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  Investing In Wine - 15th October 2010
By Thomas Gearing (Director) - Cult Wines Ltd - http://www.cultwinesltd.com


The following analysis looks at the back vintage market of the First Growth’s and Petrus. At a time when a lot of attention is on En Primeur and the Second Wines, we take a closer look at what offers good investment potential in the physical market.

All prices quoted are subject to.


Petrus

The following is an overview of the physical vintages of Petrus that we would consider purchasing and their POP values.

POP Value – Price Over Points

This value is calculated by reducing the RPJ score to a 20 point scale, from 80-100pts. The reason for this is that any wine under 80 pts has little or no re-sale value on the secondary market; therefore wines under this level are discarded. Parker’s point system doesn’t drop below 50 pts anyway.

Once the scores have been reduced to a 20 point scale, if you divide the market value of the wine by its score you will get its price per point. With this figure you can compare vintages of differing quality and determine if any wine is particularly undervalued.

Vintage Petrus - Price RPJ Pop Value
2004 10650 93 819
1999 12500 94 893
1995 14750 96 922
2001 13900 95 927
2006 12781 93 983
1996 12250 92 1021
2007 11700 91 1064
2002 12250 90 1225
2003 18750 95 1250
1998 26500 98 1472
1986 10975 87 1568
1989 32250 100 1613
1990 35640 100 1782
2000 36000 100 1800
2005 30000 96 1875

The lower the POP value, the more growth potential the wine has. The two vintages which we would recommend for investment would be 1995 and 2001. They both share a similar POP scoring at the top, but both have an RPJ rating of 95pts+. This is often stated by many as a pre-requisite for investing in wine, and although we don’t think it’s necessarily the most important factor – when buying a case of Petrus buying one that scored 95pts+ will only benefit its long term future value. Both these two vintages are approaching their optimal drinking age – 1995 (2007-2016) and 2001 (2007-2027). Out of those two vintages in particular we would lean towards 2001. The reason being, Jancis Robinson tasted this wine most recently (04.2010) and upgraded her score from 16.5pts to 19pts. Robert Parker hasn’t scored this wine since 2004 in which he gave 95 pts – but the indications would be that this vintage of Petrus has matured quite considerably in the last 5 years and potentially there is a situation in which RPJ may well improve his score similarly to Jancis Robinson.

Recommended:
Petrus 2001 – 12x75cl - £13,900 – RPJ (95)
Petrus 1995 – 12x75cl - £14,750 – RPJ (96)


First Growth – Physical Vintages

In the traditional sense of buying fine wine which is approaching optimal drinking age, has had 10 years or so to mature and for which supply is decreasing – then the years of 1982, 1986, 1990, 1996, 1998 spring to mind. The traditional methodology of buying wine for investment has somewhat changed in the last 2-3 years with the emergence of the Far East as the biggest market for Bordeaux wine. This means that it’s important to evaluate all factors roughly in the following order:

1. The quality of the Vintage in general
2. Popularity in Asia
3. RPJ Score


Lafite Rothschild

Asia’s favourite wine. The growth Lafite has shown in the last 18 months has been spectacular. However, because of this prices are now very high for physical vintages and it seems difficult to pinpoint any undervalued stock. There seems no doubt that any vintage of Lafite will show steady growth, but for the biggest rewards I would recommend looking at vintages of Lafite from ‘lesser’ years as they offer the best value for money and are popular with the Asian Market.

Recommended:
Lafite Rothschild 2006 – 12x75cl - £7,000 – RPJ (97)
Lafite Rothschild 2007 – 12x75cl - £6,200 – RPJ (94)
Lafite Rothschild 1998 – 12x75cl - £8,400 – RPJ (98)
 

Haut Brion

Haut Brion has been the weakest performer of the first growths in the last 2 years. From the end of December 2008 to end July 2010, on average Haut Brion vintages rose in price by around 24%, compared to around 34% for Margaux, 41% for Latour, 48% for Mouton and 115% for Lafite. Since the quality of Haut Brion is unquestioned, it seems only a matter of time before the gap in performance is closed. There have been suggestions that the brand loyal Asian market find Haut Brion difficult to pronounce and in many Hong Kong retailers it will be found on the bottom shelf. But when the first growths look ‘full’ in price, there does seem to be value for money in buying Haut Brion. I would recommend the 1990 and 1998 which are both entering a period of optimum drinking—at which point the supply demand imbalance is exacerbated.

Recommended:
Haut Brion 1990 – 12x75cl - £6,300 – RPJ (98)
Haut Brion 1998 – 12x75cl - £3,500 – RPJ (96)
 

Margaux & Latour

 

For a steady period we have focused on the 1996s— especially Latour @ £7,500 (99pts) and Margaux @ £5,935 (99 pts)—which look undervalued relative to younger vintages. On the theme of wines that have scored 99 pts – Margaux 2003 currently trades at £5,350, it’s a great vintage and a superb wine and with Chateau Margaux firmly on the charm offensive in China (Thibault Pontallier, the son of Chateau Margaux managing director Paul Pontallier is currently in Asia as a Brand Ambassador) – there is a lot of growth potential. Latour 2004 looks a solid purchase at £3,950 considering it scored 95pts and the similarly scored 2006 vintage currently trades at £4,500. Latour 2003 @ 100 pts could well be a wine to purchase as it approaches its drinking window (2010), supply could become scarce over the next few years pushing its price up and returning solid growth to investors.

Recommended:
Latour 1996 – 12x75cl - £7,500 – RPJ (99)
Margaux 1996 – 12x75cl - £5,935 – RPJ (99)
Latour 2004 - 12x75cl - £3,950 – RPJ (95)
Margaux 2003 – 12x75cl - £5,350 – RPJ (99)
Latour 2003 – 12x75cl - £9,350 – RPJ (100)



Mouton Rothschild

The 1982 and 1986 vintages are the standout Mouton vintages in our eyes. Supply of Mouton 1986 looks strained in today’s market in the face of strong demand from home and far away markets. Scored at 100pts there is no doubting the quality and with prices @ £8,850, there is at least 50% growth in this stock over the next few years. Mouton 1982 (100pts) @ £14,000 as supply decreases could well show a return of 50%+ over the next few years. It’s a phenomenal wine, arguably Mouton’s finest. The 1998 vintage also shows good potential having scored 96 pts and trading at a seemingly low price of £3,600.

Recommended:
Mouton 1982 – 12x75cl - £14,000 – RPJ (100)
Mouton 1986 – 12x75cl - £8,850 – RPJ (100)
Mouton 1998 – 12x75cl - £3,600 – RPJ (96)


If you want to know more about investing in wine, then please download our free guide today.

If you would like to purchase any of the wines mentioned above or would like to discuss an investment opportunity with one of our advisors then please call on +44 (0)20 8332 9386 or contact us here.

 

 

     
         
         
         
         
         
         
         
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