Investing in Bordeaux: Trading buoyant, progress steady

Price gains among Bordeaux wines have been more modest overall than for top Burgundy and Champagne in 2022, but the region has still seen plenty of trading activity.

Liv-ex, a global marketplace for the trade, said its Bordeaux 500 index was up by 4% year-to-date at the end of July, versus increases of 25% and 16% on the Burgundy 150 and Champagne 50 indices.

Miles Davis of Wine Owners exchange said Bordeaux’s more subdued overall performance versus other regions has been a trend in the past decade.

Prices have still risen in a strong market in recent years. Liv-ex said in August that the Right Bank 50 index – featuring Châteaux Ausone, Cheval Blanc, Lafleur, Le Pin and Petrus – was up 28% over three years, with rises of about 16% for its Bordeaux Left Bank and First Growth sub-indices.

Bordeaux Index reported Bordeaux prices up by 5% in the six months to 30 June 2022, although some wines outperformed this. It said a difficult 2021 vintage en primeur campaign could have been a factor in limiting momentum recently.

Trading has been good, though. ‘Outside en primeur, Bordeaux continues to see strong demand,’ said merchant Goedhuis & Co’s second-quarter 2022 report. It highlighted interest in ‘drinking vintages’.

Investment insight

Bordeaux Index reported strong trading on its LiveTrade platform, notably for Château Haut-Brion 2016, the 2009 vintages of Cos d’Estournel, Lafite Rothschild and Petrus plus Mouton Rothschild 2018 and Château Margaux 2016.

Château Palmer may be one to watch in a loosely defined group of Bordeaux ‘super second’ properties (see chart, below). The Margaux-based third growth was set to re-release its 2012 vintage in September, as part of its ‘10 years on’ release strategy. ‘Palmer has been very effective at carving out its own part of the Bordeaux market,’ said Matthew O’Connell, CEO of LiveTrade. Backed by a biodynamic approach and the quality of its wines, Palmer’s star has risen. Total Palmer sales on LiveTrade increased by 24% last year, and the 2018 vintage ‘recently experienced a surge in sales’, Bordeaux Index said recently.

On the Right Bank, Château Figeac has seen price rises on recent vintages and is tipped for promotion to premier grand cru classé A status in the forthcoming 2022 revision of the St-Emilion Classification. Back on the Left Bank, Goedhuis & Co said recently that Château Léoville Las Cases, St-Julien was one to watch after news this year that Jean-Guillaume Prats was joining the estate’s owner Domaines Delon. Prats’ previous roles include CEO at DBR Lafite and director at Cos d’Estournel. Liv-ex said Léoville Las Cases 2014 and 2016 rose in price by 32% and nearly 20% respectively in two years to July 2022.

O’Connell said selected ‘super seconds’ can be part of a wider Bordeaux investment portfolio, such as alongside top-tier Bordeaux, if there is a compelling reason to focus on them. But he said some release prices in this segment have been challenging. He said the top-traded super second estates on LiveTrade by value year-to-date were Figeac, Cos d’Estournel, Lynch-Bages, Palmer and Pichon Comtesse.

Undervalued vintages have also continued to be a talking point. Goedhuis said top-scoring 2015s were worth considering. ‘As a vintage it is drinking beautifully already, and prices are likely to rise as word gets out.’

O’Connell said 2017 looks interesting. ‘Scores are good,’ he noted. For context, he added: ‘We trade huge volumes of 2016, 2018 and 2019 [vintages], and we expect that to continue.

Monitor: latest sales activity – Bordeaux

Some individual ‘super second’ wines have risen in price by more than 10% so far in 2022 (see chart above). LiveTrade CEO Matthew O’Connell said the examples were in line with top-performing first growth wines year-to-date and showed the Bordeaux market moving ‘quite homogenously this year’.

That said, Petrus 1998 jumped in price by 28% on LiveTrade in the six months 30 June. In July, Liv-ex reported a record price on its marketplace for Petrus 2009 in 75cl bottle format, with a trade at £50,152 (for 12x75cl in bond).

At auction, ‘there’s a real focus on mature vintages’, said Charles Antin, head of wine auction sales at Zachys. He told Decanter: ‘There was a time when people liked the idea of buying young wine, at auction, for the cellar, and while some people certainly still do that, the real demand is for the mature vintages.’

He continued: ‘Legendary wines such as 1982 first growths, 1989 Haut-Brion and so forth have really been impervious to small market fluctuations,’ adding that ‘people are still chasing 1959s and 1961s’.

The impact of a stronger US dollar and reports of greater caution in the wider market may be factors to track in the coming weeks.

Tasted and rated for Decanter Premium

Château Margaux, Margaux 1CC, Bordeaux 2009

This wine justified its high reputation in a recent Château Margaux masterclass at the New York Decanter Fine Wine Encounter in June. ‘A winning combination of power and elegance here, showcasing the concentration of the year in the full, ripe and muscular fruit and tannins, balanced by racy acidity and supreme tension,’ said Decanter Premium editor Georgina Hindle after tasting the Margaux 2009 (£3,820 per 6x75cl in bond, Bordeaux Index). She gave it the full 100 points. She also gave 96pts to Château Margaux 2004 (£4,368 per 12x75cl in bond, Bordeaux Index), describing it as ‘a superb wine at an excellent time to drink but still with ageing potential’.

The Bordeaux Index View

Fine wine & spirits specialist Bordeaux Index kindly sponsors this section of Decanter, and provides its view on the market here every issue. It can be found at bordeauxindex.com

Bordeaux as a region has performed respectably in 2022 so far, with market prices up 6%, but somewhat overshadowed by Burgundy and Champagne, where prices have seen very significant ongoing gains. Despite the 2021 vintage en primeur campaign being largely marginal from a pricing perspective, the trading momentum for the region on Bordeaux Index’s online wine trading platform LiveTrade has remained strong.

Price appreciation has been reasonably balanced across châteaux, unlike in 2021 where for example Lafite and Figeac were very notable outperformers. Trading activity remains quite concentrated towards first growths and top Right Bank names, and within the super seconds certain châteaux see much more activity, usually where there is a particular run of quality and en primeur pricing has been more consistent.

We still believe Bordeaux is due an upwards surge – in an inflationary environment where there is a strong focus on brands, first growths and prominent super seconds simply look too cheap for their quality, even taking into account relative rarity.

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