Fine wine investment: picks for 2017

As we draw near to the end of what has been a great year for fine wine investment, we will look back very briefly to note some of the outperformers, and highlight as usual one or two wines which for whatever reason are currently left behind, which might be the focus of investors next steps as we enter 2017.

Just before that though, we should mention something which came up in a Liv-ex blog last week, the reference to Neal Martin’s reappraisal of Bordeaux wines from 1996. At Amphora we have tasted the Latour and Lafite from that vintage over the last couple of years, without, to be frank, seeing what all the fuss was about. I mention that in passing. It shouldn’t particularly affect anyone’s investment strategy!

Neal Martin graded Lafite 1996 at 98 points, against Robert Parker’s 100, and Latour at 95, against Parker’s 99. Prior to this tasting his call on Margaux was 98 (RP 99), but he has raised that to a perfect 100, and been perfectly effusive about it as he did so.

Irrespective of many fine wine market participants’ angst on this topic, Robert Parker has been incredibly influential over the past 30 years, and the key question as a result of his retirement from tasting Bordeaux has revolved around who will take up the mantle, if anyone. Will Neal Martin et al adequately fill the Parker boots?

Margaux 1996 responded well to his re-appraisal, which is a decent start.

It is always quite difficult to second guess matters of this nature. Does this market place need an iconic critic, or will people like James Suckling, who funnily enough bears more than a passing resemblance to Robert Parker, and Jancis Robinson MW (who doesn’t) come more to the fore? In all probability the market will now look to all of these, and maybe more, to step into the breach, but the field is clear for each and every one of them.

When we look at the performance of wines for this year we have to be careful how we swallow the headline figures. There are a lot of back vintages from the ’80s and early ’90s featuring, but the liquidity tends to erode the further back in time you go, so it is more difficult to compare like with like. The same is true of such recent vintages as 2014, where the market had not had time to establish itself before the 2016 flurry of activity took off.

For all vintages from 2000 to 2013 though it was quite hard to pick a loser in Bordeaux. There are double-digit rises across the board, nor are they limited to any particular sub-sector. Margaux is a particular feature at the first growth end. Bar 2005 which is up 12% on the year-to-date everything else is up over 20%. In the case of Mouton Rothschild, bar 2005 again (+16%) everything else is up over 25%.

Carruades de Lafite, Forts Latour and Petit Mouton have all done very well, but the Second Wine biscuit is taken by Pavillon Rouge, where everything is up over 35% except 2009 which has achieved a mere 13% rise. Over on the Right Bank again there are great performances across the board, even amongst the more expensive producers like Le Pin, whose 2001 vintage is currently up 85%. Once again though, with Le Pin the volume can be fickle so we should exercise caution in reading too much into the exact numbers.

So what looks good going into 2017? At some point it is possible that the focus switches away from Bordeaux, but until that shows some sign of happening we think weightings should be maintained, very much along the lines of our recent articles, it is worth pointing to a couple of other opportunities highlighted by a combination of current performance, and our proprietary algorithm (the two elements being of course linked).

Opus One and Dominus feature quite rightly in most balanced portfolios these days, and while we have long recommended Dominus 2008, it is the Opus 2008 which currently appeals. Oddly it has received no grade from Parker, although Antonio Galloni has accorded it 95 points, and James Suckling 94. This is a good score in Opus terms, and most of the other vintages of this quality are trading north of £3,000. Opus 2008 is up less than 1% this year. It is well ranked on the algorithm, and is one to watch as we enter 2017.

Over in Tuscany, Ornellaia 2009 is similarly unloved, having risen only 7% this year. At 97 points it is a match for any bar the 97+ 2010, yet trades at a handy discount at this point. On the algorithm it is head and shoulders above any other Ornellaia. Also one to watch.

Once again we at Amphora wish you all a very Merry Christmas and highly prosperous 2017.

Philip Staveley 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 with Amphora.