Market Performance in 2013
The Liv-ex 100 began the first half of the year by rising 4.9%, nevertheless from June to December it dropped 6.3%, leaving negative 1.4% for the year. However, the Liv-ex 100 simply reflects a narrow basket of Bordeaux wines largely made up of First Growths. This means the index is unrepresentative of the fine market at large as First Growths are too expensive for most wine lovers and collectors to buy for consumption, although many do speculate. Instead, many collectors have recently neglected First Growths and have been taking advantage of alternative great wines from Bordeaux and other regions. For example, the Right Bank Index has outperformed the Liv-ex 50 and 100 in 2013 posting a gain of nearly 14%, in part due to the promotion of Pavie and Angelus in September 2012 to Grand Cru Classe A. This pattern however is not restricted to 2013, over the last five years Bordeaux First Growths have only returned 30% while the five leading Super Tuscans; Sassicaia, Ornellaia, Solaia, Masseto and Tignanello and the Romanee-Conti Index have returned over 90% each.

Market Trends
This paradigm is also reflected in recent months by Bordeaux’s market share of Liv-ex trading remaining low at around 80%; it was as high as 96% in September 2010. Of this 80% is the recent exceptional twin vintages of 2009 and 2010 that make up nearly 40% of the trade by value. According to research carried out by Liv-ex, First Growth trading has fallen to levels last seen in 2005. In the middle of the bull run in June/July 2010, First Growth accounted for nearly 70% of trade by value. In the summer of 2011 at the peak of the market this had dropped to 55%, which was the level First Growth maintained after the global market crash in 2008. Today they account for around 35% of trading which instructively is the same as 2004 and 2005 prior to the start of the bull market.

Traditionally Bordeaux and Burgundy taken together account for around 90% of stock traded on Liv-ex and the two regions historically have an inverse correlation: as one drops the other generally rises, although Burgundy will always be limited by its tiny production. However, since Q2 in 2013 Bordeaux and Burgundy taken together only formed 75-83% of monthly trading. This provides clear evidence that the market has broadened, with Italy, Rhone and Champagne seeing significant rise in volume. The increase in trading of older physical stock in these regions shows they now have a strong secondary market and are liquid enough to trade confidently.

Super Tuscans 2010 Release (please click here to read full report)
2013 saw the release of the 2010 Super Tuscan vintage which will go down as one of the greatest in history. Super Tuscan wines are sold on a strict allocation basis and global demand for these leading wines is large, led by America and Europe, leaving very little surplus every year. This year Asia also joined the market with greater verve. Early investment signs are good; Masseto 2010 released in the UK at around £900 per case of three bottles in September and has already risen by nearly 30% comfortably trading for £1,250. The global success of this vintage and the growing demand for the leading Super Tuscans has left little room for new buyers. It is also noteworthy that 2011 is already promising to be another superb vintage.

Burgundy 2012 
Top Burgundy producers, in particular DRC, made the headlines throughout 2013 in auction houses across the globe. While it is true they have been filling a void left by First Growth, the top producers in Burgundy lend themselves well to auctions as they are exclusive and more difficult to source. January 2014 marks the beginning of the En Primeur 2012 campaign which is striking for two reasons; production is very low, yet quality is high! The result will be an increase in price of about 20%, which the market will happily accept, due to the strength of global demand. The Burgundy market remains strong and market conditions suggest 2014 will see continued price rises, it is certainly worth taking up allocation of the leading wines in 2012 but the high prices of 2011 and 2012 will also make vintages like 2009 and 2010 look extremely compelling.

Looking Forward – Bordeaux 2011
This year Parker will be re-tasting the 2011 vintage from bottle and giving his final scores. This has been a huge event for the last two years as the market waited for Parker’s final word on the great 2009 and 2010 vintages, with both vintages scoring unprecedentedly high and offering excellent opportunities to speculate: some prices rose as much as 100% overnight. The 2011 vintage however is nowhere near the same quality and few expect many surprises. We re-tasted the 2011’s from bottle recently and it is a very mixed vintage, quality can be most closely compared to the less than stellar 2007 vintage.

Bordeaux En Primeur 2013
This year the Bordelais find themselves with an uncomfortable juxtaposition. The weather conditions in 2013 have been difficult resulting in producers reducing yields to maintain quality, production was down by approximately 20-25%. Conversely, prices need to be reduced further, ideally below the 2011 and 2012 releases in order to create conditions for a successful campaign and once again provide collectors an incentive to buy in barrel.

2013 saw a late harvest after a cold first half of the year held up vineyard growth. An extremely cold May was compounded by heavy rain in June leading to uneven flowering; August was warm and September changeable. October presented its own problems with a mixture of downpours in between very warm and humid periods with most producers picking in between the rainfall. This is an intriguing position as lower yields and stricter than ever selections for the Grand Vins will reduce the total potential revenue for producers, but also create greater demands on the Bordeaux supply chain.

Robert Parker will be breaking with tradition this year and publishing his En Primeur report at the end of June, two months later than normal. For many years (apart from 2003) Parker has released his scores in late April, producing an impact on pricing and allowing consumers to make purchases based on his recommendations.

In Conclusion 
Bordeaux will always represent the preponderance of wine Investment; it is the most famous fine wine region in the world, the richest and has the production and liquidity to allow for larger volumes of trading. However, the market has broadened and the performance of the market cannot be judged with such partiality towards First Growths which are now mainly driven by new markets and the super-rich willing to pay the elevated prices: quality and not price tag is axiomatic of established traditional wine markets. There is incredible quality among the other leading wines of Bordeaux as well as other wine regions and we posit that the investment grade wine market has undergone a seismic shift and today there are many more wines that should now be considered investible.