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From Barrel to Bottle

Wine Cellar

Whilst the 2015 and 2016 vintages are still lying patiently in their barrels, we thought it would be useful to look into the most recently bottled vintage, 2014 and how it becoming physical affected the value of the wines.

With the unpredictable weather experienced during the growing season of 2014, many critics were anticipating a repeat of the disastrous 2013, where a large number of buyers overlooked En Primeur (EP) week entirely. Luckily, after an unseasonably warm winter and cold, wet summer, the sun pulled its act together and supplied sunlight ample enough to grow and nourish the vines and their fruit. Whilst 2014 didn’t hit the astronomic highs of the golden years of 2009 & 2010, it was the best since. Keen pricing by the Bordelais, designed to win back disgruntled buyers after the disastrous overpricing of the poor 2013 vintage, meant that there was and is real value to be found in the 2014 wines.

Having been met with warm, if not overwhelming, praise by critics and buyers alike, the 2014 vintage quickly moved into the background as excitement abounded regarding the promising signs for a super 2015 vintage. Early this year, the 2014 wines were bottled and re-rated by the top critics who found charming offerings and, in nearly all cases, hugely undervalued wines at that. As the wines have been traded physically, their value has appreciated handsomely and so this post will look at the investment opportunities offered by wines about to be bottled and how our members might make the most of the process.

Below is a list of wines purchased from the 2014 EP vintage, along with their release prices and Neal Martin’s rating.

Fine Wine Investment Portfolio

The table above shows the range of ratings and also the varying prices from the First to the Fifth Growths. Whilst the ratings given to the 2014 vintage Cru Classe wines aren’t particularly dazzling and don’t fit our investment criteria of 99-100 points, there are, as ever, investment opportunities here which demonstrate that by assiduously reviewing date, historical form and critical scores, real value can be added to any investment portfolio.

Having reassured our members that an en primeur 2014 was a shrewd investment, it was then up to these Fine Wines to prove their worth. With most Chateaux opting to age their wine for two years, this window allows demand and anticipation of the vintage to increase, pushing up the value. For an investor, this is music to one’s ears, as before the asset has even begun to mature and enter its optimal state, the returns they see are far greater than that of traditional assets. The table below highlights the increased value during the first year alone:

Fine Wine Investment Portfolio - First Year Growth

The real standouts, which we see in most vintages, are the second wines of Mouton Rothschild and Lafite Rothschild. Both the Carruades de Lafite and Petit Mouton increased by over 40% in the first 12 months (May ’15 – May ’16), a feat that most other asset classes cannot compete with. So if you were to have engaged Noble Rot to structure and manage a portfolio utilising the above wines, you’d have recorded a 17.7% increase in your portfolio value during year one alone, before the wine is even physical.

As the wine edges closer to being bottled, the global demand accelerates, with prices continuing to soar. One reason for the increased impetus is the anticipation of the product becoming a tangible physical asset whilst a second factor is that the wines undergo re-rating by the critics: rated up on their in-barrel scores and value leaps as the market looks to secure the rising starts of the vintage.

The table below shows the increase in value from the first to the second year in barrel. As you can see, growth grows exponentially as bottling draws near.

Fine Wine Investment Portfolio - Second Year Growth

The period just before a wine becomes physical, as you can see above, is when value tends to rise handsomely and with that in mind, we direct our members towards the 2015 vintage, which itself will be bottled and re-rated in Q1 of 2018.

Given that the 2015 wines have, on average, recorded more impressive scores relative to 2014’s offering, we at Noble Rot predict that the returns should outperform those of the 2014 vintage. In line with our overarching investment philosophy, how we identify investment potential of the 2015 cru classe wines is down to liquidity, historic market performance and critical reviews and whilst no two wines appreciate the same, it is our belief that there is a lot of value to be had by members in 2015.

To discuss how to unlock the potential of the 2015 vintage before it is bottled, please do get in touch via email or feel free to call us. All the necessary information can be found on our Contact Us page.

Liv-Ex Performance for 2014 en primeur

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