Wine Market Review August 2010

2010 – Wine Market Review -published August 2010 

After the travails of 2008, 2009 was a year of increased confidence in the fine wine market: prices of the wines that fell in 2008 recovered and most are now at, or above, their pre- ‘credit crunch’ peaks. The rollercoaster wine of 2008/2009, 2005 Ch. Lafite Rothschild, is currently fetching more than £10,000 per case in bond, just higher than its peak in the summer of 2008, having sold for as little as £6,000 in December 2008. It is fair to say that things are looking bright again.

2009 also gave us one of the most exceptional Bordeaux vintages in recent history; Robert Parker, the all-powerful US wine critic stated that “for some Médocs and Graves, 2009 may turn out to be the finest vintage I have tasted in 32 years of covering Bordeaux”. This vintage, now released, also turned out to be the most expensive vintage we have ever seen, with Châteaux Lafite and Latour being released (on allocation) at more than £10,000 per case. Despite these unprecedented prices, the vintage sold exceptionally well – the problem we experienced for most wines was supply as opposed to demand, with most wines being offered on an allocation basis.

It should be noted that a brilliant and expensive young vintage can often have a positive effect on the prices of back vintages; wines already in bottle and already in the country can start to look very cheap, and this is certainly the case with back vintages at the moment.

Much of the changes of the fine wine market over the past year have been led by one château: Lafite Rothschild. Demand for this wine seems insatiable, to the point where young vintages of the estate’s Second Wine, Carruades de Lafite, now trade for circa £2,500 per case (the 2005 was released in June 2006 at less than £400 per case) and strong vintages of the Grand Vin itself now stand at circa £10,000 per case. Two very relevant questions arise here: is this a Lafite bubble? And will the other First Growths catch up? Whilst we do not have a crystal ball, there is no sign of demand for Lafite abating, though demand for Latour, Mouton Rothschild and Margaux is rising as new connoisseurs discover that these wines offer all the class (and perhaps more) than Lafite. Ch. Haut-Brion continues to look very well-priced, though the beauty of this property’s wines surely have to be discovered soon. For wine lovers this may sound like disaster, as wines that were once relatively affordable become more and more expensive. But this is the way of the world and our friends in Bordeaux (a) cannot make any more of their wine and (b) cannot be expected to give it away.

So what does the future hold? The real test will be later this year: the wine trade is currently on its summer break and September 2010 will be the real barometer of where things are going. Fine wine is looking increasingly attractive for many investors, with so many more traditional investments lacking appeal, and there is no doubt that the idea of wine investment is becoming more and more popular.

That said the wines are being drunk. Berry Bros. & Rudd Hong Kong continues to thrive and more and more top Claret is being opened at tables in the Far East, depleting an already limited supply and impacting on prices which continue to rise on the back of this. Whilst those of us who have been buying or selling wine for some time can remember when a case of First Growth Claret could be bought for less than a thousand pounds and a case of Lynch Bages could be bought for a couple of hundred, current prices can be hard to swallow. But it would seem that this is the direction that our market is following: yes, some traditional buyers with full cellars may well be slowing down, though there is a mass of new enthusiasts more than ready to take their place.

To read more on this subject, go to our investment pages. 

To discuss this further, please contact our Fine Wine Department.
9.00am to 6.00pm Monday to Friday
Tel: 44 (0) 1256 340123
Fax: 44 (0) 1256 340149
Email: Fine Wine Enquiries