The Unusual Suspects – Business: Fine Wine Monitor

The prices that the Bordeaux 2005s are likely to command are pushing previously unfashionable vintages to the fore

The first quarter ended with a flurry. Trade in March increased 30.5% on a very strong February. The quarter as a whole finished with exchange turnover up 120% year on year. The Liv-ex 100 Index increased a further 2.9% for the month, bringing the 12-month gain to 26%. In the midst of these heady market conditions, we went down to Bordeaux to soak up the reaction to the 2005s. Given the very high level of expectation that surrounds the vintage, it appears that these “extraordinary wines” (Wine Spectator) stood up pretty well. As Jancis Robinson puts it “Wow! The hype is just about true, even if there are notable exceptions. What an amazing vintage.” James Suckling agrees, giving 35 reds his top mark of 95/100 compared to 23 in 2003 and 22 in 2000.

Speaking to many of the tasters who arrived in Bordeaux with very lofty expectations last week, it is clear that the quality is high. It is, however, perhaps not as consistent across the board as many had anticipated. We will be publishing the results of our 2005 Membership Survey next month, when we ask all of Liv-ex’s professional users to return their verdicts on the vintage. In broad terms, however, it does seem that the Left Bank has done well again. On the Right Bank, there are some mutterings about more varied quality overall, with “overextraction” being a big gripe. What seems clear is that there is a large number of high-quality wines – certainly the highest since 2000. Many also believe that the best wines might be among the greatest ever produced. While there will continue to be plenty of debate as to just how great the wines really are, with the global economy and financial markets riding high, it seems likely that 2005 primeur will be the most expensive ever!

The high prices in 2005 are going to make wines in the back vintages look cheap. Those who tasted the 2004s again last week certainly felt that they had improved a lot over the last year and now represent excellent value. Margaux 2004, for example, has risen 10%–15% since the tastings. Indeed, the market generally has started to broaden somewhat to include the top wines in unfashionable vintages. First Growth 1997s and 1999s, for example, are up 10% and 15% respectively since December. These are unlikely to outperform the best wines over long periods, but there are some relative bargains that are difficult to overlook.

In the table above we have screened the top-30 châteaux for less fashionable vintages to try to identify the stand-out bargains.  The table identifies wines that trade at a big discount to the châteaux’s average POP (price over points) ratio. POP is our loose measure of value. All the wines below trade at a discount to the average price for the chateau, despite achieving better-than-average scores.  db May 2006