Dear Investors,

In a month when there was wider financial market uncertainty, a standoff between China and the EU over solar panels and wine imports and a continued fall in the price of Gold – wine managed to hold pretty steady in comparison. This time last year, the disastrous 2011 en primeur campaign put paid to the first quarter gains as stock holders were forced into a sell-off to provide capital for EP allocations that weren’t selling. Many could be forgiven for expecting the same to happen this year, but in the month when one would expect the most damage to be done, it was in fact markedly flat and that’s a good thing considering how the financial markets in general have been behaving.

It seems that the sell-off that encompassed the general wine market last year, has only really affected the 2010 vintage this year. With stock of the 2010s still available in good enough quantities in Bordeaux a lot of the market plays this month have been in the sale of these wines to support the EP2012 campaign. As a result we have seen prices soften a little for the top 2010’s. Pontet Canet for example, despite being a double hundred wine (Parker & Suckling) has fallen to c. £1,525 per 12 from a high post-Parker scores in March of £1,650. This can be seen with Montrose, Pichon Baron, Pape Clement and Lafite to name a few. The good thing to take out of this, is the drops aren’t that significant and with the 2010’s long term investment potential assured it actually signals to us a strong buy play for those interested in picking up top quality stock. Furthermore, with their being a small number of genuine good buys from the 2012 vintage this year such as Lafite, Mouton, Pape Clement, La Mondotte, Lynch Bages, Rauzan Segla, Gazin – estates that priced their wines attractively – a repetition of last year hasn’t been forthcoming.

Elsewhere in June, there has been greater market focus on the 2003’s ahead of Parker’s annual 10 year Bordeaux retrospective that will see him re-score a lot of the top wines. This lead us to focus on Montrose 03 which is currently scored 97+, but has been scored 100 pts unofficially by Parker twice and 99 pts once, in his publication the ‘hedonists gazette’ over the past 5 years. This has lead us to believe it could be in line for an upgrade next month and if scored the ‘magical’ 100 – it will place it on the same level as the 2009 (£2,450) and 1990 (£5,250). Other top 2003’s worth looking out for are Pavie (98+), Leoville Barton (95+), Mouton (95 +), Petrus (95 +), Pichon Baron (94+) which were all scored with a plus point indicate they could be due an upgrade. Outside of these, perennial favourite Pontet Canet which Parker described as ‘One of the great successes of the vintage and certainly one of the most profound Pontet-Canets made over the last decade is the 2003’ could score favourably and following the Saint Emilion re-classification Angelus 03 could be one to watch.

Auction results over the month continue to point at increasing demand and interest from buyers for the premium vintages of mature first growth. Rare Burgundy has been leading the way in auction results over the past 24 months and continues to do well, but rare Bordeaux has seen renewed demand in 2013. Petrus, Lafite and Latour from the historic 1982 vintage have sold consistently over-estimate as have iconic vintages for Mouton (1986) and Haut Brion (1989).

Heading into the second half of 2013, again we find the wine market in an interesting position where it’s quite difficult to predict precisely where it will be headed. There are both positives and negatives to consider that would leave most bulls and bears sitting on the proverbial fence.

For the bulls, positive growth of 5% Year to date, with increased trade and a resilient market in the face of a potential sell-off following the 2012 campaign show that the wine market is in good health, and any short term softening represent good buy opportunities.

For the bears, the uncertainty of a China/EU trade dispute that could impact wine imports, as well as a lacklustre 2012 campaign and a potential stock-sell off looming suggest prices will soften.

As always though, with wine being a mid-long term investment, any potential short term volatility should be considered within this context and with positive data recently being published for fellow alternatives art and classic cars, as well as a growing number of millionaires in the Far East, one could expect this to be replicated in wine over a longer term horizon.

Château Latour 1982 @ £17,000 per case

 Parker Notes:

“Always somewhat atypical (which I suspect will be the case with the more modern day 2003), the 1982 Latour has been the most opulent, flamboyant, and precocious of the northern Medocs, especially the St.-Juliens, Pauillacs, and St.-Estephes. It hasn’t changed much over the last 10-15 years, revealing sweet tannins as well as extraordinarily decadent, even extravagant levels of fruit, glycerin, and body. It is an amazing wine, and on several occasions, I have actually picked it as a right bank Pomerol because of the lushness and succulence of the cedary, blackberry, black currant fruit. This vintage has always tasted great, even in its youth, and revealed a precociousness that one does not associate with this Chateau. However, the 1982 is still evolving at a glacial pace. The concentration remains remarkable, and the wine is a full-bodied, exuberant, rich, classic Pauillac in its aromatic and flavor profiles. It’s just juiced up (similar to an athlete on steroids) and is all the better for it. This remarkable effort will last as long as the 1982 Mouton, but it has always been more approachable and decadently fruity. Drink it now, in 20 years, and in 50 years! Don’t miss it if you are a wine lover. Release price: ($350.00/case)” Robert Parker Jnr; Wine Advocate (183), June 2009

• £17,000 per 12 (IB, OWC, immaculate condition)
• Lowest priced under bond, original wooden case in the UK market and globally on Wine Searcher
• 100 points RPJ, most recently June 2009 and has attained perfect score three times consistently since 1995
• Only other perfectly-scored back vintage is the 1961
• Cases (12x75cl) of the ’61 currently trade over £50k for wines in reasonable condition
• There are currently only 13 cases (12x75cl) listed globally for the 1982 vintage – compare this to other perfectly-scored vintages below and it’s discerning to see how a reduction in available volume affects price over time.

The condition of this case is truly exceptional and we’re pleased to offer as per the attached photo.

The last three days have seen a flurry of releases as this year’s campaign winds down, but as Liv-ex reported coming to the party this late especially with the first growths releasing so early, you better get the pricing right.

With around 20 wines released, we have cut this down and selected the wines which warrant the most attention:

Amongst these releases the clear winner is Pichon Lalande, coming out at a price not only less than flying fifth growth wines Lynch Bages and Pontet Canet but also at a price making it the cheapest available vintage  in the market. This has been the only strategy which brought any success, but unfortunately one that has only been followed by a handful of Chateaux.

The solid Parker score for right bank estates, Clinet and Pavie Macquin, make them attractive to collectors. The same however can’t be said for Leoville Barton or Montrose. The latter’s price only cementing our belief that the 2008 Montrose, which scored 95 points by Parker, is undervalued.

The table below shows a quick snapshot of how incredibly undervalued the 2008 vintage of Montrose is looking in comparison.

There are still a number of right bank estates to release their wines this year, most notably Eglise Clinet which was the only wine which received a potential 100 pt score from Parker for the vintage.

Thursday Morning saw a flurry of en primeur releases as the Bordelais returned to their offices following a well deserved break to bombard smart phones with an alternative alarm! Of the releases the three major wines to take notice were Pontet Canet, LMHB and Haut Brion. For us the Clarence Dillon wines, tasted last during our time in Bordeaux, were a definite highlight with Haut Brion in particular impressing. Pessac was one of the best performing appellations in 2012, and we believe these two wines will develop into two of the best from this vintage over the coming years. At their release prices, they are reduced from their 2011 which is welcomed, and make them look good value for money.

Similarly, Pontet Canet one of the recent stars of the left bank was released at a 9% discount to the 2011 price (Unsurprisingly at the same ex-neg price as fellow ‘Flying Fifth’ Lynch Bages). Although this vintage didn’t quite find the same favour with Parker as their back to back 100 pt wines in 09 and 10, we were impressed with the precision and balance of this wine once again and equally critics seemed to favour the bio-dynamic and organic estate with solid scores from Suckling & Jancis Robinson. From a drinking perspective, Pontet always delivers, and from an investment point of view it’s our belief that as an estate the fifth growth is continuing to grow in stature and prices across the board are likely to increase, so to buy for less than £700 p/case in a few years may well look like a smart buy.

Offers subject to availability:

Bordereaux (RED)

2012 Pontet Canet    @ £640 per case (12)                                         RP: 91-94              JS: 94-95

2012 Haut Brion                @ £2,600 per case (12)                                  RP: 93-95              JS: 95-96

2012 LMHB                      @ £1,600 per case (12)                                  RP: 91-94                JS: 93-94

Winemaker of the Vintage: Denis Durantou Wines

Also released this week were the wines of Eglise Clinet’s Denis Durantou. If you are buying for drinking in 2012, I wouldn’t look past these wines, as they are fantastic value for money.

Les Cruzelles @ £75 per 6   RP: 90-92

La Chenade @ £55 per 6     JS: 88-89

Investment Recommendation: La Mondotte

This release has taken our fancy- La Mondotte, which was – very surprisingly – released at a hugely reasonable price. They only produce 650-1,000 cases per annum of this wine, which was elevated last year to St-Emilion Premier Grand Cru classé ‘B’, having previously been unclassified. In a vintage where the Right Bank wines excelled and crop yields were down, we expected this ‘micro-cuvee’ to release at a far higher price, especially when we saw the Parker score of 94-97 points a couple of weeks ago.

However, they’ve recognised the calls for lower pricing this year and come out at a hugely reasonable £575 per half-case (6x75cl). The table below compares the 2012 to other back vintages (we’ve highlighted those vintages which are comparable to 2012 in terms of quality):

Had Sotheby’s April 3^rd auction been held two days prior, the results would have been dismissed as codswallop. But alas, there were no fools and the Hong Kong auction was truly an indication that the Chinese appetite for the Bordeaux Grand Cru wines is as strong as ever.

The eleventh offering from the ‘A Great American Collector’ series was described by Sotheby’s as featuring “the finest selection of wines from Bordeaux, Burgundy, Champagne, California and Italy”. And they were clearly not exaggerating, with 97.5% sold by lot and 99.8% sold by value! Perhaps the most impressive figures though, were those of the top Bordeaux lots, which surpassed expectations by some way.

Some highlights are detailed below:

Both the variety of wines and vintages purchased and the consistency of sale prices over and above high estimates provide a discerning example of the premiums buyers will pay for stock with outstanding provenance.

Serena Sutcliffe MW said of the sale items: “It is always stimulating to catalogue the impeccably sourced and stored wines amassed by this discerning collector – it is a flawless cellar…”. A strong argument for only buying fine wine from reputable sources and at the youngest possible age.

From a market point of view, these results have to be treated as outliers, but it must be said that it’s encouraging news that there is resurgent demand for First Growth Bordeaux.