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Second wines - bursting full of investment potential

The second wines of the Classified First Growths of Bordeaux were often an opportunity for Chateaux to use up the remainder of the grapes from a harvest, often making lighter, less powerful expressions of the famous First Wines, but at a fraction of the cost. As viticulture and vinification techniques have improved, second wines have been taken more seriously, by both Chateaux owners and investors alike.

In terms of investment options, the second wines of the First Growths offer much potential. Petit Mouton, Mouton Rothschild’s second wine, made positive returns in each of the last ten vintages – including the market slump in 2010.

Carruades de Lafite, the second wine of Lafite Rothschild, continues to see extraordinary demand from the Chinese market, ensuring that it too performs excellently, regardless of vintage performance.

To further prove the point of the rise of the second wines, in July 2007 it was possible to buy 6.6 bottles of second wines (over half a case) for every bottle of the Grand Vin, on average. That ratio has now dropped by half, meaning only 3.3 bottles to a bottle of a First Growth.

The Liv-Ex article “Second Wines: closing the gap”, published on October 18, 2016, makes the excellent point that as Chinese brand-buying pushed Bordeaux prices higher and prices for wines like Lafite Rothschild and its peers reached dizzying heights, the second wines looked increasingly attractive as entry level opportunities to the major First Growth brands, at lower price points.

The clamour to own the second wines of the First Growths continues unabated, even when it comes to the most recent En Primeur wines. Carruades de Lafite 2014 for example was the second most traded wine on Liv-Ex in 2016, despite not yet being physical until the very end of the year – a remarkable feat.

The graph below shows the progress of the 2010 and 2014 vintages of Petit Mouton and Carruades de Lafite, against the Liv-Ex 100 index and the FTSE 100 in the last year – the appreciation in value shows the incredible strength of the second wines.

In terms of return on investment, the second wines of the First Growths continue to offer excellent value for our clients whilst they also offer those who are nervous about investing in Fine Wine an opportunity to test the waters at a low-price point. The data is compelling and points to sustained demand and appreciation, as follows:

Petit Mouton – The appreciation of four vintages during 2016

2009 40%

2010 50%

2012 49%

2014 85%

Carruades de Lafite – The appreciation of four vintages during 2016

2011 45%

2012 45%

2013 77%

2014 74%

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