Welcome toIn the mood for wine — a weekly newsletter on wine for the next gen of wine lovers and investors. This is WineLeaks, a curated overview of the wine market, which will be with you every Monday at 10 a.m. (London time).
You can find all the links to this newsletter’s past editions on this page, and, in case you missed it, a much-debated piece on Gusbourne’s ambitious wine Fifty One Degrees North.
Many thanks to those that filled in the survey last week. In line with what you’ve asked for, I’ve added a few more “interesting wines” that come out of the wine reviews of the week, namely Vieux Château Certan 2012, Château Larcis Ducasse 2020and Isole e Olena Cepparello 2019 among others.
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Inflation (CPI) 12-M to September:
Euro +10% (up from 9.1% in August)
Interest Rates (Bank Rates):
US +3.25% / UK +2.25% / Euro +1.25%
S&P 500 (5D):
-2.91%
Crude Oil WTI (5D):
-0.66%
Gold (5D):
0.39%
VIX (5D):
5.68%
What happened in the markets last week?
1️⃣ US$-based investors took advantage of Sterling weakness, (US$1.04 to the pound) over last weekend (23rd-26th Sep). US buyers more than doubled their trading share, to 39.1% of total trades compared with 16.9% of the previous weekend. Bordeaux ‘on’ vintages took the lead.
More unexpected was the Asia market: its shares didn’t moved much.
In Asia, several currencies such as the HK$ are tied to the US$, but that didn’t seem to increase the appetite in the short term.
While the Sterling has been an all-encompassing saga in the news last week, the pound is far from the only currency wilting against the dollar.
And, staying in Asia, the Chinese renminbi touched the 7.25 per dollar mark, its weakest level since early 2008, suggesting that perhaps we shouldn’t expect much activity from Asia after all.
Burgundy, tipically the Asian buyers’ favourite region, was lagging.
Source: Bloomberg
All in all, US$ strength, not Sterling weakness, could be the dominant theme in the next year in fine wine markets. Liv-ex reported that the US is around 15-20% of the total trade value, allowing a large room for increase of that share.
However, having noticed some opportunistic reports in the market hailing that “fine wine can perform during sterling slumps“ or “fine wine as a potential hedge against ongoing GBP weakness“ — I would caution against drawing correlation (or worse, causation) between GBP weakness and burgeoning fine wine prices.
2️⃣ Saying that the there has been volatility in the markets last week would be an understatement.
Volatility is a statistical concept and is often associated with big swings in either direction: when an index rises and falls more than 1% over a sustained period of time, it is called a "volatile" market. Volatile assets or market are often considered riskier than less volatile ones because the price is expected to be less predictable.
There are many ways to calculate volatility — and among those, VIX (also known as the fear index) is a widely used tool measuring the 30-day expected volatility of stock market.
A high reading on the VIX implies a risky market and, while long-term investors are best advised to ignore periods of short-term volatility, it keeps a finger on the pulse of the market nervousness.
Liv-ex reports that fine wine has traditionally proved a stable and far less volatile life raft than traditional stocks and equities in troubled economic waters.
(MoM = month on month, i.e. the change in the value as a percentage of the previous month's value.)
Livex 50 (MoM):
+1.7%
Livex Movers:
Pétrus, 1999
Dom Pérignon, 2012
Château Lafite Rothschild, 2018
Château Lynch-Bages, 2010
Château Lynch-Bages, 2009
This week increased trading activity driven by US buyers was accompanied by a heightened demand for ‘on’ vintages of classed growth Bordeaux, such as 2009, 2010, 2016 and 2019.
A higher demand for ’on’ vintages could be associated with a risk-off environment — and in particular in light of what we mentioned above with regards to the VIX.
Fifth Growth Château Lynch-Bages has been popular. The estate even led total trade by volume in the past week. On average, Lynch-Bages prices have risen 19.5% over the last year, compared to 17.6% move for its parent index, the Left Bank 200. The two ‘on’ vintages of Château Lynch-Bages, the 2009 and 2010, continued to enjoy increased demand.
However, as far as ‘on’ vintages, the 2016 peaked my interest.
Why is it interesting?
Jane Anson tasted it recently and upgraded her Decanter En Primeur score from 95 to 99 points.
Lisa Perrotti-Brown finds 2012 a challenging year that tended to favor Merlot.
Late spring rains caused uneven ripening and mildew early in the season. Mid-July is when the dry weather and heat finally kicked in. Autumn rains plagued the Cabernet harvest with around 100mm in the Médoc, causing dilution and forcing hands.
“2012 is what I like to call a trick-or-treat vintage—there are lots of treats, but there are also a few scary tricks” she writes: “many of the top wines are mature now and won’t last much more than another 10 to 15 years. Some less successful wines are already starting to fade.”
Some standouts in the cellar-worthy category include:
“As for Sauternes and Barsac, this was an even more challenging vintage than usual. This was the year that Yquem, Raymond Lafon, Rieussec, Suduiraut, and a few others decided not to make anything.”
Among the ones getting special mention from Perrotti-Brown, Haut-Brion and Léoville Las Cases were mentioned in WineLeaks #6 as among two of the most underpriced châteaux in the analysis run by Quantian. So let’s look at Vieux Château Certan.
Why is it interesting?
Vieux Château Certan is, to me, a pure value play — underpriced, forgotted vintage. It received high praises from Perrotti-Brown MW and also from Sebastian Payne MW, who upgraded Jane Anson’s En Primeur score at the most recent tasting to 97 and said: “Still improving“. Jancis tasted it blind and awarded it 19.24 “because of five 20/20s”.
Perrotti-Brown awards this wine not only a higher score but also a wider drinking window than Jane Anson does, who believes it will peak in 2038.
Blend: 87% Merlot, 12% Cabernet Franc, and 1% Cabernet Sauvignon
Drinking window: 2022-2049
🔴‘For many years, Château Larcis Ducasse had been an underachiever.’ (TWI) ($)
In Inside Bordeaux, Jane Anson writes: “This is one of my tips for fastest-rising estates, really delivering exciting wines with something to say.“
TWI explains: “owned by Famille Gratiot-Attmane, in 2002, Jacques-Olivier Gratiot hired Nicolas Thienpont to take over the management of the estate, working with David Suire as the technical director. Stephane Derenoncourt and his colleague Julien Lavenu were also brought in as consultant enologists. Together, they conducted extensive soil and vineyard studies to understand the place’s needs and adapt practices. At last, a team of worthy adversaries was in place, armed with the necessary know-how and means to take on Bordeaux’s capricious climate, to take the terroir of Larcis Ducasse to the limits of what it could do.“
The Château is a 1er GCC B since 2012 and the plantings are roughly 83% Merlot and 17% Cabernet Franc.
It has received raving reviews: 99 points from TWI and 97 from Jane Anson, who writes of the 2020 vintage for Decanter: “great consistency over the past few years at this property but this is really stepping things up a level.”
It's another value play — completely underpriced compared to other similarly-scoring vintages (e.g. 2010) and to other 1er GCCs B (e.g. Troplong Mondot).
Susan Hulme MW selects her top 25 wines from her extensive report covering Tuscany, released or about to be released onto the market or via the Place de Bordeaux.
Reminding ourself about the 2019 vintage in Tuscany, Ornellaia and Masseto Estate Manager Axel Heinz notes: “We had a very cool spring in 2019 and almost as much rain as 2018. The biggest difference between the two years is that summer was much drier in 2019. We saw good diurnal shifts leading up to what was a late harvest (see Saturnalia chart below: warmer daytime temperatures help to foster sugar development, but cool nights help to preserve aromas, freshness and acidity). For example, we did not have to rush to pick the Merlots, as we often do. Harvest was a week later than 2018.”
Diurnal range is the difference between day and night temperatures in the vineyard; the gap between the hottest temperature and the coolest. 2019 showed a larger range than usual. Source: Saturnalia
Hulme writes: “The reviews feature some of the famous names and Tuscan “superstars,” but there are also, I hope, one or two surprises”. Indeed Cepparello is among these.
Why is it interesting?
It got 100 points, head-to-head with the Super-Tuscan icons Sassicaia, Ornellaia and Masseto. “For me,” explains Hulme ”a 100-point wine is as close to perfect as it is possible to be with that variety or varieties in that particular vintage. It is, of course, a wine that should have concentration and depth of flavor, but it is also very much about finesse and elegance.”
Also, Paolo di Marchi left the reigns of the business, which has recently been acquired by the EPI Group, owners of Charles Heidsieck champagne and Biondi-Santi in Montalcino. We can expect a higher focus on brand-development by the group.
Cepparello 2019 is a blend of Sangiovese from different vineyards, selected by Di Marchi on the basis of "the best exposure, elevation, soil, genetics and age”.
The price is still around £80, at a heavy discount from the Super-Tuscan icons, but with intersting prospects. Please note that it could be classed as a “Chianti Classico” — but for legacy reasons (in 1980s, 100% Sangiovese was not permitted under the Chianti Classico rule), continuity or for branding strategy, Cepparello is a Toscana IGT.
🔴 ’The Champagne Report 2022: Part One’ (Club Oenologique) and ’Champagne: The growing secondary market for luxury’ (Livex)
Two champagne reports came out this week: one from Liv-ex and one from Club Oenologique, authored by Essi Avellan MW.
You can expect my comments regading those reports in two weeks’ time, when “In the mood for wine“ will release a piece on Champagne Investing written in collaboration with “Six Atmospheres”.
In the mood for wine nor this article represent investment advice or any kind of professional counsel, nor does it represent an offer to buy or sell securities or investment services.
