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April 12, 2012

March Market Report

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Robert Parker’s 2009 rescores
The biggest news this month was Parker’s declaration that the 2009 Bordeaux vintage is the greatest vintage of his lifetime. He re-scored 19 wines a perfect 100 driving prices for this hallowed vintage further skyward. Wines such as Cos d’Estournel had an overnight increase of 11%, Haut Brion increased 7% and the largest climber was Smith Haut Lafitte growing 133%.

We expect the sharp increases in this vintage to filter down to older vintages and add greater impetus to the market by making many physical wines such as the 2005′s look very cheap by comparison.
 

 

 

 

The Market
The market’s upward trend continued in February with positive momentum, increasing volumes of bids and strengthening of the offer prices. Liv-Ex 50 returned 3.0% (YTD) by the end of February, with March progressing positively.

The Best performers in February were:

 

 

 

 

 

 

 

 

After a torrid 6 months the 2008 vintage has started to see upward momentum with Mouton 2008 +5.38%, Margaux 2008 +4.88% and Lafite 2008 +3%.

Burgundy saw continued buying pressure, DRC’s top performer this February was Grand Echezeaux , it saw an average performance (across vintages from 1985 to 2008) of 8.14%.

 

The market also continued to broaden with other top producer such as Leflaive, Rousseau, Roumier, Mugnier experiencing an increase in demand and volume.
Relative value

The First Growth’s relative value when compared to the Super Seconds has undergone a 22% ratio change over the last 12 months. During this time the ratio tightened from 6.75 to 5.24, indicating that the First Growths are once again at an attractive entry point. This ratio is very instructive and was one of the key indicators last year that lead us to believe that the First Growths were overvalued and the Seconds due a price rise.

The forecast for March
We expect March and April to be very positive months in terms of volumes and prices, with activity rising and prices on an uptrend. The big news in April will be about the 2011 Vintage; after the heady heights of the great and greatest vintages of 2010 and 2009 the 2011 is likely to be described as reserved, with many expecting the right bank wines to have fared better. However, the key feature will be price with most expecting the price to be released 20% below last year’s, which for an average vintage will probably mean 20% too high to represent a good short-term investment.

IG Wines in the press :
http://www.bloomberg.com/news/2012-02-29/burgundy-beats-bordeaux-as-buyers-push-price-to-records-in-global-auctions.html
And look out for out remarks in Decanter April 2012 – Collectors News