggests that, independent of subsequent evaluations, those wines with a good rating-to-priceratio on release are likely to attain, over time, a price level closer to that of their similarly rated peers. As such, they are likely to realise a greater return on any given investment. There are, however, certain wines in certain vintages that are almost entirely immune to the influence of Parker ratings.
In recent years, these have been the first growths and premier grand cru classé A wines. The international demand for these wines is unprecedented – driving a near exponential increase in prices which is not governed by Parker ratings. The
same now increasingly seems to be the case with the second wines of the first
growths, many of which, in 2004 and 2005, have almost doubled in price since
their release, despite relatively modest Parker scores.
Gauging the influence
We can see that a range of factors influence the current price of a case of classed growth Bordeaux: the reputation of the vintage; its initial release price; its ratio of Parker rating to price on release; any change in its Parker rating since release, its place in the official classification; and the price dividend it may enjoy from the ‘first growth’ effect. So is Parker’s influence waning, as some have argued? In terms of release prices, there is no evidence to support this – and his influence on pricing is likely to be at least as significant in 2007 as it was in ’04, ’05 and ’06. Yet the picture is different and opinions more divided. For
Simon Staples at Berry Bros & Rudd, Parker’s influence on consumer demand has fallen with every vintage since 2000. ‘It has been a long time since anyone asked for a wine’s Parker score,’ he said. Yet such scores are invariably printed
on merchants’ web pages (including those of Berry Bros), alongside those of other critics, and consumers tend to look as much for consensus among tasters as they do a high Parker rating. Where Parker favourites divide critics, Staples says they sell poorly. For the UK market, it seems, Parker ratings are one of many factors influencing consumer choice. Yet others see more of a Parker effect. Although the UK market likes to think of itself as largely independent of Parker’s influence, some point out the correlation between consumer preference and Parkerratings is greater than this would imply. For Stephen Browett at Farr Vintners: ‘Customers buying solely or mainly for investment will always follow Parker for as long as they see the market following him. Those who buy for their own drinking and who know what they like are much less likely to be influenced.’ Similarly, for Simon Davies at Fine & Rare, ‘Parker’s influence is global. In the
case of the investor that means jumping on high-rated wines as early as possible
and, in the case of the drinker, calibrating ➢ somewhat more complicated when it comes to demand. Here, as a number of UK-based merchants and brokers reveal, there are significant differences between the US and UK markets. In the US, Parker’s influence (and that of the Wine Advocate) has never been greater. It now seems increasingly clear that certain Right Bank châteaux produce their wines almost exclusively for the US market, restyling them to conform to what they take to be Parker’s preferences. In the UK, the picture is subtlyone’s palate against Parker’s to decide what to buy.’ That process of calibration is aided significantly by theremarkable consistency of Parker’s palate. This allows consumers to differentiate between those scores to take particular note of, and those to ignore. Thus, while a high rating is no guarantee a particular wine will sell well in the UK, Parker’s overall impact
on demand remains massive. As Mark Bedini at Fine & Rare said, the
simple truth is that ‘Parker sells wine’. It is not just Parker scores that influence prices and demand, however. An example closer to home puts this into perspective. According to internet message boards, after the results of a Decanter panel tasting of the 2005 Médoc classed growths (see this month’s main issue, p85) leaked out, two leading UK-based fine wine merchants sold, in the space of 24 hours, more than 1,000 cases of one particular wine. That wine, Château Pedesclaux, is a fairly obscure fifth growth and its 2005 had previously attracted relatively modest interest. Yet in the tasting it was given a unanimous five stars, averaging a score of at least 18.5/20, one of only three wines among the 25 Decanter award winners to do so.
The man, the myth
Finally, if it is important to get Parker’s impact in some kind of proportion, it is no less important that we dispel some of the popular myths regarding the legendary influence that he exerts. Parker’s ratings, though by no means uncontentious, are in fact remarkably conventional – far more than is widely assumed. There are undoubtedly wines, most famously in recent years Château Pavie, that Parker
has evaluated far more positively than many other influential critics.
But there are many more wines that unite the leading critics than there are those that divide them. There is now also strong evidence that, to date at least, wines such as Pavie remain unable to attain the release price that their Parker score would otherwise warrant. Finally, there is also evidence that Parker scores are most influential in determining prices where they help to restore the place of previously ailing châteaux in the official classification system. Second and third growths returning to form, it seems, are better placed to cash in on the effects of high Parker scores than are fourth and fifth growths. As this suggests, whatever we have come to assume about Parker, the evidence seems to indicate that he serves to reinforce rather than undermine the 1855 classification.