My April 2012 Report is out!!

 Summary

§         En Primeur 2011 is starting earlier this year; first releases from the smaller chateaux have already begun and the Robert Parker ratings expected in a few weeks.

§         Overall we expect scores to be in the low to mid 90s range, but no perfect scores (unlike 2009 and 2010), given this year is said by Parker to be a “complicated vintage” and “irregular” in terms of individual chateaux’s performance. It is similar to the 2008 and 2001 vintage.

§         James Suckling scores are out and reveal a good but not great vintage (see chart below).

§         In order for 2011 EP to be of strong consumer value, we believe release prices should be at least 30-40% lower than the 2010 vintage.

§         Juxtaposed by the 2011 vintage, the exceptional 2009 and 2010 vintages remain to be great investments with healthy returns in the long-run.

§         The 2011 vintage in our view is about picking out the “hidden gems” from the pack and buying great wines for future drinking.

§         Begin by building a “wish list” of 2011 wines now. Wines we recommend to watch (depending on release price): Lynch Bages, Pontet Canet, Pichon Baron, Pichon Lalande, Leoville-Las Cases, Ducru Beaucaillou, Yquem, Palmer.

2011 En Primeur: Returning to Value for Bordeaux Wines

The 2011 vintage will have been barrel tasted and rated by all the top critics in the upcoming few weeks. The En Primeur campaign is starting earlier this year and some of the very early releases have already begun.

While some critics maintain that the wines are better than expected (as Bordeaux had experienced unstable weather in 2011), many others have suggested that top chateaux have underperformed. The recent James Suckling barrel tasting scores of the 2011 vintage have come out, and Robert Parker’s scores will soon follow.

We expect Parker’s scores to be quite varied scores across the chateaux, as from his blog he mentions that the 2011 is a “complicated vintage to navigate... irregular, but very rewarding to those who got it right.”

He adds that the 2011 vintage “may be close to both 2008 and 2001 in overall quality”, which means it will definitely not be as exceptional as the great 2009 and 2010 vintages.

Below are Suckling’s scores (juxtaposed by his 2010 and 2001 scores) for some of the top Chateaux:

Suckling’s scores, Parker’s comments (and soon to come out ratings), should come as a relief to long-time collectors and drinkers of Bordeaux. If you turned away from these wines in the past two years because China’s thirst for Bordeaux had driven prices up to historical heights, then this is a chance to come back to the market.

The 2011 vintage as we predict, is going to be a return to value for Bordeaux, and for those who buy top growths for personal consumption and collection, this should be great news as the prices are expected to be much more affordable than the previous two vintages.

2009 and 2010: Still Exceptional, Still Worthy

At the same time, for the avid investors who bought the 2009 and 2010 vintage, you should be reassured that given the less than stellar results of the 2011 vintage, the higher value of your investments are well-justified and should bring about healthy returns in the long-run.

After all, Robert Parker had already mentioned in his blog that the 2009 “is unquestionably the greatest Bordeaux vintage I have ever tasted,” and that 2010, while “not yet in bottle, is going to be another fascinating vintage.”

Conclusion: Finding Hidden Gems at Great Pricing

Since the 2011 is not a homogenous vintage due to patchy performances across different chateaux, those who are interested in getting involved with the 2011 vintage should take a patient approach. In order for 2011 EP to be of strong consumer value, we believe release prices should be at least 30-40% lower than the 2010 vintage.

As Chateaux start to release their prices, and critics give their final barrel scores in the upcoming few weeks, it is a great opportunity to spot the hidden gems within the vintage, before making a final decision on what to buy.

We suggest for customers to begin by building a “wish list” of 2011 wines now.

The 2011 vintage in our view is one where Super Seconds will be more worthy of investment and drinking, unless the First Growth chateaux come up with exceptionally good prices.

The wines we recommend to watch (assuming release prices are reasonable) are: Lynch Bages, Pontet Canet, Pichon Baron, Pichon Lalande, Leoville-Las Cases, Ducru Beaucaillou, Yquem and Palmer.

In conclusion, we believe 2011 EP is going to be considered an affordable vintage, to both buyers and investors alike. If priced properly by the Chateaux and picked carefully, the wines might turn out to be very smart buys in the future.

I'd say .. buy 2010 now. Before it's too late.

Summary

• Robert Parker gave 100 pts to an unprecedented 19 wines from the 2009 vintage, including Super Seconds like Cos d’Estournel, Montrose and Leoville-Poyferre.
• The 2009 vintage has earned more 100 pointers than the great vintages of 1982, 1990, 2000 and 2005 combined.
• According to Parker, 2009 is “unquestionably the greatest Bordeaux vintage I have ever tasted.” He added that it is “the greatest vintage I have tasted in Bordeaux since 1982, of which it is a modern-day version, but greatly improved.”
• Wine market is going through a rebound since January 2012
• The 2009 prices are already on the move and are becoming increasingly hard to obtain in the market. We predict that the 2010 vintage will go through a similar trend.
• Our recommendation is to start looking at brands that faired well in the 2009 vintage, rather than just the vintage itself.   

Parker on 2009: “The greatest Bordeaux vintage I have ever tasted”

Robert Parker’s in bottle scores for 2009 Bordeaux are finally released, confirming the vintage as one of the top Bordeaux vintages of the century. According to Parker, the 2009 is “unquestionably the greatest Bordeaux vintage I have ever tasted.” An unprecedented 19 wines were given perfect scores Parker of 100, surpassing that of the great 1982, 1990, 2000 and 2005 vintages put together.

The 100-pointers:

Wine	2010 score	Bottled score
Beausejour (Duffau Lagarrosse)	96-98+	100
Bellevue Mondotte	95-100	100
Clinet	97-100	100
Clos Fourtet	95-98	100
Cos d'Estournel	98-100*	100
Ducru Beaucaillou	96-98+	100
Haut Brion	98-100	100
La Mission Haut Brion	98-100	100
La Mondotte	95-98+	100
Latour	98-100	100
Le Pin	95-98	100
Leoville-Poyferre	97-100*	100
L'Evangile	96-100*	100
Montrose	96-100*	100
Pape Clement Blanc	94-97	100
Pavie	96-100	100
Petrus	96-100	100
Pontet-Canet	97-100	100
Smith-Haut-Lafite	96-98+*	100

Other wines that earned top Parker scores:

Wine	2010 score	bottled score
Angelus	96-100	99
Cheval Blanc	98-100	99
Clos l'Eglise	96-100*	98
L'Eglise Clinet	98-100	99+
Haut Bailly	96-98+	98+
Haut Brion Blanc	96-100	98+
Hosanna	98-100*	99
La Mission Haut Brion Blanc	96-100	96
Lafite	98-100	99+
Leoville Las Cases	96-100	98+
Lynch Bages	94-96+	98
Pichon Baron	93-95	98
Palmer	94-96	97
Margaux	98-100	99
Mouton	96-98+	99+
Trotanoy	97-100*	98+

Market Rebound since January 2012

As we had expected, the wine market overall has rebounded since January 2012 when we issued our last report (see Liv-Ex 50 chart below). It seems to be following the same pattern as 2008, making now the best time to enter the market since Jan 2009.

The wine market experienced a major correction of an average of 17% over last year amidst the Eurozone crisis. However as Asia, in particular China and Hong Kong, are snapping up the last of bargain stocks out in the market, we feel that this is just a beginning of an upward trend that is to continue into the year.

Planning Ahead for the 2010 Vintage

With the added boost from the recently re-scored 2009 vintage, the wine market  looks positive. Those who were sitting on the fence when the prices peaked last summer should consider getting re-involved.

With 2009 being increasingly hard to find on the market, our suggestion is for investors to plan ahead and get into the 2010 vintage. After all, Bordeaux 2010 is already known to be an exceptional vintage, just like the 2009s. Given that the 2011 vintage is already reported to be less than stellar, it should come as no surprise to us when 2010 prices will start to move soon as well, and we should take advantage of their current prices which are now selling well below the 2009s. 

Parker had given an unprecented 19 wines a top score of 100 pts for the 2009 vintage. My Angelus 2009 has just shot up in trade price !!!!

http://www.wineyields.com/index.php/features1/211-parker-delivers-record-number-of-100-points-for-2009-bordeaux

2009 vintage will do very well - as expected

Robert Parker will be retasting the Bordeaux 2009 vintage and we're already seeing the prices move since James Suckling re-rated the same vintage a couple of weeks ago. Some Super Seconds gained top scores and today on Bloomberg, I realized that my market report that I wrote last month is well-aligned with what Jeremy Peacock, senior wine broker at Vin-X Ltd is saying about the market. So for all of you who's bought the 2009, good job - for those of you who were sitting on the fence in the past few months, I really suggest you start looking into getting the 2010 vintage soon as all the 2009s are sold out. 2010 is also an exceptional vintage, just like the 2009, and prices will move soon. Don't say you haven't been fore-warned. ;)
http://www.bloomberg.com/video/87443086/

This is the final version!!!!

Wine Investment Market Updates (Jan 2012)
Summary

• Fine wine prices were down on average 15%-18% across the board in the 2nd half of 2011
• As the European debt crisis unfolded, many collectors have been selling their collections to cover losses in other asset classes
• Demand from emerging markets in Asia, especially China, continues to grow
• Market downturn is showing signs of stabilization as bargain stock is getting snapped up in Asia
• Sources have already confirmed that the 2011 vintage of Bordeaux wines will not be as great as the exceptional 2009 and 2010 vintages
• The only two previous bear markets for fine wine in the last 25 years were 1998 and 2008, both of which saw the market hit a low point in December and recover steadily within 6 months
• On a medium to long-term view the market outlook for fine wines remains positive, given fine wine prices have increased 63% in the last 5 years compared to the FTSE 100 which is down 9% and the HSI which is down 4% over the same period

Market Overview: 2011 Q3 & Q4

With the European debt crisis unfolding and the global equity market taking a hit, we have seen a significant weakening of fine wine prices by an average of 15%-18% from July last year as numerous European collectors sold their wine collections in exchange for cash in the midst of the uncertainties in Europe. This weakening of the wine market came after a period of sustained growth of up to 76% since the end of 2008.

Notably, the most highly traded First Growths, Lafite and Mouton, have undergone a rather significant price correction of an average of 18 -25% across multiple vintages from the last decade. Super Seconds, such as Leoville-Las Cases, Pichon Lalande and Montrose, have undergone a price pull-back of about 10-13% on average over the last 6 months. This also applies to the 2010 En Primeur prices.

As for Asia, especially in Hong Kong and China, investors have been cautious in purchasing more Lafite and prized labels. In the Sotheby’s auction in October 2011 many investors were able to find the same wines at better prices from alternative sources. In addition, Chinese consumers have started broadening their appetite towards top Burgundies like the very rare DRCs as well as Super Seconds, which seem to be a better value for money.

2012 and into the Future: Outlook Positive

As these below-market priced top growth wines are gradually getting into the hands of Chinese consumers (who are buying these wines for personal consumption and gift giving), and also hungry investors in Hong Kong who have been snapping up great deals, we expect to see a slow-down in the price correction.

Regarding the Bordeaux First Growths, the correction is good news for potential investors, sophisticated drinkers, and collectors. Having been put off by the high prices back when the en primeur 2010 were released, long-time collectors are now getting re-involved. An additional factor is that due to unstable weather conditions, the 2011 En Primeur will not be close to the quality-level of the exceptional 2009 and 2010 vintages.

For the Super Seconds and great labels that fall outside the 1855 Classification that are highly recognized for their superior quality and ageing potential, the price correction offers comfort to those investors and drinkers who have been avid supporters of these lesser-known brands of amazing value.

Lastly, the historical performance shows the only two bear markets for wines have been 1998 and 2008, both of which had seen a relatively quick recovery within 6-8 months after hitting their lowest points. Wine prices over the past five years have increased by 63%, outstripping both the FTSE 100 index and Hang Seng Index in Hong Kong which were both down 9% and 4 % respectively over the same period.

Based on a medium to long term view, the future looks promising for investment wines, and right now is a great time to start revisiting and getting involved in the market to take advantage of these low prices and a weakened Euro.

Wine Investment Market Updates

I just drafted below newletter for my investment clients. Let me know what you think!

Market Overview: 2011 Q3 & Q4 up until now (Jan 2012)

With the European debt crisis unfolding and the global equity market undergoing a 15-20% correction over the latter half of last year, we have seen a weakening of fine wine prices from around July to August last year up until Christmas time, when trades began to slow down as the festive season came about. The most highly traded First Growths like Lafite and Mouton have undergone a rather significant price correction of an average of 18 -25% across multiple vintages of the last decade, while Super Seconds like Leoville-Las Cases, Pichon Lalande, Montrose, had undergone a price pull-back of about 10-13% average over the last 6 months. This applies also to 2010 en primeur prices.

A major reason behind the correction, in our view, stems from many European collectors who are holding above stocks dumping these fine wines at below market prices. This comes as no surprise to us, as the banking and economic crisis in Europe has left many investors wary of the future and spurred their need to cash out and also to over their losses in other investments. This also explains why in our opinion, China investors have been cautious in purchasing more Lafite and highly-prized wines in the previous Sotheby’s auction back in October, as they were able to find these wines at better prices from alternative sources and wine merchants but also because they have started expanding their appetite towards top Burgundies like the very rare DRCs as well as Super Seconds, which seem to be a better value for money. 

The future looks positive

As these below-market priced top growth wines are gradually getting into the hands of China consumers, who are buying these labels for personal consumption and gift purposes as the Chinese New Year approaches, and hungry investors in Hong Kong and China have been snapping the rest of it up in these upcoming few months, there will most definitely be a slow-down in the price correction, as we are already seeing from the recent trades and what’s been available in the market as of late.

Regarding the Bordeaux First Growths, the major correction is actually good news for potential investors and sophisticated drinkers and collectors, as they who have been put off by the high prices back when the en primeur 2010 were released are now getting re-involved. For the Super Seconds and great labels that fall outside the 1855 classification but are yet highly recognized for their top quality, the slight price correction actually offers much comfort to those investors and drinkers who have been avid supporters of these perhaps lesser-known brands that are of exceptional quality yet amazing value.

Our position thus remains the same: We think the future looks bright for investment wines, and right now is a great time to start revisiting and getting involved in the market, no matter what type of an investor or collector you are, and wherever you are today on your investment timeline.