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Bordeaux blue chip boom: artificially inflated?

As prices of blue-chip Bordeaux continue to rise on the back of fevered trade activity, commentators have accused merchants of artificially inflating the market.

With sales, and prices, of top-end Bordeaux rising, one industry source said: ‘Most of the interest is a result of merchants emailing their clients about SIPPs [the news that, from April 2006, providers of Self-Invested Personal Pensions will be able to include wine in pension funds]. It is not difficult to push up prices by warning how rare certain wines will become.’

Merchants across the UK are reporting unprecedented levels of interest in first- and second-growth claret and top-end Right Bank wines. The reasons for the boom are debatable, however.

Feverish interest over SIPPs (Berry Bros said on its website that it ‘fully expects the quantities of the top blue-chip wines… to reduce substantially’) has affected prices, with Berrys reporting that the 1982s have doubled in price since the summer.

Johnny Wheeler of Lay & Wheeler said there has been major interest in the top growths from 1982, 1986, 1990 and 1996, as well as Pomerol 1998s.

However, the lion’s share of recent interest comes from outside the UK, shooting down the theory that SIPPs speculation is wholly responsible. Many merchants report constant, increased demand from mainland China and Russia.

Pensions providers remain doubtful as to whether they will include wine in their SIPPs. Pensions consultant David Seaton of James Hay, the UK’s largest SIPPs provider, which will decide whether to include wine in March, says ‘a lot of UK providers won’t want to include wine’.

Legislation on pensions is still in draft form. Clarifications from the government are expected by the end of 2005.

Written by Adam Lechmere

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