Liv-ex Fine Wine Market Blog

How to get a Wine Spectator Award of Excellence...

...according to Robin Goldstein. See here.

August Market Report released

In summary, the August Report includes:

•  Trading Activity - record turnover for second month in a row

•  Liv-ex 100 – index down 0.6%

•  Major Movers – 2005s continue to decline

•  Critical Corner – Jancis Robinson on Lafite in Asia

•  Final Thought – Sauternes: undiscovered gold

 

Please note that if you are not subscribed to a Liv-ex Cellar Watch package you will not be able to view the full report. 

View the Liv-ex Cellar Watch package options here.

You can also view a previous report here.

 

Liv-ex 100 Fine Wine Index falls back slightly

The Liv-ex 100 Fine Wine Index has dropped slightly to 262.63, as of the 31st of July. This represents a 0.6% fall on the month previous. The year to date change is 9.5% and the year on year change 6.0%.

Liv-ex on the radio

BBC Radio 4 has been running a series on alternative investments, presented by Alvin Hall. The most recent edition of 'Alvin Hall's World of Money' deals with fine wine, with Liv-ex Director James Miles making an appearance. You can listen to the programme here, with James featuring towards the end.

Cos buys Montelena

The owner of the Bordeaux Super Second, Cos d’Estournel, has bought legendary Napa estate Chateau Montelena (pictured above).  Michel Reybier is rumoured to have paid in excess of $120 million dollars for the 19th century winery and its 200 acres of vines. The highly respected general manager of Cos, Jean-Guillaume Prats, has been named president of Montelena.

Decanter, Wine Spectator and Jancis Robinson have the full details.

It appears Reybier has bought Montelena at a rather advantageous time. As well as benefiting from the weak dollar, he gets an estate that is about to play the starring role in a new Hollywood film, Bottleshock. Somewhat ironically, the film is based on Montelena’s surprise victory at the ’Judgment of Paris’, the infamous tasting of 1976 in which Napa’s top wines beat the best of Bordeaux and Burgundy in a blind tasting.  Montelena Chardonnay 1973 was voted top white wine and  Stag’s Leap Cabernet 1973 the top red. Launched next month, you can watch the trailer here.  With the defeated party having now bought out the victor, perhaps a sequel is in order? ‘Bottleshock 2: Bordeaux bites back.’

Introducing the Liv-ex Claret Chip Index

Liv-ex is  launching a new index – the Liv-ex Claret Chip. Born of a desire to produce an index that is fully investable and transparent, it consists only of top-rated Bordeaux First Growths. Its components are chosen according to the index rules, rather than by committee, and there is no weighting for scarcity or production.

The rules are as follows:

• Left Bank First Growths only

• Components must score 95 points or above from Robert Parker (official erobertparker.com score only)

• Wines added when physically available and final bottle scores given (generally three years after vintage)

• Components removed after 15 years from vintage

• Components reviewed at 6 month intervals (30 June and 31 December)

As with the Liv-ex 100 Fine Wine Index, the components are priced with the Liv-ex Mid Price – the mid-point between the best bid and best offer on the Liv-ex fine wine exchange – the most accurate measure of real value available.

As you can see from the graph, the Liv-ex Claret Chip Index has outperformed other Liv-ex indices since January 2004 – the date the indices were rebased at 100 – with its current level of 298.53 some 13% above that of the next best performer, the Liv-ex 100.

An investment of £37,707 in January 2004, plus a further £21,812 to buy the proceeding vintages as they became available in bottle, would now be worth £121,716. A 104% return on investment. In addition, you would also have received £10,616 from selling off the wines from 1989 and 1990, increasing the return to 127%.  It seems that simply buying the most highly rated First Growths when they become physically available has been an excellent investment strategy. With the 2005 Bordeaux wines having joined the Liv-ex Claret Chip at the end of June, it will be the future performance of this vintage – which has only just arrived in bottle – that will largely decide if it continues to be.

Parker's Asian 100 pointers...

As we mentioned in a previous post, Robert Parker recently completed a tour of Asia, visiting Japan, Korea and China. For those interested in the region's culinary delights, he has since written an 18-part review of his trip, with full details of all that he ate and drank during a marathon run of official dinners. You can read the report in the Hedonist's Gazette section of his website (subscribers only).

The highlight of the trip was a dinner at the Great Wall of China - at which he gave five wines in a row the full 100-points. As he says: "The Great Wall was illuminated in both directions, and we could probably see 20-25 miles given the clarity that evening. It was a sight I shall never forget. Perhaps that ambiance as well as the historic nature of the event contributed to what some might consider generous scores, but these wines were absolutely out of control. After talking to many of the guests, I do not think my comments are exaggerated - it was just a perfect night - historic, and never to be forgotten."

Overall he gave ten wines 100 points during his trip - four of these having been upgraded from their official Wine Advocate rating. 

A word of warning, however:

The abbreviated, spontaneous, and visceral tasting notes and numerical ratings in this section should not be confused with professional, structured tasting notes from specific peer group tastings or cellar tastings. The Hedonist's Gazette notes emerge from casual get-togethers, with the food and company every bit as important as the wines. I do not consider these tasting comments as accurate or as pure in a professional sense, but they are part of a wine's overall record. In short, focus, so critical in a professional tasting without food or other distractions, is clearly on a different level in such "fun gatherings."    —Robert M. Parker, Jr.

Please see the table below for full details of the scores. The prices for all of these wines can be found by logging on to Liv-ex.com. (HG - Hedonist's Gazette Rating / WA: Official Wine Advocate Rating).

	Vintage	HG	WA
Guigal Cote Rotie Turque	1999	100	100
Torbreck Runrig	2003	100	99
Shafer Hillside Select Cab Sav	2002	100	100
Haut Brion	1989	100	100
Taylor	1998	100	98+
Yquem	2001	100	100
Beaucastel CDNP Hommage J Perrin	1998	100	100
Mission Haut Brion	1989	100	99
Montrose	2003	100	99
Guigal Cote Rotie Mouline	1988	100	100

Jancis on Lafite

Jancis Robinson MW has written an interesting article in which she discusses the reasons behind the phenomenal success of Lafite Rothschild in Asian markets. It is not just the grand vin that enjoys a great following in the region, but the second wine Carruades de Lafite as well as the company's large stable of generic Bordeaux brands. The article, 'The Legend of Lafite' is free to everyone and can be found here.

Robinson feels this popularity is not just to do with Lafite's taste: 'Its very dry, almost austere, racy, elegant style must be particularly difficult for newcomers to wine, and torture to drink with most of the food served in China – whether it be the sweet, sour, spicy foods of the various Chinese provinces, or the rich, truffle and foie gras-laden cuisine of the fancy hotels and restaurants at which most bottles of Lafite must be opened by China’s mushrooming millionaire class."

According to Ian Ford, head of Summergate of Shanghai, an importer of the brand, the actual reasons behind its popularity are quite simple: "They were in at the beginning. Lafite president Christophe Salin’s first trip here was in 1992. The word Lafite translates phonetically especially well,and the Lafite Rothschilds have been very attentive to the Chinese market. Baron Eric de Rothschild’s son is studying Mandarin. They also have a very good Chinese website.”

As Robinson states: 'So, there you have it folks. To develop a new market, get there first, have an easy name – and don’t forget the website."

Below is a selection of prices for Lafite and Carruades de Lafite. As you can see, both have performed extremely well, although it is the more affordable baby brother that has seen the largest increases.

	Vintage	Jun-07	Jun-08	% increase
Carruades de Lafite	2000	£680	£1,550	127.9
Carruades de Lafite	2005	£650	£1,271	95.5
Lafite	2005	£4,600	£8,900	93.5
Carruades de Lafite	2003	£720	£1,300	80.6
Carruades de Lafite	1996	£750	£1,350	80.0
Lafite	2000	£7,800	£10,750	37.8
Lafite	1996	£6,526	£7,400	13.4
Lafite	2003	£6,400	£7,200	12.5

July Market Report released

In summary, the July Report includes:

•  Trading Activity - exchange turnover up 117% y-o-y

•  Liv-ex 100 – index climbs 2.2%

•  Major Movers – back vintages play catch up

•  Critical Corner – Tuscany 2005

•  Final Thought – the 2005s join the Liv-ex 100  

Log in and find the full report under the Analysis menu (subscribers only). You can subscribe here.

Comparative performance

The Liv-ex 100 was mentioned in a rather interesting survey of the performance of different investment asset classes, compiled by a website concerned with the gold market.

Although the article is mostly concerned with the performance of gold, the writer, Pete Grant, makes a couple of interesting points:

“[The chart] is extremely troubling for most households. The two biggest losers are the asset classes where the vast majority of the net worth of most individuals is wrapped up, equities (stocks, mutual funds, 401ks, etc) and the family home.”

“We've included the Liv-Ex 100 Fine Wine index in this year's survey as a point of interest. Fine wine is an investment generally associated with higher net worth individuals, and its performance is reflective of the broader flow out of paper assets and into tangibles.”

For those interested in the performance of the fine wine market, we have recently updated the Liv-ex 100 web page, including full details of the wines that were removed at the end of June to make way for the Bordeaux 2005s. We have also added a page for our other main index, the Liv-ex 500. Please take a look.