2009 Investment Update
FIRST PUBLISHED SOUTH CHINA MORNING POST, MAY 2012
You don't have to go further than Causeway Bay to see the effects of the recent pricing rout with investment-grade Bordeaux wine. The pricepromotions this week at bordeauxetc on Leighton Road include hefty (up to 30%)discounts on Lafite Rothschild 2008, Forts de Latour 2003 and Carruades deLafite 2000. And it’s fair to say that the 2009 vintage is attracting more thanit's fair share of blame for pushing the market with such high prices that it broke its back.
So, is this a fair assessment? And should investors be cutting their losses or holding on? As a brief reminder, for the first time in 2009, Chinaand Hong Kong made up the second largest group of overseas tasters (after theEnglish) at the annual wine futures week in Bordeaux, and flush from theintroduction of a zero tax environment, and from the undisputed quality of thewines, they went on a spending spree.
What happened next, says Simon Tam of Christie’s Hong Kong,supersedes any wine wisdom, and follows simple consumer behaviour. ‘When the2008s came out, some Hong Kong merchants did well, and people who bought the wines en primeur saw how enjoyable and profitable the system could be. When 2009 came along, many more people moved in, and a few made good returns fairly quickly. But by 2010, most consumers were saying ‘hang on, prices are going up beyond recognition, and we know we can buy ready-to-drink wines for less.’
The fundamental mistake the Bordelais made with both 2009 and 2010pricing was to assume that Hong Kong and Chinese clients are different from anybody else. ‘They’re not – they are lifestyle-minded wine lovers, who are behaving logically,’ continues Tam. ‘Most wine drinkers who are prepared to pay hundreds of dollars a bottle are in their 40s and 50s, and don’t want to be buying wine for their children to drink in 25 years – they are true wine lovers, who want to enjoy the wines themselves. So why buy recent vintages when you can get older wines for the same money?’
Yann Schyler of Bordeaux wine merchants Schroeder & Schyler says vintages such as 2009 always pose a risk for investors. ‘You may make a small profit on release from the top years, but the wines are so expensive, that the chances to make a decent profit quickly are limited. And if too many wine funds are holding on to them, then not enough corks are being popped to push up the scarcity factor.’
Depending on what you bought, some figures make for painful reading.2009 First Growths are overall down around 13% from their opening prices, and the 2010s down around 15%. Lafite, as the former star performer, has inevitably taken the biggest hit - down 32% for the 2009 and down26% for 2010. Doug Rumsam of Bordeaux Index sees a dubious investment outlook for both years. ‘Prices remain significantly above comparable older years (think Margaux 2009 at £7,600 per case against the 1996 at £5,250 or the Mouton 2010 at £7000 against the 2005 at £4800. There seem to be even greater risks for the 2010s, as they are not yet physically in bottle, therefore trade is limited –and we expect buyers to cut their losses when given the opportunity.’
Most commentators say that 2009 was saved by critic Robert Parker’s in-bottle scores, where he gave a full 19 wines his perfect 100points, the highest number for any vintage. 'The raft of 100 pointers pulled up the prices dramatically for the Super Seconds,' says Rumsam, 'with Pontet,Montrose, Poyferré all increasing by 50%. Parker has made it clear this will not happen again in 2010.'
Florence Cathiard, owner of Chateau Smith Haut Lafitte and recipient of one of Parker’s 100-points, has seen the benefits first-hand. ‘Anyone who thinks Parker’s influence is over should have been having breakfast with me the morning after we got our 100 points. The price of the 2009 Smith Haut Lafitte quadrupled overnight.’ Cathiard, in common with many Bordeaux chateaux owners ,has a slight preference for her 2010 ‘as it seems more faithful to its terroir, even if it doesn’t have the instant gratification of the 2009s.’
Veronique Sanders at Chateau Haut Bailly is also clear that 2009 may not be the peak that many people believe. ‘The 2010 seems to have all the same qualities as the 2009, but more so. Looking purely at the analysis, we have more alcohol, tannins and acidity in 2010, suggesting that it will be the vintage with the greatest ageing potential.’
'No one is doubting the quality of these wines,' says Schyler,'But their very longevity makes it clear that they should have been priced for the long-term - with profits intended to be made slowly and surely, as they keep on proving their brilliance in bottle.'
What is certain is that just as it was herd mentality that made the prices go up, so is it herd mentality that is dropping them back down. And squabbling about it may be obscuring the real brilliance of the 2009s. Renowned critic Jancis Robinson, MW, points out, ‘The exceptional thing about 2009,apart from its combination of ripeness and balance, is its consistency. There are so many wonderful wines right down the price ladder – Crus Bourgeois in particular – that you really don’t have to pay a great deal to experience the excitement of 2009.’
Two good-value 2009s that are drinking beautifully now…
Petit Haut Lafitte, Pessac Leognan 2009 – The second wine of Chateau Smith Haut Lafitte could well reward a few more years in bottle, of course, but it’s a superb wine full of generous fruit that is tasting delicious right now. Better than many older vintages of the first wine of this property. (Bordeaux Index, £220 per case)
Chateau Poitevin, AOC Medoc 2009 – Just won the annual Coupede Cru Bourgeois in Paris, this seductive wine has a light toasting of grilled oak, and good fresh fruit. (Fine &Rare, £67 per case)
Red: Beausejour Duffau Lagarrosse, Bellevue Mondotte, Clinet, ClosFourtet, Cos D’Estournel, Ducru Beaucaillou, L’Evangile, Haut Brion, Latour,Leoville Poyferre, La Mission Haut Brion, Mondotte, Montrose, Pavie, Petrus, Le Pin, Pontet Canet,Smith Haut Lafitte
White: Pape Clément blanc