Right bank Bordeaux continues price slide

Investable right bank Bordeaux is still suffering sliding prices, according to the Fine Wine Fund.

"Some of the lower production first growth equivalents on the right bank have actually continued to drift down throughout 2009,” recorded the fund in its September market report, referring to Ausone, Cheval Blanc, Lafleur and Pétrus.

Overall, the Fine Wine Fund’s unit price was up 1.3% in September, a trend that the fund attributes to the performance of one brand: Lafite Rothschild.

However, it does not believe Lafite’s market-leading performance is a bubble that is about to burst.

“It would be time to sell if Lafite demand was being driven only by speculators, but that is not the case,” noted the report.

“The demand is being driven largely by Asian consumers and prices are reflecting the increasing scarcity value over its peers as supply permanently decreases in those vintages.”

Elsewhere, the report highlighted the lack of price appreciation in other first growths, aside from Mouton-Rothschild, which appears to be showing a slight increase.

“The performance of its first growth peers in the Médoc and Graves have been flat, or marginally up in the case of Mouton, over the same period,” it said.

Looking ahead, the Fine Wine Fund believes that the market as a whole is about to begin its recovery.

“The broad market ex-Lafite is still way off its peak and this recovery will soon start to take place and will provide strong momentum when it does.”

Referring to the poor performance of investible right bank Bordeaux, it concluded, “Given the current price levels and tighter production on the right bank, some of the value opportunities in the year ahead will come just as much from there as they will from the laggard first growths.”    

Patrick Schmitt, 22.10.09