April Fine Wine News round-up

David King – 24th April 2018

I have been catching up after a trip to Bordeaux tasting the 2017 vintage with my esteemed colleague Mike King and renowned consultant wine guru Richard Marlowe. We have already seen prices are being released and not just by the Petit Chateau. Most notable are Chateaux Palmer and Valandraud have released today; around 20% down from the rather pricey 2016 vintage. This may encourage a flood of prices in the coming days / weeks. More news on this to follow in my May edition as the mind games are played out and a clear picture of the pricing landscape emerges and the market’s reaction to them. Much to discuss of course. Here are just 2 things to consider as the campaign is in its infancy.

• Value versus a comparable vintage physically available in the market today.
• Weakness of Sterling v Euro today. Will the 2017s be better value in a few years?

Decanter Magazine

Chris Mercer, 26^th March

China threatens US wine with retaliatory tariffs – “California’s wine trade body warned that there is a risk of ‘years of lost market share’ in China if Chinese officials press ahead with threats to punish American wine shipments as well as more than 100 other goods, following a trade dispute with the US government.” Not a surprise here when the current US administration is taking quite an aggressive stance towards the balance of trade between the two countries. Other wine producing nations will be waiting in the wings ready to take up the slack should China follow through with their threat. US wine exports has risen by 450% in 10 years, where California accounts for 97% of all exports

Chris Mercer, 20^th March

Brexit effect hit UK Champagne orders in 2017 – “Champagne exports to the UK fell by more than 10% in volume in 2017, but the US, Japan and Australia helped to make up the difference, show new country-by-country figures.” Trade figures show a decrease in value from 440.3 million Euros in 2016 to 415.2 million Euro in 2017 (-5.7%), however the volume exported to the UK fell by 11% in 2017. This contradicts the global rise in Champagne exports by 6.6% in value terms (2.8 billion Euros) and the domestic demand remaining unchanged. Britain continues to be the biggest importer in the world by volume, whereas the USA holds the record in terms of value. Interestingly Asia and Australia are taking up the slack.

Andrew Jefford, 21^st March

The era of billionaire ownership in Burgundy has begun. Andrew is highlighting the sale of top Burgundy vineyards by long-established. No longer are the lands handed down to the next generation or used as a marriage dowry. The example given refers to Clos de Tart (Morey St. Denis) and the remarkably short list of owners. The nuns from Notre-Dame de Tart took possession from the Knights Hospitaller of Brochon in 1141; then it passed on to the Marey family in 1791 who entered an alliance with the Monge family in Beaune. The Mommessin family purchased it in 1932 from the last remaining heiress who was also a nun. Since October 2017, all this belongs to Francois Pinault’s Group Artemis (also owns auctioneer Christie’s, Stade Rennais Football Club, plus controlling interest in Gucci and much else besides). It is suggested a value of 26–30 million Euro per hectare has changed hands. This follows Domaine Bonneau du Martray’s sale of an 80% share in their 11ha Corton-Charlemagne and Corton Grand Cru holdings to Stan Kroenke (owner of Arsenal FC and Screaming Eagle) at a rumoured 11.4 million euro per hectare in January 2017. Perhaps Clos de Tart’s neighbor, Clos des Lambrays, got the ball rolling in 2014 by selling to LVMH for as much as 11.5 million Euros per hectare.

Owners of Grand Cru land see this as a catastrophe, as they see themselves financially out gunned when land comes up for sale. Even if they could the return on capital would be far in the future. It heralds the end of family ownership of any sizeable Grand Cru holdings. Inevitably the pressure to sell up becomes irresistible; and then there is the thorny issue of death duties. It seems the corporate billionaire ownership of Burgundy Grand Cru land will become the new normal. It seems unlikely that the traditional families will be ousted entirely as they are likely to retain the village and some 1er cru vineyards. Enough for mere mortals to enjoy.

Wine Spectator

Suzanne Mustacich, 6^th April

Bordeaux Wine Firm Found Guilty of Fraud – “A judge ruled that Grands Vins de Gironde illegally blended cheap table wines with premium Bordeaux.” It seems they apparently tried to pass off table wine for being something more expensive, after they mixed wines from different appellations, vintages and chateaux. Needless to say the contents no longer represented what was on the label. The guilty verdict was handed down on 5^th April with a fine of USD 500,000 with half of this suspended. Witnesses say that the fraudulent wine was destined for the Chinese market. The producers of the wines used were not implicated in the case.

Liv-ex Insights April 2018

28^th March – Second Wines: The Rally Continues

The Bordeaux 500 index has risen 7.1% in the past year. A solid if not exciting performance when compared to other regions. Better than the Rhone 100 (+4.3%), however Italy 100 (+11%), RotW 50 (+11.3%) and Burgundy 150 (+20.6%) make Bordeaux one of the weaker regions over this period.

The Bordeaux 500 sub-indices show a divided picture. Not surprisingly the slowest mover was the Sauternes 50, and the second slowest is the Fine Wine 50 (tracking prices of the First Growths) and running virtually flat for the last 3 months. The picture is further divided when we look at second wines. Their popularity is in the accessibility of a power brand at a lower price point. There leaders in this market has traditionally been Carruades de Lafite, Petit Mouton and Pavillon Rouge and each are up over 20%. Les Forts de Latour and Clarence Haut Brion although outperforming the Bordeaux 500 are someway short of their peers. Liv-ex has decided to include them in a reclassification of their Bordeaux indices and they are to be considered second growth equivalents.

3^rd April – Liv-ex 100 drifts 0.5% in March

Often regarded as an industry benchmark the Liv-ex Fine Wine 100 fell 0.47% at the end of March. Top movers were Armand Rousseau Chambertin 2012 & 2013. The 200 vintages of Haut-Brion and Margaux were both risers after Neal Martin gave them near perfect scores of 99+ and 99 points respectively. The biggest fallers were Burgundy, Champagne, Bordeaux and the Rhone. Beaucastel 2012 was the biggest faller, down 8.3%.

James Suckling Releases Bordeaux 2017 scores – Left Bank 

I’m not going to list all of his scores here. I will say that I’m broadly in agreement, but it is of course all rather subjective. Different week, different atmospheric conditions, and depends on the sample condition too. We did experience some variation between Chateau and UDGC venue. Not surprising, whilst the wine is still in a fairly unstable state. I would select Lafite as the best First Growth and where is Rausan Segla? This was my personal favourite (non First Growth) wine of the 2017 vintage, but doesn’t feature in the Liv-ex summary of Suckling’s scores.

13^th April – Talking Trade – En Primeur Week

Liv-ex reports that its membership is cautiously optimistic for 2018 with an expectation of a rise for 2018. However the Liv-ex 100 falling albeit very slightly for four consecutive months, rather belies this optimism. Generally the expectation is an increase of around 3.7% by the end of this year.

Liv-ex Market Report. April 2018

As the market has very much one eye (if not more) on Bordeaux, we saw a drop in all markets in March, as follows: