First growth laggards experiencing turnaround

The Fine Wine Fund’s latest market report points out that prices achieved at Christie’s Hong Kong auction last month were considerably higher than valuations or offer prices in London.

In particular, the report highlights that the largest premiums were achieved among those first growths that have been lagging in terms of price performance.

For example, a case of Latour 1995 sold at an 85% premium to the fund’s valuation; Margaux 1996 at a 67% premium; Latour 1996 at a 48% premium; Haut Brion 1989 31%, and Margaux 2000 26%.  

Certainly it is these labels that have fallen behind fellow first growths Lafite and Mouton-Rothschild in terms of price appreciation according to the Liv-ex Power 100, as featured in December’s drinks business

Overall, the Fine Wine Fund notes that there were many instances of wines selling at premiums of 10-20%, while very few wines sold below what would be considered fair value in London.  

And although the report reminds that auction prices are “unrealistic for valuation purposes… they are useful for gauging sentiment.”

In essence, the fund predicts “the Chinese appetite for luxury products will be one of the main driving forces behind our market in the coming decade.”

Elsewhere, the November market update notes that Chatéau and Estate’s attempt to liquidate US$28 million (£16.8m) worth of fine wine stock will not have a widespread impact.

“By way of contrasting economic fortunes and due to the economic crisis and unfavourable exchange rate, the US distribution arm of Diageo has had to liquidate a large amount of unsold young Bordeaux in the US at a discount by selling it to the negociant Joanne, who probably sold much of it to them in the first place,” it says, adding, “This is very much a local issue.”

Patrick Schmitt, 17.12.2009