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Fine wine monitor / Priced to perfection
Traders underestimate the aggressive pricing of 2005 Bordeaux as campaign explodes into life
After A short pause for breath in April, market activity exploded in May. Trade was up 105% month on month and 135% year on year. There was some activity in the early releases of Bordeaux 2005s towards the end of the month, but the interesting trend was frenetic activity in the back vintages in anticipation (rightly so!) of very high release prices for the campaign as a whole. The Liv-ex 100 increased a further 1.49% for the month, bringing the 12-month gain to 30.6%.
At the time of writing it appears that release prices for 2005 Bordeaux are exceeding even the wildest estimates. The table below shows UK release prices to date on a handful of well-known names. So far prices are up 60% on 2003 and are more than double 2004. By the time all the wines, including most of the First Growths, have been released, these totals are likely to be higher still. You may remember that our survey of the Liv-ex membership anticipated a rise of 27% on 2003 prices and 70% on 2004.
There have been very few prices that appear to leave much on the table for the consumer in terms of upside. Of course, Bordeaux will get the blame for this, but the reality is that demand has been enormous and even at these high prices
the wines are selling well.
Many wines have made a step change to a different level. For wines like Pontet-Canet and Grand-Puy-Lacoste, for example, which used to get released at £200-plus, the figure is now double that. Wines that used to go for £400 are now selling at £800 or £1,000 and the First Growths, which used to be £1,000, are £3,000.
It is easy, of course, to argue that these wines are overpriced and it is true that there have been some major errors in pricing particularly among the super seconds like Pichon Lalande, Ducru and Palmer, but the fact is that most of the wines are selling, not just to the trade, but right through the chain. This is a very positive signal for the market. In our mind, the sensible conclusion to make is not that the current vintage is too expensive, but rather that many of the fantastic wines in the back vintages like 1986, 1989, 1990, 1995, 1996 – and even 2000 – are just too cheap.
© db July 2006