Bordeaux learns to share
If your cellar is no longer packed full of Bordeaux, then you’re not alone.
Bordeaux is still a cornerstone of the fine wine world, yet Liv-ex said this week that Bordeaux constituted 50.5% of trades by value on its platform so far in 2020, versus 96% in 2010.
Sotheby’s also saw Bordeaux fall to 26% of its global wine and spirits sales across auction and retail in 2019. But, it expects that to rise again as buyers begin to see the value on offer on some wines. ‘The quality for the price is a bit out of kilter,’ Jamie Ritchie, head of Sotheby’s global wine business, told Decanter magazine for a forthcoming article.
Burgundy, Champagne, Piedmont, Tuscany, Rhône Valley and California have all grown in stature in the last decade. Rare whiskies, too, have enjoyed strong success at auction.
Italy rises and Barolo 2016 excitement grows
Piedmont has been garnering more interest. Several wines from top names like Gaja, Giacomo Conterno and Bruno Giacosa already command relatively high prices. But, ‘the majority of [the region’s] wines still represent extraordinary value for money,’ said Ella Lister, co-founder of analyst group Wine Lister, in a recent report for its members.
The Barolo 2016 wines are expected to be sought-after, following an ‘exceptional vintage for Nebbiolo’, as Decanter expert Stephen Brook described in in his recent review for Decanter Premium subscribers.
Will Hargrove, head of fine wine at Corney & Barrow, told Decanter magazine in February, ‘Customers have started to follow producers [in Piedmont] as they do in Burgundy.’
Those looking to buy mature wines could consider Barolo 2006.
Merchant BI Wine & Spirits also reported strong global demand for Super Tuscan wines in 2019, including Sassicaia, Tignanello and Ornellaia. Gary Boom, MD of BI Wine & Spirits, said, ‘Over the past two years we have seen an increased focus on purchasing Italian wine for investment.’
Italy has avoided the 25% US import tariffs, which has made its wines more attractive to US buyers.
Mature Bordeaux vs Young Bordeaux
While the numbers vary from estate to estate, Liv-ex said in a new report out 2 April, ‘In over half of the campaigns since 2005 the returns of the broader market – investing in already-physical stock – have been greater than buying wines en primeur.’
It also said there are still relatively high stock levels for younger vintages – unless you’re after a scarce Pomerol wine, such as Petrus or Lafleur – and this has held back price rises on the secondary market.
Several top wines from the outstanding 2009 and 2010 vintages remain below ex-London release prices – albeit those initial price tags were extremely high. Liv-ex said recent trading on its platform has concentrated on the vaunted vintages of ’10, ’09 and 2016.
Some analysts have suggested looking for value in great vintages of older Bordeaux wines that are ready to drink.
Miles Davis, head of professional portfolio management at Wine Owners, said in January this year that ‘some fantastic older vintages, particularly ’89, ’90 and ‘96, are more available on the market than for some time.’
You can read more in-depth analysis of the Bordeaux market in the last two decades in a forthcoming Decanter magazine feature.
Have the top Burgundy wines peaked?
Sotheby’s sold $25m of Domaine de la Romanée-Conti wines in 2019, which was a record-breaking year for its global wine and spirits auction department.
This doesn’t exactly indicate that people are bored of grand cru Burgundy, yet prices for the top estates have weakened in the past 15 months or so.
Matthew O’Connell, head of wine investment at UK merchant BI Fine Wine & Spirits, told Decanter magazine’s Market Watch in February that concerns of a Burgundy bubble ultimately proved unfounded in 2019.
‘While prices were marginally softer, there was little or no evidence of a [significant] correction,’ he said.
Liv-ex reported that collector interest in Burgundy has broadened. It saw a 48% increase in the number of Burgundy wines traded on its platform in 2019, although it questioned whether demand would be sustained on the secondary market for all of those.
Uncertainty in the market
The priority right now is, of course, the health of people around the world, as governments have sought to restrict movement and prevent health services from becoming overwhelmed with Covid-19 cases.
The crisis has naturally caused uncertainty and disruption in all parts of the wine sector.
Many merchants saw orders rise in March, but restaurants and tasting rooms have shut, auction houses have had to think about how to hold more sales online – with staff working remotely – and Bordeaux en primeur, which is still very important to many châteaux and merchants, has been shelved.
Uncertainty existed on the fine wine market before Covid-19 arrived, too.
The above-mentioned price drift on top Burgundy has also been seen on some top Bordeaux wines, including the five Left Bank first growths of Mouton Rothschild, Lafite Rothschild, Margaux, Haut-Brion and Latour.
Liv-ex said in an update, ‘Fine wine’s long-term fundamentals remain intact – arguably supply is diminishing at a faster rate than ever – but with so much uncertainty still at play, few are prepared to call the market’s direction from here.’
If you buy wine with one eye on future financial returns, then remember that this is best done as a long-term endeavour and with specialist knowledge.
In the UK, fine wine investment is not regulated by the Financial Conduct Authority. You should always buy from a known and reputable merchant, and be prepared to drink your cellar if prices go south in future.