BUSINESS FINE WINE MONITOR – Points make Prizes

Châteaux names and Parker points are the main drivers of growth behind Liv-ex record performance

Activity on the exchange last month notched up a record for February. Trade increased 75% on 2005 and was up 26% month-on-month. Demand for the top names remains very strong, reflected in some big price increases. Overall the Liv-ex 100 increased an impressive 3.1% on January, bringing the 12-month gain to 24.3%. Picking the right wines has not been rocket science. Our screen of the top Bordeaux labels from the 10 best vintages between 1982 and 2000 shows that brand and Parker score have been the two biggest drivers of performance, while choosing a mature vintage in itself has had little impact.

These results are highlighted in the table below. Of the 300 wines we looked at, only 15% outperformed the Liv-ex 100 in the last 12 months. Of the wines that beat the 24.3% increase in the Liv-ex 100, 70% scored 95 points or more on the Parker scale and 61% were of First Growth quality. In the two underperforming groups of wines, high scoring and better quality brands made up a much lower percentage of the total. We also grouped our wines into different baskets by score, quality and brand and then measured the performance of each basket. The wines that score 95 points or more generated twice the return (24%) of those scoring between 90 and 94 points and five times more than wines scoring less than 90 points. Similarly, wines of First Growth quality have substantially outperformed the second and third-tier wines. Indeed, the best performing brands in the last year across all vintages have been Pétrus (up 36%), Lafite (35%), Haut Brion (26%), Latour (22%) and Mouton (22%). Above we list the wines that have not performed to script, lagging behind the Liv-ex 100 over the last year despite achieving 95+ Parker points. Will these play catch-up in the months ahead?

© db April 2006