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April 13, 2017

Chateau Margaux 2012

chateau.margaux.1

Bordeaux en primeur 2016 will begin in earnest in the next three to four weeks. This marks the third instalment of three excellent vintages in a row. The 2016 vintage is exceptional; however, we expect significant euro price increases among the First Growths. We have been proposing the virtues of the 2014 vintage for investment over the last two years, based on the strength of the vintage and more recently its discount to the 2015 vintage. Since then the 2014s have risen considerably in price. We are now highlighting the 2012s as the next vintage to benefit from the rising average price.

In the coming months, the First Growth owners will be encouraged by the price rises of the 2015s seen since their release last year. The 2015 First Growths have risen 14.5% since release, with Margaux an outlier at 34%. This follows on from the 2014 vintage which since release have increased on average 54%, with Margaux itself also at 54%. The 2013 vintage, which has been more appealing to Asian buyers, has returned 30% since release, with Margaux posting 34%. Finally, since release the 2012 First Growths have risen on average 22%, with Margaux posting the highest with 33%.

The fine wine market has a history of using en primeur campaigns such as 2005, 2009 and 2010 and now 2015 and 2016 as watermarks for price. As a result, this pulls their most recent vintages in lock step. If the market accepts the prices during en primeur, which for the First growths in 2016 it surely will, recent good to excellent vintages appear immediately undervalued. In 2010/2011 the market for First Growths rose over 40%. While this was driven by Asian demand, back vintages such as 2008 benefited greatly from the en primeur release price rises for the 2009 and 2010 campaigns.

As such we view the 2012 vintage as perfectly placed as the presently undervalued vintage, following the price rises seen among the 2014s. In 2012 Haut Brion and Margaux shone. We highlighted Haut Brion 2012 as a strong investment buy in May 2015, since then it has risen 45%. Margaux 2012 is the other great First Growth of the vintage, which has recently been marked up to 96 points by Neal Martin. This places it one point above the 2014, yet it is trading at the same price. Moreover, 96 points places it two points above the 2008 and 2006, which again trade at the same price. In fact, the 2012 has the lowest Price Over Points score of any recent vintage of Chateau Margaux. As such its relative value is obvious.

Vintage WA Price   POP
2015 98-100 £3,000 316
2014 95 £1,825 261
2013 91 £1,550 282
2012 96 £1,850   231
2011 93 £1,800 277
2010 99 £3,600 379
2009 99 £3,300 347
2008 94 £1,850 264
2007 92 £1,800 300
2006 94 £1,900 271
2005 98+ £3,100 335

Since the release of Margaux 2015 we have noticed a reduction in trading volume for Margaux, while Liv-ex report trading volumes for Margaux have been half that of Mouton and Lafite Rothschild. We have also been monitoring availability in the market, both in terms of volumes traded in London and availability on the Place du Bordeaux. Market presence has decreased over the last two months and the prices on the Place du Bordeaux have now moved on average above the mid-market price in London. We expect a price correction. When Margaux 2016 releases at the likely price range of £2,500 to £3,250 per case of six during en primeur, the 96 point scoring 2012 will look even more appealing. Margaux 2012 is a brilliant wine. Robert Parker states in his bottle tasting note that ‘This is a great effort from Château Margaux, and should handsomely repay those who buy it.’ As such we recommend Margaux 2012 as a strong short, mid and long term investment proposition.

Chateau Margaux 2012

96 Points, Neal Martin, The Wine Advocate

Tasted blind at the 2012 Southwold tasting, the 2012 Château Margaux has a taut, linear, pencil lead-infused bouquet with pure blackberry and boysenberry scents, an undercurrent of tobacco that surfaces after five minutes in the glass. The palate is medium-bodied with fine tannin, crisp acidity, a life-affirming sense of balance with well-integrated new oak towards the finish. I concur with Robert Parker that his has become more structured and masculine in bottle, yet there is pedigree here from start to finish, a sense of effortlessness that is seductive. This is a top-class wine from the late Paul Pontallier and his team.