MD & FOUNDER OF FINE WINE MERCHANT BORDEAUX INDEX
BACK in late June, our analysts presented me with their prognosis for 2009 Bordeaux. The en primeur campaign at the time had already become the largest in history and despite high initial releases, prices were still going up extremely fast in the secondary market. Activity, however, was still ferocious so we had to make a decision regarding our position.
We had looked at a raft of previous vintage data and mapped price curves for all the great vintages for several years after release.
Across a representative selection of top wines, one of the observations was that in the longer term, the 2009 vintage was likely to trade at a discount of around 20 per cent to the 2000 vintage.
Looking back, with those same 2009 wines already at 12 per cent less than June prices, this was a pretty good call. More interestingly though, a full quarter of trading since has allowed us to further extrapolate and refine the picture a bit. Let’s have a look:
For several years, it’s been obvious that the market has assigned premiums to certain chateaux, the values for which are both measurable and relatively stable.
Taking one of the more obvious and important pairings (that of chateaux Lafite and Latour), we can see that top vintages of Latour trade at a discount of around 35 per cent to Lafite over time. Given that at release, the two chateaux tend to price around the same level this implies a value discrepancy that should be exploitable.
Using our current offer prices, we can work out three separate price targets for the two wines. Let’s start with Latour 2009 (current price £12,500):
● 80 per cent of the 2000 Latour gives a predicted price of £8,400.
● 65 per cent of the 2009 Lafite gives a predicted price of £8,125.
This looks pretty bearish for Latour, right? Hang on.
Applying the same relationship for the pair of 2000 vintages, the normal 65 per cent doesn’t hold. Indeed our implied value for Latour 2000, based on the 65 per cent prediction is actually all the way up at £12,350. Plugging that into our vintage comparison for 2009 gives us Latour 2009 at £9,880. Still pretty uncomfortable reading, no doubt, but somewhat more realistic short term.
What about the Lafite 2009? Well 2009 Lafite is already cheaper than Latour (current offer £12,500), very much against a well established trade history. In addition, Lafite 2009 is substantially outside the predicted discount to the 2000.
Indeed at the 80 per cent number we discussed earlier, the price target for the 2009 Lafite would be up at £15,200. More conservatively, using the mean of the three target prices for Latour 2009, our chateaux relationship gives the figure of £13,540.
So what does this tell us? Well for one, we’re happy we did that work back in June. More importantly, we’ve got a nice trade call for today. Latour 2000 – we like it, its younger brother, the 2009, much less so.
Lafite 2009? Whichever way we look at it, we like it and after all the craziness of the 2009 campaign, it’s a touch ironic that its most-hyped wine conversely appears one of the best value.