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).
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The Wine Independent published the first piece of the “Retrospective“ series, authored by Lisa Perrotti-Brownn MW, which I very much enjoyed reading.
Perrotti-Brown quickly reviews the 2005 vintage (it was a dry one) and reminiscing how “tannic and impenetrable” wines were en primeur, adding: “After bottling, most of the wines immediately shut down, falling into a long slumber.“
In this report, she was to understand whether these wines came out of the slumber — and yes, the answer was affirmative. Usual suspects or “late-bloomers“ impressed her, but a few names surprised (positively): “In particular, Clos Fourtet (is a St. Emilion 1er Grand Cru Classé property), Rauzan-Segla (of the Margaux appellation and owned by Chanel), Smith Haut Lafitte (in the the Graves region and now owned by former Olympic skiing champion, Daniel Cathiard), and La Gaffeliere (part of the St. Emilion appellation, classified as a 1er Grand Cru Classé(B) and owned by Léo de Malet Roquefort) blew me away—these are real jaw-droppers with a long life ahead! What’s more, all three of these wines are widely available for around $150-175/bottle.“
(She promises retrospectives on more recent vintages, namely Bordeaux 2012, 2015, 2016, 2017, and 2018 which I am looking forward to sharing.)
What to Read
“Bid:offer ratio shows signs of wider global problems“ (Liv-Ex)
Perhaps you might remember the article I wrote on liquidity “Are your liquid assets illiquid?“ — where I pointed out that liquidity is a leading indicator (a piece of data that corresponds with a future movement or change in price) for fine wine prices. Liv-Ex currently reports that the market is drying up, which is showing in the bid-ask ratio of Liv-ex indices.
“A bid to offer ratio compares the total value of bids (firm commitments to buy) to the total value of offers (firm commitments to sell) on the market.
The ratio’s aim is to indicate the level of demand that exists in the secondary market. Historically, a bid:offer ratio above 0.5 tends to indicate the beginning of an uptrend in the market, or at the very least acts as a sign of price stability.”
Note: if the ratio is above 1, it means that there are more people willing to buy than to sell. And, vice versa, a ratio below 1, means there are more sellers in the market.
“Currently, the bid:offer ratio on the Liv-ex trading exchange is 0.89. This is down from its high points in late 2021 and early 2022, with more offers currently listed than bids suggesting increased caution from buyers – a sign of the straitened economic global outlook but also an opportunity for buyers.“
They add: “The bid to offer ratio is a useful indicator of market sentiment and frequently reflects the world’s macroeconomic situation. For example, in 2020, as the reality of Covid-19 spread and lockdown was announced, the ratio dropped to 0.2. And as a consequence, the market weakened.“
Of course, Liv-Ex points out the inflation-hedge nature of fine wine as well as the power-shift from sellers to buyers in such environment can create opportunities for buyers who now hold a position of greater power over those wishing to sell stock.
However, I would like to point out that liquidity has yet to impact fine wine prices — we are still seeing prices climbing daily. As liquidity is a leading indicator, we might expect prices to collapse in the near future, which will then be a great time to buy some bargains.
“With yields down 50%, NZ winery Gladstone embraces En Primeur” (vino-joy)
“Allocations of the 2020 and 2021 vintages from the Wairarapa-based winery will be available from now until October 31 and will include four of the estate’s wines, which are 340 Blanc 2020 & 2021, Estate Pinot Noir 2021, Dakins Road Pinot Noir 2021, and Blairpatrick Pinot Noir 2021.”
Allocations available on 31st October 2022 — you can submit your interest via their website.
You can submit your interest via their website here.
Higher production costs. Everything is set up for 750ml formats, therefore supply costs for off-size bottles are higher.
Longevity. Among wine professionals, magnums are considered to keep wine fresher, because the wine ages more slowly in a large bottle (higher ratio of wine volume to ullage (the small amount of air inside the bottle).
Veblen goods. Magnum bottles make great gifts and feel more special than typical bottles. This could also explain why the very top brands and wines like, for example, Louis Roederer’s Cristal 2008, have the largest premium over the 750ml bottle.
Anything else?
“Collector’s guide: Right Bank Bordeaux“ (Decanter) ($)
Events
In the mood for wine was born with the idea of creating a community of fine wine nerds and investors. If you are on Reddit, you should join the subreddit group WineEP — which focuses on all things fine wine & investments. Last week, two (London) events were mentioned there:
Jeroboams Late Summer Tasting 2022 (£65) on Wed, 7 September 2022
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.
