As global markets try to find their footing, we take a look at one of the best vintages of the decade
An Evaluation of Vintage 2009
Global markets dip on Feds news and China’s manufacturing is slowing down. But will this have an impact on the fine wine market? We take a look at some of the 2009 vintages which are looking so cheap right now. Especially if you entered in during the En Primeur of this vintage. Luckily we did not buy nor recommend any 2009 vintages during En Primeur because the price was over priced in my opinion.
The charts below show the top first growth wines from the 1855 classification, courtesy of Liv-ex. They look like a real opportunity at the current price levels. See if you agree with me.
So the FED can not decide whether to raise rates and the markets were sent into turmoil. The reality is that the FED knows the economy is not in a great position and they simply can not increase. Will they increase in October, November or December or wait until next year? If the data in China continues to dwindle then it’s a wonder how the stock market will sustain any growth.
We saw China’s PMI manufacturing data turn out to be a disastrous result of 47, the lowest print since March 2009. China’s manufacturing PMI has contracted in seven straight months. Let me take your mind off the doom and gloom painted on the global markets and look with fresh eyes at some of these charts below with some interesting opportunity on hand.
Margaux 2009 – Offered at 5025 Pounds/case at the ask price. But the market prices are still around 5300 which means merchants are still offering higher prices. Private sellers and investors are not keen to go any lower with their prices but merchants are prepared to give discounts to sell their stock, probably to ensure cash flows. Since selling on Liv-ex is only available to merchants and traders, there are commissions to pay when trading on liv-ex which would push up the ask price close to the market price.
From an En Primeur price of 12,000 pounds and a high of 13,000 pounds, it’s hard to believe you can now buy Latour 2009 for less than 9000 pounds. Some might say this is still too expensive, albeit to buy an 82 Latour today is around 17,000 pounds. And inflation also has a part to play since it cost more to produce wine in 2009 than it did in 1982. Latour 2009 is now trading flat for over a year, a stimulus from money exiting the stock market and entering the wine market should give it a push up. Such low bids to buy at 7750 show that merchants are still putting in silly offers to taunt sellers. But nobody is selling at that price level since the offers to sell are up at 8675.
This has probably been the most volatile first growth in the 2009’s. Haut Brion always known for its steady and modest growth has had the rockiest of rides. Yet its price depreciation is still lower than the rest at around 25%.
Mouton has been a favourite in the fine wine market since Lafite lost its power over the China market. As high as 8000 pounds with a current market price of 4500-4600/case. Almost a 50% dip since its high.
Lafite Rothschild, a name we can not forget, Lafite has brought the most tears and joy in the last ten years. Crazy highs of nearly 15,000 pounds, when it was still in the barrel. Alas no more highs of 15,000 pounds. Will we see those highs again? It has been on a long flat plane for three years now. Any chartist would tell you that this wine is about to increase but yesterdays chart is all about yesterday and yesterday is not an indication of the future. Charts do not have any analysis on emotions. Certainly looks like a bargain at 6000 pounds/case.
So where does all this global concern leave the wine market?
Well, as I’ve mentioned in previous emails, there is definitely an increase in activity in Bordeaux wines again. You can see in the charts above that these first growths were 30-50% more expensive when they were first released in 2009 by the wine makers. Let’s not forget that Vintage 2009 is by far the vintage of a lifetime, the quality of these vintages is simply amazing. With Haut Brion and Latour owning a spectacular 100 points and Lafite Rothschild, Margaux and Mouton with blockbuster 99 points respectively, a prudent wine investor knows these are the assets to acquire in his portfolio. With the law of supply and demand, we know that the supply of these vintage 2009 first growths are depleting and yet you have the opportunity to pick them up at one of the most affordable prices right now. My hunch is that you will not see a big jump in prices immediately but you will see small appreciations over time.
I would like to share with you what one of my long time client has commented. He said, “I will not sell these wines from my portfolio. Me and my first growths are in for the long haul.”
I could not have said it any better.
Managing Director – Sure Holdings Ltd
James Pala is the Managing Director of Invest Into Wine with Sure Holdings and Sure Holdings Ltd. With more than 20 years in the wine investment industry, James was able to successfully co-manage and grow his client’s wine investment. He is happily married with a beautiful daughter, and currently resides in Malaysia. He spends most of his time managing his ventures and taking care of his client’s investments.