Fine wine investment: Perfect points

We were asked this week whether we thought Angélus 2005 might now be worth buying, after its decline against an otherwise firm market, and the query threw up two interesting points. First, it pays to shop around, and second, a Parker 100-pointer still has a certain cachet.

To all intents and purposes, Angélus 2005 has a market value around £4,500 (per dozen). The range on wine searcher is £4,200 all the way to £5,400, although quite why anyone would want to pay the latter price at this juncture is anyone’s guess. When we talk about ‘market value’ we are referring to the price point at which the majority of purchases are likely to be made, the price at which most active merchants are placing their offers.

When a wine is posted at what seems to be an unrealistically high level it is best to ignore it, as it will be a throwback to the days when merchants could get away with murder; the real estate equivalent, if you like, of offering your house at a ritzy premium in the hope someone with more money than sense might happen along.

The Liv-ex market price, in this instance, is £4,200, and it is against that price that Angélus 2005 seems to have lagged, but once you take that case off the table there is a gap up to £4,500, punctuated by someone offering at £4,400 who is advertising it against a Robert Parker rating of 98 when since 2015 its score has in fact been 100, so that may not actually be available if you call to enquire. (If it is, you can think about buying it on the basis that you know more than the vendor)

This happily brings us to the second point. In June 2015 at the 10 year retrospective tasting of the 2005 vintage, Parker raised four wines from St Emilion to 100-points, (Ausone already had that accolade), one Pomerol (Lafleur), and both Haut-Brion and La Mission Haut-Brion. Since his re-rating of these wines, they have all significantly outperformed the market.

It would not have been at all unusual to report this reaction at any point over the last 35 years, but we currently sit at a ‘critics’ crossroads’. Regular readers will know that we have discussed the Parker-baton-handover at various times this year already, and it is fair to suggest that the market thinks the most likely elevation will be of Neal Martin.

Perhaps we will look back from some future date to 2018 as the period of transfer, but it certainly hadn’t happened by early 2015. In January of that year Martin, while still at The Wine Advocate, had thrown out a series of scores for all these wines well below the 100 mark. It is not that the market at that time ignored Martin, so much as it responded very favourably indeed to the Parker numbers.

So what happens next? Amphora is on record as suggesting that perfect Parker scores will continue to enjoy a premium not least as a mark of respect to the old boy, but also because he will not be registering any more in Bordeaux. An additional scarcity premium, if you will. That is the way price movements for these 2005s seem to be leaning.

The question as to whether they are all buys at this point, however, is quite different. The 2005 vintage is revered in most circles as being on a par with, if distinct from, 2000, 2009, and 2010. Most 2000s enjoy Millennium premia, which buyers have to decide by themselves as to validity.

Amphora banged the drum long and loud three years ago about the lack of premium for La Mission 2000 and it has responded with a great rally. We added a further note earlier this year about the premium differential between La Mission and other top wines, but you certainly can’t just barge out and buy any old 2000 on the old-fashioned premise that it’s a great wine and a great vintage, because that is not the way to enhance returns. Comparing like with like, or very similar with very similar, across the whole market, is the best way to find pricing anomalies.

When we put the 2005s into the context of the 2009s and 2010s, different opportunities emerge. Cheval Blanc 2005 and 2010 both score 100 points whilst the 2000 and the 2009 score 99-points. The 2010 is out on its own as far as price is concerned, at £8,450, while the 2005 lags even the 99-pointers at £6,600. Although the algorithm selects the 2012 and the 2014 as the best relative value Cheval Blancs, when balancing a weighting with an “on vintage” the 2005 offers a compelling case.

The easiest comparison of all should be Pavie, whose 2000, 2005, 2009 and 2010 all score 100-points. The respective prices are £5,300, £3,600, and £3,100, and £3,300. We can accept the 2000 cost as Millennium premium, but against the 2005 and 2010, the 2009 looks undervalued. As a note of caution, when he blind-tasted the 2009 in July 2013, Martin accorded it only 92+, way below his scores for the other three. Somewhat enigmatically, however, he added in his notes: “I think it will merit a higher mark in future”. A cynic might be inclined to add: “at a non-blind-tasting”.

Finally, what of Angélus 2005, with which we began the note? Again this should be straightforward, as the 2005 scores 100 and the other three 99, 99+ and 99+ in chronological order. Logic would suggest a moderate premium for the Millennium vintage, and a premium for the 2005 over the latter pair. Sure enough the prices are: £4,950, £4,200 and £3,400 (both for the 2009 and the 2010).

Nothing to do on the Angélus, maybe, but Cheval Blanc 2005 and Pavie 2009 will justify a moderate investment at this point.

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.