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Liv-ex Lafite 09 trade causes outrage – and acceptance

The ‘short-selling’ of Chateau Lafite 2009 on Liv-ex has outraged some wine merchants, leaving others in the industry shrugging their shoulders.

The latest vintage of Lafite is being offered on the trading platform for £11,750 a case. The actual sale has gone through for £10,000.

The wine has not yet been released by the chateau.

Lafite’s second wine Carruades de Lafite, also not released, also appears, with a bid for £1000 a case.

Wine merchants like Sam Gleave of Bordeaux Index and Oliver East of Farr Vintners condemn the selling of a wine that is not yet offered by the chateau as ‘reckless’ and ‘a disgrace’.

Others, like Miles Davis of specialist wine fund managers Wine Asset Managers, see it as inevitable – and even historic.

‘This is the first time we have officially seen someone short-selling wine. It’s a natural continuation of the development of the wine market as an asset class,’ he told decanter.com.

Merchants consider that short-selling of wine is irresponsible because it encourages the chateaux to increase their prices.

Gleave said, ‘Wine merchants have a duty to their clients – it takes making a quick buck to the extreme.’

Berry Brothers’ wine director Simon Staples conceded that such a move was ‘inevitable’ but he said he was ‘disappointed’ Liv-ex should be allowing such trades. He also agreed it was unlikely the trade would in reality affect the release price of the wine.

Liv-ex remains unrepentant. This sort of trading ‘would not raise an eyebrow’ outside the wine trade, it says on its blog, adding that it is vital for ‘price discovery’ in most markets.

‘Indeed, many involved in en primeur have long complained that the chateaux regularly set prices with no reference to the market.’

Liv-ex stresses the trade is guaranteed. ‘There is no question of this trade not being fulfilled. As any member of Liv-ex will tell you, our due diligence on en primeur suppliers is extremely rigorous. Most of our en primeur supply is secured with bank guarantees and all suppliers are confined to strict limits.’

As for Bordeaux, the trade has caused few ripples. Laurent Ehrmann of negociant house Barrieres Freres told decanter.com it was all part of the ‘circus’ surrounding Lafite and Carruades.

Their prices are expected to go very high indeed this year because of both wines’ popularity in China.

Ehrmann said, ‘It has little impact here – it is definitely not getting a lot of attention. The whole circus surrounding Lafite and Carruades has become so crazy, and this is just another sign of it.’

Moreover, he said, the price of Carruades had reached ‘unsustainable levels’ anyway, and ‘Most reputable merchants are realising that they can’t honourably recommend [its] purchase any more.

Corinne Mentzelopoulos of Chateau Margaux said she had not been aware of the Lafite trade but found it ‘very interesting.’ Margaux will release its 2009 before the end of June.

Other wines which are not yet released being offered or bidded for on Liv-ex include Chateau Cos d’Estournel, offered at £3,000.

There are bids for Chateau Latour at £4,275, Margaux at £3,330, Mouton at £3,200 and Haut Brion at £2,525.

Liv-ex supplies Decanter’s Fine Wine Price Watch and the Decanter Fine Wine Tracker on decanter.com with monthly prices fetched by selected fine wines at auction. These prices have no relation to the merchant prices quoted on Liv-ex.com.

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Written by Adam Lechmere

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