Q4 2012 Fine Wine Market Report

One month into the 4th quarter of 2012 and it’s time to take stock of the situation. Looking around the trade, we have reason to be cautiously optimistic about the fine wine market. Whilst we have seen a general plateauing of prices across the Bordeaux-board, it would seem that the Q3 slide in prices, primarily led by the slump in First Growths prices, has ended. Below are the top points worthy of consideration as we go into the festive season and 2013.

The 2012 St. Emilion Classification.

The INAO (Institut National des Appellations d’Origine) reclassification of St Emilion Grands crus, on the 7th of September, led to the promotion of several properties. Two of which stuck out from the crowd: Chateau Pavie and Chateau Angelus, were both elevated to “Premier Cru Classe A” status. These two are now on par, in the eyes of the INAO, with Chateau Cheval Blanc and Chateau Ausone; whilst Pavie and Angelus have yet to raise their prices themselves to meet their new classmates, you can be sure Gerard Perse will consider the Chateau’s new position for the 2012 release. Interestingly enough, speculation from the trade and wine-owners has already happened with Pavie, where prices across the best past 3 vintages has already started to rise, whilst Angelus has mostly levelled.

The clear effect of the 2012 St Emilion Classification. Pavie Composite (2000, 2005 & 2009) v.s. Angelus Composite.

Château Calon Segur Sold.

Château Calon Segur has been sold to Suravenir’s life-insurance subsidy Credit Mutuel Arkea, in a similar move to Chateau Montrose’s sale in 2006, with JF Moueix of Chateau Petrus again bringing his expertise to the new business venture. Expect to see a similar rise in quality and prices, as with the likes of Chateau Pichon Baron’s purchase by AXA Millesimes, back in 1987, as JF Moueix continues the sterling work of the late Mme Gasqueton.

JG Prats to Leave Château Cos d’Estournel.

JG Prats is leaving his role as managing director of Chateau Cos d’Estournel. Jean-Guillaume is heading to LVMH, and whilst his departure is not until 2013 you can be sure his legacy of rising prices and quality will continue at Cos d’Estournel.

Bordeaux Prices Continue to Level Off.

Despite the slide in Q3 Bordeaux prices, the past 3 months has seen a levelling in the Bordeaux market as wines either reach their own lower limit or their appeal at their respective price point levels off. Amongst the First Growths, Haut Brion has taken the biggest slump in prices since August, with the likes of the 2003 falling over 6% to today’s £2795, whilst Lafite has seen the least price change, the 2005 for instance holding steady at £7450.

2009s Remain in Demand.

Beyond the First Growths, 2009 Bordeaux continues to be in demand with Ponet Canet, Cos d’Estournel and Clos Fourtet all being sought after, primarily we suspect due to Robert Parker’s 100 point score, coupled with the higher availability. The general perception of the vintage is one of quality and longevity and those yet to get on the boat are sorely advised to; now that we’ve seen the post-arrival realignment in prices we expect more stability for this vintage and resistance to extreme price volatility that has previous beset this vintage.

New EIS Companies and a new Fund to Launch.

Outside of actual market prices, there are several things happening that we see as healthy indicators for the future of the fine wine market. Firstly, several new wine companies have sprung up in the past months here in the UK, taking advantage of the government’s Enterprise Investment Scheme, and as they begin trading in earnest demand/activity and liquidity will increase. Secondly, whilst not yet corroborated in the press, we’ve heard news of another new wine fund soon to be launched, undoubtedly taking advantage of the perceived bottoming of Bordeaux prices and the expected demand from newer emerging markets as the global economy improves – Fine Wine is still a long-term investment for many.

The Coming Months.

Finally looking ahead, to both Burgundy 2011 En Primeur and Bordeaux 2012 En Primeur in the new year, we’ve heard mixed opinions about both vintages, but we’re keen to see how these wines fare. 2011 Burgundy coming off the back of two previous excellent vintages, and Bordeaux 2012 having the potential to be excellent, but with Chateau owners comparing it to both 2002 and 2006.

As the trade rolls into the festive season with the usual offers of Champagne, Port and drinking Claret, we expect to see another surge in demand in the new year as the East prepares to celebrate Chinese New Year and the Year of the Snake.