iDealwine update: Precious Margaux

Mature vintages of Château Margaux have been over-performing recently, and there is hope that lesser vintages might start to follow a similar upward trend. The estate’s second wine, Pavillon Rouge, is also proving a savvy investment

IN THE past few months and ahead of the latest en primeur campaign, Bordeaux has been confirming its dominant position at auction. Holding more than 57% of iDealwine’s sales in 2016, the region has recently notched up a series of high prices, particularly on the finest vintages of top classified growths but also for lesser crus and vintages. Iconic Château Margaux has been one of the blue-chip wines that has performed particularly well. The wine history of Château Margaux started towards the end of the 16th century under the ownership of the Lestonnac family who shifted part of the production of the estate from cereal crops to vines. The original vineyard represented a third of the 265 hectare estate (655 acres), a proportion that has barely changed since then. Its fame progressively grew in France and abroad.

In London, the 1771 vintage became the first claret to be auctioned at Christie’s, while, across the Atlantic, Thomas Jefferson, the third president of the United States, known for his passion and knowledge for wine, wrote that there “couldn’t be a better Bordeaux bottle” than the Margaux 1784. In 1855, Margaux was ranked among the four Premiers Crus Classés. The 1900 vintage became an absolute legend, as did many other brilliant years, such as 1929, 1953 and 1959. In 1924, Margaux made bottling at the château compulsory to enable a better control on the quality and authenticity of the wines – a revolution in Bordeaux that many other châteaux only started imposing several decades later. Between 1963 and 1977, however, the property experienced a difficult period because of a series of poor years, a harsh market and a lack of investment.

A New Era

Several factors led Margaux to regain its iconic status: the arrival of the Mentzelopoulos family, who introduced substantial restoration and investment projects, a new team, including the talented consultant professor Emile Peynaud, and the vibrant future director Paul Pontallier, the opening of dynamic new markets, particularly the US and Japan, and last but not least, a fantastic succession of great vintages.

Margaux 1978, 1982, 1990, 1996, 2000 and 2015 were all awarded some of the highest scores from international wine critics including several 100 ‘Parker points’. This contributed hugely to reminding everyone of the incredible potential of Château Margaux and its strong price performance in the secondary market.

The estate’s 94 hectares are mostly planted on gravelly soils, clay and a high proportion of limestone. In total, about 130,000 bottles of the grand vin are produced every year, the rest falling into Pavillon Rouge (100,000 bottles), Pavillon Blanc (10,000 bottles) and third wine Margaux du Château Margaux (40,000 bottles). Providing good levels of liquidity on resale, the château held the fourth position in value as the most-sold Bordeaux at iDealwine auctions in 2016, just behind Pétrus, Lafite and Mouton-Rothschild.

Boosted notably by the sharp recovery of the 2010 vintage (+21% to €745 (£630), Château Margaux saw its average auction prices rise by 5% in 2016. Unlike Haut- Brion, which usually sells more to traditional wine collectors and merchants from France, the UK and the US, or the two Rothschild premiers that have a strong base on the Asian market, iDealwine customers of Château Margaux are more evenly spread across markets.

Local Success

However, the work of promotion and the establishment of a representative office in Asia certainly contributed to the local success in the region that accounted for nearly 20% of the bids in 2016.

Since the start of the year, mature vintages of Margaux over-performed compared with more recent years where high release prices such as in the 2005, 2009 and 2010 vintages have limited the price appreciation on the secondary market. The 1990, a 100 Parker point whose average auction price rose by 20% between 2014 and 2016, reached €924 in the first April auction this year, +32% compared with 2016. The 1982 has gained 42% since the previous year, fetching €804 on the auction of 11 January 2017.

Lesser vintages such as 1999 (€356), 2001 (€324) and 2006 (€336) remain stable, yet they might start to follow the similar upward trend. A good example is 1998, the bottle price of which reached €420 on 12 April, an increase of +43% since 2016.

Another interesting wine to follow is Pavillon Rouge, a good introduction to Margaux at a fraction of the price: €120 for the 2009, €138 for the 2000. It has been a clear success at recent auctions, especially with buyers from the UK and the US. Recent investments in the cellar and the vineyards, and a renewed interest at auction for iconic Bordeaux grands crus, especially matures vintages, should continue to support the upward trend of the jewel of Margaux in the coming months.