Categories
Learn

Bordeaux En Primeur 2023: under pressure

Château Beychevelle Bordeaux 2023 En Primeur
  • Bordeaux 2023 largely met trade expectations for reduced pricing but only some releases have stood out as offering fantastic value. 
  • Price cuts slowed towards the end of the campaign, from 27.4% average discount in week one, to 23.3% in week four.  
  • Bordeaux’s ability to adapt does not only matter for its short-term sales but also for its long-term relevance in a highly competitive market.

Over the last month, our news coverage centered around the ongoing Bordeaux 2023 En Primeur campaign, examining critic scores and the investment potential of the new releases. 

Prior to the start of the campaign, Bordeaux châteaux faced considerable pressure from the trade to reduce release prices. Price cuts of around 30% were expected. In some cases, these expectations were met, with reductions of up to 40%. 

Now that the campaign is coming to a close, we weigh its success, considering the current state of Bordeaux’s investment market. 

En Primeur 2023 – back in vogue?

Critics of En Primeur contend that the system no longer meets buyer expectations, and the 2023 vintage wanted to rise to the challenge of defying the norm.

Partially it did. Wines like Lafite Rothschild, Carruades de Lafite, Mouton Rothschild, Petit Mouton, Beychevelle, Cheval Blanc and Haut-Brion delivered value and were met with high demand. 

Liv-ex reported immediate trades on its exchange for some of the releases. A developing secondary market is a positive sign for investors, although both Lafite Rothschild and Mouton Rothschild 2023 changed hands below their opening levels. 

According to Liv-ex, ‘it is clear there continues to be a market for Bordeaux En Primeur at the right price. What that price is, is perhaps less clear and will not always be agreed upon’.

The En Primeur golden rule  

For investors, an En Primeur release needs to be the most affordable wine among vintages with comparable scores to make sense. Where that isn’t the case, one should be cautious when buying. 

‘Our golden rule is the En Primeur price is the cheapest you can get. You can’t get anything cheaper. Generally speaking, it’s reasonably successful, not to say 100% successful, and then the price goes up.’ – Philippe Blanc, Château Beychevelle

‘En Primeur should be forever the lowest price you can find in your bottle. If you purchase later, it’s going to be more difficult to find and it’s going to be more expensive.’ – Pierre-Olivier Clouet, Château Cheval Blanc

The price decrease trajectory

The average price reduction among the top wines released in the first week of the campaign was 27.4%, going as low as 40% discount on the previous year.

In the fourth week of the campaign, this trajectory of offers slowed down. The average discount was reduced to 23.2%, the most significant being Château La Fleur-Pétrus 2023, down 33.6%, and the least significant, Beychevelle (-11.1%).

However, even though Beychevelle has seen one of the smallest discounts, it has still been one of the best value releases this campaign.

Beychevelle En Primeur 2023 Prices

The Bordeaux market slowdown

The pressure to reduce release pricing was largely owing to the current market environment. 

Over the past two years, Bordeaux prices are down 12%. Over the past five years, Bordeaux is one of the slowest growing markets, up 2.1%, considerably lagging behind Burgundy (25.2%), Italy (31.2%) and Champagne (45.5%). 

The market for top Bordeaux has suffered the most. First Growth prices are down 17.3% in the last two years, and 3.7% in the last five years.

Bordeaux En Primeur 2023 Prices

The region is also losing market share to its contenders. In 2023, Bordeaux accounted for 40% of the trade by value on Liv-ex compared to 60% in 2018.

This is further exacerbated by slowing demand. Liv-ex noted that today ‘there is more than three times as much Bordeaux for sale than the fine wine market is looking to absorb’.

The need to adapt

The 2023 En Primeur campaign has unfolded under the shadow of mounting pressure for Bordeaux to realign with market demands. The campaign highlighted the critical balance Bordeaux must maintain: offering wines at attractive prices for everyone in the chain. 

Successful examples from this year’s campaign, where price cuts coincided with high demand, underscore the potential for Bordeaux to adapt. However, the slower reduction rates towards the campaign’s end and varied responses from buyers reflect the ongoing debate about the optimal pricing strategy.

Ultimately, as Bordeaux grapples with these challenges, the 2023 En Primeur has underscored the importance of responsiveness to market dynamics. The region’s ability to adjust will not only determine its short-term sales but also its long-term relevance in a highly competitive and ever-evolving global wine market.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today. 

Categories
News

WineCap’s Head of Content named in Harpers Wine & Spirit 30 under 30

Harper's Wine and Spirit 30 under 30 2024

Harpers Wine & Spirit‘s prestigious 30 under 30 list has been unveiled, showcasing the top talents in the UK wine trade. We are delighted to announce that our Head of Content, Desislava Lyapova, has been included in the rankings. 

The publication received over 100 nominations, ‘with each prospective star deserving recognition’ for their leadership, commitment, communication, innovation, and sustainability initiatives. Jo Gilbert of Harpers noted the industry’s challenges, highlighting the importance of the passion and talent that the nominees bring to their roles.

The judging panel is comprised of esteemed industry figures such as Katy Keating (Flint Wines), Kim Wilson (North South Wines), Michael Saunders (Coterie Holdings), Miles Beale (WSTA), Rachel Webster (WSET), Regine Lee MW (Indigo Wine), and Jo Gilbert (Harpers Wine & Spirit). To make the shortlist, the judges convened over two days in separate groups, with scores averaged out. 

Desislava Lyapova stood out as the only wine investment specialist on this year’s list. During her tenure at WineCap, Lyapova has significantly boosted subscriber numbers through her PR efforts and comprehensive research reports, including those focusing on wealth management in the UK and US.

Desislava Lyapova Harper's Wine and Spirit 30 under 30

On the announcement, Alexander Westgarth, CEO of WineCap, congratulated Lyapova on her achievement:

‘I want to give a huge congratulations to all the winners of the Harpers Wine & Spirit 30 under 30, especially our very own Desislava Lyapova. 

Desi has made a transformational impact at WineCap over the past two years. I can’t imagine anyone else who could have helped us achieve what she has. We are extremely proud to have Desi as a key member of our team.’

Before joining WineCap, Lyapova honed her skills as a Senior Writer at Liv-ex, the global marketplace for the wine trade. At WineCap, she has been pivotal in shaping the editorial direction, producing our Quarterly and Regional reports, leading En Primeur campaigns, and managing freelance and in-house teams, all the while enriching the content of the Academy and News sections.

Categories
News

Bordeaux 2023 En Primeur: an overview of the current campaign

Cos d'estournel bordeaux wines
  • Three weeks into the Bordeaux 2023 En Primeur campaign, we examine the pricing trends of the releases so far.
  • In many cases, the current price cuts have highlighted the steady ascent of En Primeur release pricing in recent years.
  • The Bordeaux 2023 vintage is characterised by diverse critic scores and some high achievers.

This year’s Bordeaux En Primeur campaign kicked off early and rapidly gained momentum. The first 2023 releases landed in the last week of April, shortly after trade professionals had returned from the region and before the publication of most critic reports.

Pricing, as always, remained a central issue. Questions arose about whether châteaux would consider the current market conditions, whether anticipated price reductions would drive interest, and ultimately, whether the Bordeaux 2023 vintage would prove a worthy investment.

Three weeks into the campaign, several major châteaux, including First Growths like Haut-Brion, Mouton Rothschild, and Lafite Rothschild, have already launched their 2023 wines.

With most critic assessments now available and pricing trends becoming clearer, we delve into the details of the campaign so far.

Noteworthy releases

Château Léoville-Las Cases’ 2023 release marked a promising start to this year’s En Primeur. On April 30th, the wine was offered at a 40% discount on the previous year’s release. However, some older vintages still presented better value.

The first ‘great value’ release came from Château Lafite Rothschild in the same week. Its second wine, Carruades de Lafite, represented the lowest priced offering from the estate on the market today, playing on En Primeur’s original premise.

Similarly, Mouton Rothschild and Petit Mouton presented attractive opportunities for investors, released at 34.6% and 25.1% discounts on last year’s offerings respectively.

As a result, Liv-ex reported that both Château Lafite Rothschild 2023 and Château Mouton Rothschild 2023 have made their way onto the secondary market – although they have traded below their original release prices.

In many cases, the current price cuts have highlighted the steady ascent of En Primeur release pricing in recent years.

The average price cuts so far have been 21.5% compared to last year, with reductions ranging from 40% to none. Despite these cuts, many older vintages remain more affordable and often boast similar or better ratings, including those from 2019, 2017, and 2014.

Diverse scores and high achievers

The Bordeaux 2023 vintage has received a wide array of scores from leading critics, demonstrating a spectrum of quality across various appellations and estates.

Château Margaux consistently received high acclaim, with scores of 97-100 from both Antonio Galloni and William Kelley, and 99-100 from James Suckling. Neal Martin rated it as his second- highest wine of the vintage.

Another high achiever, Le Pin, received top marks with a perfect 100 from Peter Moser of Falstaff and 99-100 from Suckling. Château Montrose is also noteworthy, with a barrel range of 97-100 from Kelley and 99-100 from Suckling.

The critical consensus indicates a preference for wines from the Left Bank, which are noted to have fared better overall. The vintage is characterised by wines that lean towards a classic style, marked by their freshness and moderate alcohol content.

Despite the mixed nature of the vintage, there are several standout wines that show considerable promise. These wines are not only great for adding to a collection due to their potential to appreciate in value, but they also offer the kind of quality that makes them worth seeking out for those looking to enjoy fine wines in the years to come.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

Categories
News

Jeb Dunnuck on Bordeaux 2023 En Primeur

Chateau Montrose 2023
  • According to Jeb Dunnuck, ‘2023 is a good to very good, but not a great year for Bordeaux’.
  • He described most wines as ‘ripe yet not massive with more focused, linear profiles on the palate’.
  • Château Montrose received his highest barrel range of 97-100 points.

According to Jeb Dunnuck, ‘2023 is a good to very good, but not a great year for Bordeaux’. In his latest report, the critic delves into the growing season that shaped the vintage, comparisons with previous years, the En Primeur tastings and the current market for buying the new releases. Below we summarise his key findings. 

A heterogeneous vintage

An erratic growing season led to a divergence of styles between sub-regions and even neighbouring châteaux. Bordeaux 2023 witnessed ‘an incredibly successful flowering, huge mildew pressure in the spring, a slightly uninspiring summer that lacked sunlight, sporadic and very localised storms, and a heatwave at the end of August and September that sped up ripening and, according to many, saved the vintage’.

In terms of vintage comparisons, ‘some of the wines have a certain 2019-like sunny, easygoing style, while others can have a cooler, more structured, almost austere profile similar to 2020’. The common themes, according to the critic, are the ‘fully ripe aromatics and more focused, linear profiles on the palate’.

A Left Bank vintage?

Jeb Dunnuck pointed out that ‘at a high level, the Merlot is much riper and more opulent, and the Cabernets are slightly fresher and vibrant’. He suggested that the Left Bank had the upper hand in 2023, saying that ‘while there are unquestionably impressive wines from the Right Bank, the top Médoc and Graves seem to have another level of harmony and overall balance’.

In terms of overall quality and style, Dunnuck argued that Bordeaux 2023 ‘surpasses 2014, 2017, and 2021 yet is a solid step back from the incredible trio of 2018 through 2020, and most likely will be surpassed by 2022 as well’.

Jeb Dunnuck’s favourite Bordeaux 2023 wines

Dunnuck found potential for perfection in three wines, awarding a barrel range of up to 100 points. Château Montrose got his highest score (97-100), and he noted that ‘it has some similarities to the 2010 (or 2016?) and might end up being the wine of the vintage’.

Among the First Growths, only Château Margaux came close to perfection, with the critic saying that ‘it is clearly one of the greats in the vintage, and it actually reminds me a touch of the 1996, if not better’.

Regarding the 2023 Château La Mission Haut-Brion, Dunnuck remarked that ‘the overall balance paired with opulence here is something to behold, and it’s incredible to find this level of quality in the vintage’.

Jeb Dunnuck Bordeaux 2023

Should you buy Bordeaux 2023 En Primeur?

Dunnuck outlines four main reasons why you should buy a vintage En Primeur: ‘1) If it is a great vintage; 2) If the wines are expected to increase in price; 3) If quantities are limited; and 4) If you are buying wines in formats other than 750-milliliter bottles’.

He defined 2023 as a ‘a borderline case’. While ‘it’s not a truly great vintage […] there are a handful of gems in the vintage that will rival the best from 2016, 2018, 2019, and 2020,’ the critic said.

In terms of pricing, he observed that it seemed to ‘be coming back to 2019 levels’, still he reckoned that ‘the time of substantial early gains from purchasing En Primeur has largely sailed’.

Our En Primeur offers only highlight wines that present great value for money in the context of the market prices for vintages currently available on the market. These are wines that hold significant potential for future price appreciation, and where the scores match the price. 

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

Categories
News

Neal Martin’s top-scoring Bordeaux 2023 wines

Mouton Rothschild 2023
  • According to Neal Martin (Vinous), Bordeaux 2023 is a heterogeneous vintage riddled with paradoxes.
  • Only one wine achieved his highest score of 98-100 points – L’Eglise Clinet.
  • Martin suggested that ‘deep [price] cuts’ are needed for the campaign to work.

 Now that the En Primeur campaign has kicked off, critics have started releasing their Bordeaux 2023 in-barrel scores. Vinous recently published Neal Martin’s assessment of this ‘Dalmatian’ vintage, characterised by ‘spots of astounding quality’ but also ‘all manner of shortcomings’ – even in some of the region’s most famous names.

Bordeaux 2023 vintage overview

‘A season riddled with paradoxes,’ Neal Martin described Bordeaux 2023 as a heterogeneous vintage. According to him, it ‘would sit uncomfortably on a mantelpiece alongside 2016, 2020 and 2022’. However, the critic acknowledged that ‘some châteaux pulled out magical wines from their top hat, surpassing those aforementioned years in one or two cases’.

The keyword that defined 2023 is ‘classicism’, meaning ‘lower alcohol levels in the 13-something range,’ without the opulence of previous vintages.

Martin further noted that ‘the 2023s are relatively more tannic than we’ve become accustomed to, more linear and vertical, though endowed with greater fruit concentration than the 2021s’. He continued: ‘The best wines embrace these traits while maintaining sufficient fruit and grip, occasionally harking back to the kind of barrel samples encountered in the early days of my career, and I mean that in a good sense’.

Overall, Martin claimed that ‘despite the disparity in quality, it cannot be denied that it is bejewelled with a clutch of spellbinding wines’.

Top-scoring Bordeaux 2023 wines

Neal Martin’s top-scoring Bordeaux 2023 wines can be seen in the table below. Only one wine achieved the maximum barrel range of 98-100 points – the 2023 L’Eglise Clinet. Martin said that ‘it’s very harmonious and fans out brilliantly on the finish’.

Three wines received a barrel range of 97-99 points: Margaux, Lafleur and Le Pin. In his tasting note, Martin called the First Growth a ‘quintessential Château Margaux’ but noted that it ‘will require ten years in bottle to really show what it is capable of’.

Regarding Lafleur, he said it was ‘one of the few profound wines this vintage’. He described Le Pin as ‘so pure and refined, it seems to embrace and gently hug the senses’.

En Primeur and the global market

Despite the virtues of the vintage, the question of whether it will present value is pertinent in the current economic climate. For Martin, the ‘newborn wines blink open their eyes to survey a bleak economic landscape and finger-pointing between various factions as to who’s to blame’. He said that ‘deep cuts, not gestures, are the only thing that will open wallets’.

This week’s first releases have seen discounts of up to 40% on last year. However, back vintages of similar quality that remain available for less continue to challenge the En Primeur tradition.

Stay tuned for our analysis of the best value releases.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

Categories
Learn

What is En Primeur? A short guide for wine investors

En Primeur
  • En Primeur is a three-tier system, involving châteaux, négociants, and courtiers.
  • It allows buyers to purchase wines early, while they are still in barrel.
  • It provides an opportunity to secure allocations of highly sought-after wines that might appreciate in value when bottled.

En Primeur, also known as ‘wine futures’, is a practice rooted deeply in the traditions of the French wine market, particularly prominent in Bordeaux. This unique system allows investors and wine enthusiasts to purchase wines early, while they are still in the barrel, well before they are bottled and released on the general market. This method not only provides a fascinating glimpse into the future of wine investment but also plays a critical role in the financial ecosystem of wine production.

Historical context

The concept of En Primeur dates back over 60 years and has its origins in the post-World War II landscape. During this period, French wine producers faced significant financial challenges. To alleviate these pressures, influential wine merchants, known as négociants, began purchasing wine while it was still maturing in barrels. This arrangement allowed them to lock in supplies at a potentially lower cost and gave the châteaux much-needed cash flow to continue operations.

The En Primeur campaign

Traditionally, the En Primeur campaign kicks off in the spring following the harvest. Wine merchants and critics are invited to sample the young, unfinished wines, which are still in the process of aging. Based on these tastings, they make decisions about purchasing the wines, several years before the final product will be ready for consumption.

The price of the wines can be influenced by several factors, including the perceived quality of the latest vintage, historical brand positioning, critic scores, and market conditions. Once the wine is eventually bottled and ready, it is shipped to the buyers, typically between 18 and 24 months after the sale.

Advantages for investors

Investing in En Primeur can offer several benefits. Firstly, it provides an opportunity to secure allocations of highly sought-after wines, which might be difficult to obtain after release due to limited quantities and high demand. Moreover, purchasing wines at this early stage can be cost-effective, as prices for these wines might significantly increase by the time they reach the market, following bottling and release.

Historically, certain vintages have shown high returns. For instance, the 2008 vintage has risen 79% in value on average since release. Such potential for appreciation makes En Primeur an attractive option for investors looking to diversify their portfolios.

Risks and considerations

However, investing in En Primeur is not without risks. The market can be volatile, and there is no guarantee that purchased wines will increase in value. Recent campaigns have seen negative returns in some cases; for instance, the average price of the 2020 vintage is down 10% since release, of the 2017 – 13%. This means that the wines are now cheaper in the physical market.

Economic downturns, changes in consumer taste, and low critic scores can affect the investment’s outcome. Additionally, buyers commit capital upfront without a guarantee of the wine’s quality at bottling.

The cost of participation can also be a barrier. En Primeur often requires purchasing by the case, which can be prohibitive for smaller investors. Furthermore, there are storage costs to consider, as these wines often need to be aged further in suitable conditions before reaching their optimal drinking window, which can span from five to fifty years.

The global influence of Bordeaux En Primeur

Still, the attention that Bordeaux En Primeur commands, and on a global scale, remains unrivalled. No other region attracts the same level of hype among press and trade. This success has inspired similar practices in other wine regions worldwide, including Burgundy, the Rhône Valley, and even non-French regions such as Italy, Spain, and parts of the New World. These regions have adopted the En Primeur model to varying degrees of success, influenced by their specific market demands and the exclusivity of the wines offered.

For buyers to take fill advantage of En Primeur, keen understanding of the wine market and insight into vintage variations is required. As with any investment, potential investors should perform due diligence, consulting with experts and considering their financial position and investment strategy.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

Categories
News

Bordeaux 2023: navigating climate challenges and market realities

Bordeaux 2023
  • The first Bordeaux 2023 En Primeur releases are expected next week.
  • According to early reports, 2023 is a heterogeneous vintage shaped by climate extremes.
  • The market expects lower release prices that last year, given the broader economic context.

The trade is now in Bordeaux tasting the 2023 vintage En Primeur, and the first releases are expected already next week. The campaign is set to be fast-paced and shorter than usual, and the price forecasts suggest discounts of up to 30% year-on-year.

The vintage is shaping up to be one of measured optimism, tempered by both climate challenges and shifting market dynamics. In the following paragraphs, we delve into what we know so far in terms of quality, volumes and the broader context of Bordeaux 2023 in the global wine market.

A year of extremes

Weather patterns play a significant role in defining a vintage’s potential. According to Bordeaux correspondent Colin Hay for the Drinks Business, 2023 was marked by uneven climatic conditions, with a particularly challenging start due to persistent rain and mildew threats. However, a shift in the latter half of the season brought drier, warmer conditions, providing a much-needed respite, and aiding in the maturation process. This dual phase growing season has resulted in a heterogeneous vintage that, while not exceptional, holds the promise of producing some truly outstanding wines.

Gavin Quinney’s comprehensive harvest report further underscores the impact of the weather, noting that despite the high mildew pressure similar to 2018, the consistent warmth towards the end of the season slightly tipped the scale towards better quality. The blend of early challenges and a fortuitous Indian summer echoes the sentiments of resilience and cautious optimism.

Bordeaux 2023 – quality and quantity

Major critics are yet to release their quality assessments after tasting in Bordeaux this month. Initial harvest reports suggest that 2023 is a good but not great year that may fall behind 2016, 2018, 2019 and 2020, but above 2017 and 2021 in terms of quality.

Gavin Quinney wrote that ‘everything points to what might be called a ‘classic’ Bordeaux vintage, one where the better wines show fruit and finesse over structure, richness and power’. He further noted that 2023 was ‘a year for fraîcheur (freshness) and équilibre (balance), brought about by terroir, gentle extraction, slightly lower alcohol and bright acidity’.

However, the varied impact of climate conditions has led to heterogeneity in grape quality, particularly between those estates that successfully managed mildew and those that did not.

When it comes to volumes, the overall production in 2023 was 384 million litres, below 2022 (411) and slightly above 2021 (377). However, this is considerably lower than the annual average of 487 million litres of the previous decade (2011-2020).

And while yields for the most prestigious appellations were comparatively generous, the volume of wine that may come to the market En Primeur might not be. Liv-ex noted that ‘many estates are reducing the amount of wine offered En Primeur in favour of drip-feeding the market with more mature vintages’. The average stock reduction in the already low-quantity 2021 vintage, for instance, was 30%.

The Bordeaux market and the role of En Primeur

The Bordeaux market has witnessed significant fluctuations over the past few years. The Liv-ex Bordeaux 500 index is down 13.8% in the past year, with many collectible wines seeing even sharper declines.

This trend underscores a shifting landscape where Bordeaux, despite maintaining a large share of the fine wine market, now competes more directly with other prestigious regions like Burgundy and the Napa Valley.

With the unfolding En Primeur tastings, the system itself faces scrutiny. Historically, En Primeur has offered an advantageous opportunity for all involved. While this system has benefited from ensuring early cash flow for producers and allowing buyers to secure potentially valuable wines at favourable prices, recent trends show a misalignment in pricing strategies. Recent back vintages are often available in the market at prices equal to or lower than release, raising questions about the future of the system.

Bordeaux 2023 – pricing and investment potential

Given the backdrop of a declining market and the historical data suggesting that many wines do not immediately appreciate in value post-release, pricing will be a crucial factor for the 2023 vintage. Industry insiders and potential investors will be looking closely at how châteaux price their offerings, seeking a balance between fair value and market dynamics. The hope is that producers will heed the market’s call for more reasonable pricing to reinvigorate interest in En Primeur purchases.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

Categories
Report

Q1 2024 Fine Wine Report

Q1 2024 Fine Wine Report

Our Q1 2024 Fine Wine Report has now been released. The report offers a comprehensive overview of the fine wine market in the last quarter, including the impact of interest rates and geopolitical risks, the best-performing wines and regions, and analysis on the rising popularity of non-vintage Champagne as an investment.

Report highlights:

  • Mainstream markets rallied in Q1 2024, driven by resilient economic growth and expectations for future interest rate cuts by central banks.
  • The first green shoots started to appear in the fine wine market towards the end of Q1.
  • Fine wine prices (Liv-ex 100 index) experienced a smaller decline of 1% in Q1, compared to a fall of 4.2% in Q4 2023.
  • Italian wine enjoyed rising demand amid a flurry of new releases, including the 100-point Sassicaia 2021.
  • A number of Champagne labels that experienced consistent declines last year have started to recover, including Dom Pérignon, Salon Le Mesnil, and Pol Roger.
  • The Burgundy 2022 En Primeur campaign delivered high quality and quantity, with about 10% of producers reducing pricing year-on-year due to the challenging market environment.
  • China lifted tariffs on Australian wine after more than three years.
  • Critics and trade are now preparing for the 2023 Bordeaux En Primeur campaign, which will dominate the news in Q2 2024.

Click below to download your free copy of our quarterly investment report.

Categories
News

Fine wine market trends amid economic shifts in Q1 2024

Fine wine market

The following article is an extract from our Q1 2024 Fine Wine Report which will be published in full later this week.

  • The industry benchmark Liv-ex 100 index fell 1% in Q1 2024, a milder decline than the 4.2% dip at the end of last year.
  • Bond and equity markets rallied in anticipation of interest rate cuts by major central banks.
  • Over the past twenty years, the Liv-ex 1000’s most significant year-on-year dip was only 15%, less severe than that of major stock indices like the S&P 500 (-45%).

After a challenging start to the year, the global economy is showing signs of resilience and potential growth. As we moved past the first quarter of 2024, both bond and equity markets rallied in anticipation of interest rate cuts by major central banks. Notably, sectors like the fine wine market are expected to benefit from these shifts, although the impact has not yet materialised.

The fine wine market in Q1 2024

The industry benchmark, Liv-ex 100 index, saw a modest decline of 1% in Q1 2024, an improvement from the 4.2% dip observed at the end of the previous year. This index experienced a slight drop of 0.3% in January and 1.1% in February but recovered in March with a 0.4% increase, marking its first rise in twelve months. Influential movers included Promontory and Dominus from Napa Valley, Super Tuscan Sassicaia, and Clos des Papes Châteauneuf-du-Pape. Despite this recovery, the fine wine market’s performance still lags behind mainstream financial markets.

Comparing mainstream markets

Mainstream indices such as the Nikkei 225 and the S&P 500 have shown remarkable strength over the past year. Their annual growth from March 2023 to March 2024 ranks in the top 10% of year-on-year periods this century.

However, bond and equity markets experienced heightened volatility at the beginning of the year, due to geopolitical risks like the Middle East conflict and ongoing uncertainty around interest rates. This confluence of factors boosted the safe-haven asset Gold which has extended its run on buying momentum.

Liv-ex 100 vs mainstream markets and Gold

A decade of the Liv-ex 1000 index

Celebrating ten years since its official launch in January 2014, the Liv-ex 1000 index provides two decades of insight into fine wine prices, encompassing a wide range of regions including Bordeaux, Burgundy, Champagne, the Rhône, Italy, and the rest of the world (Spain, Portugal, the USA, and Australia).

Over the past twenty years, while the Liv-ex 1000 has seen 64 year-on-year declines, its most significant drop was only 15%, considerably less severe than that of major stock indices like the S&P 500, which once fell by 45%.

On the upside, the Liv-ex 1000’s best annual performance showed gains of 38%, comparable to those of major indices like the FTSE 100 and the Dow Jones, and its average growth rate of 8.4% is higher than many mainstream markets, only trailing behind the S&P 500.

Liv-ex 1000 vs mainstream markets

As the global markets navigate through turbulent waters, the nuanced performance of the fine wine sector, detailed in our comprehensive Q1 2024 report, continues to offer valuable perspectives on both the challenges and opportunities that lie ahead.

Stay tuned for the full report later this week.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

Categories
News

Finding value in the Bordeaux second wines

Lafite Rothschild
xr:d:DAE6H_YT7e4:162,j:6193999689458374237,t:24040906
  • The average First Growth case price is £5,300, while second wines come in at £1,941.
  • Le Clarence de Haut-Brion is the most affordable second wine.
  • Le Petit Mouton has been the best performer over the last decade.

Following our article last week, which examined the performance and value of the Bordeaux First Growths, we take a look at the data behind their second wines.

What are second wines?

Most Bordeaux châteaux produce more than one wine each vintage, and some might make three or four. Each château’s second wine draws on the expertise and knowledge that goes into the Grand Vin. Generally, second wines are made with fruit from younger vines, or vines and parcels that are not quite up to the quality of the Grand Vin in any given year.

However, they are often produced using grapes from the same vineyards as the flagship wines, receiving the same technical treatment in both vineyard and winery. Considerably less expensive than their siblings,  second wines represent a particularly attractive and accessible option for investors.

Second wines – at what price?

Second wines prices and scores

White the average First Growth case price is £5,300, second wines come in at less than half the price (£1,941).

Interestingly, prices of the first and the second wine are not always rising in unison. For instance, Château Latour is the second most expensive Grand Vin after Château Lafite Rothschild. Les Forts de Latour, however, sits directly in the middle, with Le Petit Mouton and Carruades de Lafite being pricier.

When it comes to value for money, Le Clarence de Haut-Brion has the lowest price per point of £16, similar to its Grand Vin. As examined last week, Château Haut-Brion is the most affordable of the First Growths, while also boasting the highest average Wine Track score. Yet while Le Clarence is also the most affordable of the second wines, its Wine Track score is lower.

But looking purely at scores is not the best indicator of value when it comes to the second wines. Second wines differ from the Grand Vins, as the dominant relationship is between price and age, not price and quality. As time passes, their value rises, following the traditional wine investment dynamic.

Moreover, this group of wines is often bought by collectors and investors as they present access to a brand. Though suitable for aging, these wines are built for earlier consumption, offering an alternative to opening bottles of the Grand Vin as soon as they are delivered.

Performance of the second wines

In the last decade, Le Petit Mouton de Mouton Rothschild has been the best-performing second wine, up 111.9%.

The most affordable, Le Clarence de Haut-Brion, has delivered the second-best returns of 76.2%. It has been followed by Carruades de Lafite (64.7%) and Pavillon Rouge (63.1%).

Second wines performance

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.