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Bordeaux wine investment: 20 years of market hits and misses

It seemed Bordeaux would always reign supreme, but the last two decades have seen major shifts globally in fine wine buying patterns and the market picture is now more complex. This article, published in Decanter magazine's recent Bordeaux supplement, looks at how top vintages have fared and some of the issues for collectors to consider.

Bordeaux wines have hit stunning heights in the last 20 years, but buyers haven’t always enjoyed the ride and the investment picture has become more complicated.

It’s been a golden two decades for Bordeaux winemaking, and hall-of-fame contenders include 2000, 2005, 2009, 2010 and 2016, as well as 2015 in some areas. Global demand for fine wine has increased, notably in Asia, where Hong Kong is now a major auction hub alongside London and New York.

Despite this, Bordeaux prices haven’t always risen consistently, and en primeur returns have been patchy.

Bordeaux remains a bellwether of the wider market. Yet, it faces greater competition for collectors’ money from other regions, especially Burgundy, as the following Liv-ex chart from March 2020 shows.

Liv-ex trade shares graph

First-growth focus

Châteaux Haut-Brion, Lafite Rothschild, Latour, Margaux and Mouton Rothschild have long been staples for collectors and would-be investors. Of the great years, the 2000 vintage has gained the most in price since release by London merchants, shows Liv-ex data. In March 2020, Mouton Rothschild 2000 in particular was priced at about £19,000 per 12-bottle case in bond versus its ex-London release of £1,580.

The 2005 first growths were also healthily up, albeit less spectacularly, but the 2009 and 2010 were below release prices, despite a rally in the last five years. The 2016 wines were slightly down, although Latour hasn’t yet released.

En primeur buyers of the vaunted 2010 vintage suffered more than most. The 2010 first growths were released at €736 per bottle ex-Bordeaux on average, versus €404 in 2005 and €141 in 2000, according to Liv-ex. This proved unsustainable and the market slumped from mid-2011, after the emerging China market overheated.

Lafite Rothschild 2010 was £5,500 per 12-bottle case in mid-2015, versus an en primeur peak of £12,000. It was £7,000 in March 2020.

Other 2010 wines across Bordeaux have performed better. Le Pin 2010, for example, was up by 78% on its ex-London release price, Liv-ex noted in February.

The first growths have also seen price rises for so-called lesser vintages, although mostly those from 2001 to 2008 inclusive. The 2001 wines were released at £900 to £950 per 12-bottle case ex-London; in March 2020, Haut-Brion was cheapest at £3,500, with Lafite at £6,300.

Max Lalondrelle, fine wine purchasing director and Bordeaux buyer at Berry Bros & Rudd, says lesser vintages can offer great value. However, he adds: ‘If you’re an investor and you want to buy for the long term, then great vintages are important.’

As a broad guide, the chart below compares ex-London release prices with the Liv-ex mid-price, based on data received on 25 March.

Bordeaux first growths chart

Bordeaux en primeur: still worth it?

There’s a thrill to securing a good vintage early, fresh from the château, and en primeur is still a key fixture. However, Liv-ex commented last year: ‘In just over half the campaigns since 2005, wines have been cheaper at physical release than at en primeur.’

Speaking prior to the 2019 release campaign, Will Hargrove, head of fine wine at Corney & Barrow, notes that there have also been ‘too many vintages where the wines are nice and the prices are too high’.

Many analysts feel that châteaux have tended increasingly to factor potential future returns into their prices. Some estates also hold back more grand vin stock, too.

However, it pays to do your homework on individual estates. Châteaux release strategies have diverged, says Jean-Charles Cazes, CEO and co-owner of Château Lynch-Bages, which sells a high proportion of wine en primeur and often finds favour with the trade. ‘It’s a simple equation for us,’ says Cazes.

‘You look at the current [available] vintages and the movement of the market and you have to price sensibly, compared to similar quality vintages. Otherwise it doesn’t make sense for the consumer.’

At Berry Bros, Lalondrelle says en primeur ‘is still important for the five top merchants in the UK’, but fewer wines sell through. Of the 500-or-so releases each year, Hargrove comments that Corney & Barrow does ‘a reasonable trade in 60 names’. Liv-ex co-founder Justin Gibbs suggests: ‘There are always [châteaux] who get it right, but it’s [been] a diminishing circle.’

While the nature of the Bordeaux 2019 en primeur campaign was uncertain at the time of writing, Bordeaux lovers have had time on their side in several recent vintages, even in top years. ‘2016 is great, but the prices haven’t moved,’ says Gibbs, adding that some Bordeaux négociants had ‘bulging stocks’ from recent vintages.

See our Bordeaux 2019 en primeur campaign coverage

Recent fast risers

Limited supplies of some sought-after Pomerol estates can fuel faster price rises. For example, Château Lafleur 2016 and 2015, both rated 100 points by Decanter’s Jane Anson, have shown a compound annual growth rate (CAGR) of 30% and 27% respectively since their ex-London release, according to Liv-ex.

Back on the Left Bank, the 2014 Pauillac second wines Le Petit Mouton and Carruades de Lafite had a CAGR of 24%, with Margaux’s Pavillon Rouge 2014 at 17%, Liv-ex says.

Specific circumstances can also drive prices up. Château Margaux 2015 was £9,700 per case in March 2020, versus £4,200 on release ex-London. It was a good vintage, and the wine also features a commemorative bottle for the estate’s late MD, Paul Pontallier.

A broader market?

The classic names are ever-present. Auction house Sotheby’s reveals that its 10 best-selling Bordeaux estates in 2019 were, in order: Mouton, Petrus, Lafite, Latour, Haut-Brion, Margaux, Cheval Blanc, La Mission Haut-Brion, Le Pin and Léoville Las Cases.

However, an expanded secondary market provides more potential opportunities, making it easier for collectors and investors to buy and to sell. Buyers are also presented with more choice, because many châteaux across Bordeaux, spanning the growths from first to fifth, have improved their winemaking thanks to increased investments in vineyards and cellars.

While Liv-ex doesn’t speak for the whole market, its Bordeaux 500 index – tracking prices for a range of classified estates across the Left and Right Banks – had increased by nearly 30% in value in the last five years at the time of writing.

Hargrove says the Right Bank has become more prominent in the last two decades. Among buyers, he adds, ‘we find there’s more year-to- year loyalty on the Right Bank than the Left’.

In St-Emilion’s revised classification of 2012, Châteaux Angélus and Pavie joined Cheval Blanc and Ausone as premier grand cru classé A estates – with some controversy. It’s too early to assess the impact on long-term demand, but Liv-ex promoted Angélus to the top tier of its own classification in 2015; the system ranks estates based on average trading price. Pavie has remained in the second tier.

Several St-Emilion premier grand cru classé B estates have garnered greater praise on quality, including Châteaux Bélair-Monange and Canon.

Decanter’s Anson also highlights Troplong Mondot as an estate to watch.

On the Left Bank, Beychevelle, Calon Ségur and Rauzan-Ségla rose from third to second division of the Liv-ex Classification in 2019.

The outlook

Bordeaux looks relatively good value in some ways. Sotheby’s average bottle price for Bordeaux at auction in 2019 was $513, versus $1,904 for Burgundy, $1,029 for Champagne and $668 for US wines. Bordeaux also constituted just 26% of Sotheby’s wine and spirits sales in 2019, despite the group’s record $118m of auction revenue.

Jamie Ritchie, Sotheby’s global head of fine wine, expects that ‘Bordeaux will come back globally’, adding that ‘the quality for the price is a bit out of kilter’. As an example, he says: ‘Mouton 2000 is expensive, but the 2005 and the 1986 are both great vintages and look extremely good value.’

Some merchants have reported rising demand for mature vintages that are ready to drink. Ella Lister, founder and CEO of analyst group Wine Lister, advises patience on recent greats. ‘As the 2009s and 2010s start to enter and approach their drinking windows, supply will go down and demand should go up,’ she says. ‘There’s no guarantee of an immediate return but, like stocks, with patience and a long-term view, prices should rise.’

Miles Davis, head of professional portfolio management at the Wine Owners trading exchange, says: ‘Bordeaux will always be there and it can offer steady, decent returns.’ He is sceptical about price rises in 2020. At the time of writing, prices for top Bordeaux and Burgundy had weakened over 12 months, but had remained relatively resilient in spite of economic concerns related to coronavirus.

For those fortunate enough still to be in a position to buy, Davis believes there could be opportunities for buyers. But, he adds: ‘If I was wealthy and I had cru classé, then I would hang on to it.’

As ever, though, be prepared to drink your cellar if things go awry.

Wine storage at a glance

How does it work?

Most major wine merchants offer storage. As a price guide for those choosing to go private, London City Bond’s Vinothèque charges £11.16 annually per 12-bottle case, or £75 ex-VAT minimum for accounts ‘holding 80 bottles or less’.

Why it matters

Temperature and humidity-controlled storage affects price. Buyers also ‘ascribe more value’ to proven authenticity and provenance, according to Jamie Ritchie at Sotheby’s. ‘There’s a premium [at auction] for full cases,’ he adds.

Think about costs when buying

Put simply: ‘Price appreciation [on wine] has to go faster than rental costs’, explains Max Lalondrelle, fine wine purchasing director and Bordeaux buyer at Berry Bros & Rudd.

This article appeared in the Bordeaux supplement of Decanter magazine’s July 2020 issue, and was written prior to the Bordeaux 2019 en primeur campaign.  

Disclaimer: Please note that this article has been published purely for informational purposes and does not constitute financial or investment advice. Prices and availability of the wines cited are subject to change. Seek independent and professional advice where necessary, and be aware that prices can go down, as well as up.

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