Bargain first growths

There has been a fair bit of coverage on the impact of Robert Parker’s withdrawal from the day to day fray of Bordeaux tasting (and scoring), with most people doffing their hat in deference to the impact he has had over the market place over the last 35 years.

Time, of course, waits for no man, and people are now questioning whether his 100 pointers will achieve an even greater cult status over time, as Rupert Millar covered in these pages last week. A key question fine wine investors are asking is, how will the market place cope in his absence?

Previous generations of investors will have mourned the loss of Benjamin Graham in even greater measure. This “father of value investing” helped restore sanity to the investment world through the Great Depression which followed the Wall Street Crash of 1929, and at his demise the investment world will have wondered who would take up the mantle. Well, step forward Warren Buffett, Sir John Templeton, Peter Lynch, et al.

This happens in all walks of life. There’ll never be another Alberto di Stefano. No, but there will be a Pele, George Best, Maradona, Lionel Messi. Unfortunately none of them have ever played for Sunderland!

The point is, new arrivals always fill the gap. In 35 years’ time we might well be eulogising about the impact Neal Martin had on fine wine investment. Or we may recognise this as the moment when leadership in this space morphed into a broader spectrum.

Of course there are sceptics of the practice of investing in fine wine, and those who think it’s all smoke and mirrors, but as we have evidenced before and as is illustrated below, this accusation simply doesn’t hold water.

And although Parker himself has often stated that his interests lie solely in helping consumers enjoy their tipple, rather than investors make a turn, there is no doubt that his scoring system helps make sense of this otherwise complex and varied market.

Meanwhile, as the rally in the Liv-ex 50 continues, if not without the occasional healthy pull back, we thought we would examine the first growths for the best bargains available. It is this sector which currently leads the market. The objective was to find the best buy currently available from each producer, irrespective of vintage.

As a mark of respect to Parker we have added a pertinent comment from his latest tasting notes. As you will see, what he has to say supports the investment thesis, which has a happy logic to it!

Mouton 2008 – 94 points

Typically, Mouton off-vintages have scores in the ’80s, and the vintage score is one of several key components of the Amphora proprietary algorithm. It matters. Mouton’s 2008 is priced in line with the other off-vintages but enjoys a higher overall score on Parkers vintage chart.

Parker scored the 2008 94-points and said: “From an undervalued vintage for many Bordeaux wines this gorgeous Mouton will age effortlessly for three decades.”

Haut-Brion 2008 – 96 points

RP: “This is profound. The extraordinary 2008 Haut-Brion is a candidate for wine of the vintage. This incredibly pure, noble wine was produced from one of the estate’s smallest crops (only 7,000 cases produced versus the usual 12,000).”

He accorded it 96-points and while, typically, lower production levels result in earlier scarcity and higher prices this is not yet reflected in this case.

Lafite 2010- 98 points

As if to emphasise the fact that 2008 is as much an on-vintage as an off, the Lafite 2008 is more expensive than the 2010!

They both score 98-points but you sense there is much more scope for an upgrade in the case of the 2010, although that upgrade would likely not now come from Parker himself, but from Neal Martin.

It would be unheard of for a 2008 to score 100 points (apart from Penfolds Grange which is obviously subject to different climatic conditions) but several 2010s in Bordeaux achieved the maximum and Parker says of it: “a big, rich, full-throttle Lafite-Rothschild meant to age a half century or more.”

Lafite 2006 – 97 points

A good scoring off vintage (97-points) of which Parker has said: “It may turn out to be as good as the 2005 which in all of Bordeaux is a far greater vintage than the 2006.”

If that is the case it certainly merits a premium to other lower-scoring off-vintages, and none currently exists.

Latour 2009 – 100 points

Quick! Prices of the same-scoring (100 points) 2010 have taken off of late. See chart:

There is no justification for this, other than that the 2009 has been left behind. Currently there is precious little showing in the market. Buy while you can.

Margaux 2008 – 94 points

The investment case is similar to the Mouton 2008 above. 94-points and Parker’s note that: “This is a stunning Château Margaux. Remarkably, a mere 36% of the entire production was selected for the 2008.”

As with the Haut-Brion 2008, scarcity will become apparent in the prices sooner than would normally be the case.

So as we say farewell to Robert Parker, we would place on record our thanks for what he has done for the fine wine market, both in terms of education and clarification.

For a long time he appeared as the one-eyed man in the land of the blind, but at his departure we at Amphora are inclined to say: “the king is dead. Long Live The King!”

Philip Staveley (pictured) is head of research at Amphora Portfolio Management. After a career in the City running emerging markets businesses for such investment banks as Merrill Lynch and Deutsche Bank he now heads up the fine wine investment research proposition at APM. www.apmwineinvestment.co.uk