Good news, everyone! Nice blog at James Suckling’s site re the Chinese market and price trends in general. Key quotes:
more and more wine investment funds are placing their wines onto the market – something I predict that we will see much more in the coming month. Investors are seeing the pressure on prices and want to rush to liquidate their positions before their investments turn negative. I have never before seen so many large parcels of fine wine being offered on the market.
I told a friend of mine a few days ago that I believe we will be able to buy Chateau Lafite at the same price as Carruades de Lafite was selling at its peak: 350 Euros per bottle
The problem with speculative markets is both spectacular rise and spectacular fall. If Bordeaux prices start to collapse and investors get spooked, prices will crash.
I know nothing about the Asian market. But there has always been demand for Burgundy there, and indeed some Asian Burg lovers post here regularly. We are hearing about a new wave of demand from status buyers, shifting from Bordeaux toward Burgundy. Would that new wave just be after DRC? Sort of like… “well, I’ve got some Lafite, now need some La Tache?” The market segment of buyers who pushed Lafite prices so high, does not seem likely to me to delve into the intricate mysteries of the broader Cote d’Or. At least I hope so…
Is Bordeaux an investment market, by and large? Or are BDX wines held for investment a fairly small sliver of the market? I don’t know. It seems to me that part of the rationale for buying wine as a speculative investment would be the belief that not too many others are doing it. Perhaps there is some way to know how much wine is being held for speculation, but I don’t know about it.
I can’t imagine Burgundy would work as well for the Investment market. There just doesn’t seem to be the quantity of production to support it. The auction market is another story though.
I haven’t seen any indication yet that the Lafite status buyers have migrated to any Burgundies other than DRC. Heck, they hadn’t even managed to find their way from Lafite to Mouton. What I have seen a lot of is the trade exploiting the mere prospect of it to foment hysteria. I don’t think it will work.
From what I can tell it is certainly an investment market, I’m not sure what % is held as investment but I don’t think it matters. In my mind the question is whether the investment activity (whatever it is) drives pricing in the broader market, both for the investment grade assets (a rediculous way to describe wine haha) and the lower grades.
Can’t believe Alex hasn’t chimed-in yet to tell you that you’re all wrong about the impending collapse of the Bdx. market because (1) you’re all wrong, and (2) Bdx. is the best wine that has ever been and will ever be and (3) you’re all wrong and (4) everybody loves Bdx. and (5) the Chinese are buying more than ever and (6) you’re not looking at the entire Bdx. market and (7) Bdx. prices will continue to rise because the worldwide market recognizes the undisputable fact that Bdx. is the greatest wine in the world and everyone loves it and (8) Bdx. wine is the best!
You’re wrong Brian. This is were Jeff Leve comes in and tells us that Bordeaux goes up and will always go up. It has been this way since Columbus and will continue until the end of days.
In the past few months there has been a dramatic shift in what people are wanting (from me anyway.) Calls for Bordeaux to send to Asia have dried up dramatically, and US demand for Burgundy is back in the catbirds seat. And not just the big stuff like DRC or Leroy- people want Angerville, Dujac and all those other very good things that just aren’t quite cherries. But provenance, of course, is king. Demand is still slack enough that buyers are being very picky on older bottles. Demand for 2009 is insane- now that most of the Domaines have opened up distribution in new markets, there is just far less wine coming here than ever before and so at the top levels it is a sellers market all around. 2010 is going to be even worse with rumors of high quality and the reality of significantly lower production.
Bordeaux, and Lafite in particular, are still in demand. If you compare prices to the past 3-4 years it looks like things are down. If you compare to the past 10 years- prices are still strongly up, and in line with the reality of a much wider audience buying the wines (this being a global boom as opposed to the boom of the mid to late 1990s where there were more buyers in the traditional European and American markets.)
In the US Bordeaux is very tricky with the departure of Diageo from the importing scene. And frankly prices are still so high that many buyers do not care. Bordeaux has been largely forgotten here at the higher end- but will be back strong I think in some future year when distribution is again normalized and release prices come back down (which I expect- sub $300 first growths is my guess, but it will be a couple of years at least.)
For older Bordeaux, seepage and other previously unacceptable issues are still acceptable if the price is right. For documented provenance and pristine condition- prices are a bit off the highs, but not by much. At this point there is just not much 1990 and prior wine that has not been passed around the auction circuit a time or two.
That’s my take anyway. The real frantic focus is now on Burgundy- and not so much by speculators, but for those who keep and drink the wines and are suddenly finding that distribution quantities that were reliable through 2002 and shrank in 2003, are again shrinking dramatically in 2008 and 2009.
As for investing- it is no time to be investing in wine at all unless one wants to source top 2009s and flip them quickly. Those who have that kind of access are tending (at least the ones I know) to keep what they can get their hands on. Resale is not in the game plan.
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