1982 Mouton Rothschild - Auction Prices

I admit, I thought the great wine correction was going to take place in 1Q 2008, and it has taken until now for the data to support the ongoing correction.

The wine market is breaking down, but the data is hidden. My analysis of 1982 Mouton shows that single bottles are off 20% from a year ago, but market averaged data shows no change. The most often cited data averages in all bottles regardless of provenance or owc status. The facts are that an owc of '82 Mouton has stayed the same, because the ultra-rich can still pay $17,000 for a case. Smaller speculators who trade in one and two bottle lots have been getting crushed, and the data is getting buried. When a single bottle sells as lot #1, and case sells as lot#2, the single bottle becomes 1/13th of the "average auction price" -even though it represents 1/2 of all actual sales.

Here are the prices for 1982 Mouton:
2Q '08 = $950 (single bottle), $1450 (x12 for owc)
3Q '07 = $1200(single bottle), $1500 (x12 for owc)

My data includes sales from Sotheby's, Bonham's, Hart Davis Hart, Zachy's, and Acker.

Scarecrow!

Scarecrow from the 2005 vintage is available March 21st-31st at $150/bottle. Buy your entire allocation.

The 2003 vintage received 98 points from RP, the highest score that Parker has given for any inaugural vintage. Released to a lucky few at $100/bottle, the wine was trading at $800 as soon as the Wine Advocate's review was in in the mail. Today, this wine is at least $900.

The 2004 vintage got (only) 95 pts from RP, but the damage from the first year's success could not be undone. The cheapest retailer on wine-searcher.com offers the 2004 Scarecrow at $700, but as with the 2003, there is no shortage of merchants willing to charge $1000.

The 2005 vintage isn't bottled yet, but Parker gave it 94-97 from the barrel. Pre-sales on winecomune.com are the cheapest at $620-$650. A brick-and-mortar wine merchant will charge more. I'm not buying much wine right now, but '05 Scarecrow at $150 gets me reaching for my checkbook.

2000 Chateau Lafite Rothschild Extends Gains, Lafleur Weakens

First growths and other top Bordeaux from the 2000 vintage have been on a tear lately, prompting this blogger to speculate that a wine bubble is here (see earlier posts). Results from Acker Merrall & Condit’s January auction suggest that a top is finally forming, for everything except Lafite. Most wines failed to appreciate over the past 7 months. Latour Cheval Blanc, and Margaux are holding steady at $1000 each, Mouton is still $750, Haut Brion is a little more variable –stuck in a rang of $650-$700 with no discernable trend, Petrus remains at $3600.

Only Lafite continues to climb. Now at $1500, up from $1300 three months ago.

It’s not all good news: Ultra-rare Lafleur sold at Acker’s January Auction for $1815. That’s down from $2000 in the fall of ’07, which itself is down from $2400 from the summer.

Will the bubble reveal itself this quarter?

The Importance of Dumb Money

Bring me the best wine! Only the very best!

It is vital for the wine speculator to understand this attitude. The very best of any collectible, including wine, is likely to be overpriced relative to the second best example of that collectible. Not just priced higher, but overpriced.

Let's look at an examples of where pricing makes sense and another where it does not make sense:
DRC Romanee Conti vs La Tache. Romanee Conti has an average annual production of 450 cases/year, whereas La Tache produces about four times as much - 1870 cases, on average. For the 2002 vintage, the Romanee Conti gets around $6500 at auction, compared with $1700 for the La Tache. To me, this price ratio looks about right.

Now let's look at 2003 Bordeaux, Latour vs Montrose. Both Chateaux make about 20,000 cases a year, and both made less than usual in 2003. Both wines score 100 pts (RP). Yet Latour costs $1000/bottle, and Montrose is $250. Maybe Latour is better, but is it 4 times better? This ratio defies common sense. I do expect Latour to cost more, because it is a first growth, and there is a certain prestige associated with that, but not 4 times more.

Compare this to the 1990 vintage, where again, both wines earned top marks from RP. The 1990 Latour now trades for $900, and the 1990 Montrose costs $500. This approximate 2:1 price ratio is what I foresee for the 2003 Latour and Montrose. 2003 Montrose is on my short buy list for Bordeaux.

2005 Quilceda Creek Allocation - What to Buy

Orders for the 2005 Quilceda Creek are due by January 7th. Recent years have been very favorable to Quilceda Creek, with the following advocate scores: 2001, 98 pts; 2002 and 2003, 100 pts, 2004, 99 pts. If you still haven't decided what (if any) of it you want, here's my analysis. The magnum of Cabernet at $253 is a screaming buy. Current auction ranges of the '01, '02, '03, and '04 magnums are $300-$500, $650-$850, $650-$950, and $300-$450 respectively. Someone pre-sold their '05 cabernet magnum on winecommune for $420 recently. The risk in the '05 Quilceda Creeks comes from the fact that they are not rated yet. You can hope for a 100 point score from the Wine Advocate, or sell yours on winecommune before the wine is reviewed. If you only buy one part of your allocation, it should be the cabernet magnum.

The cabernet 750 ml bottles are compelling as well, although they appear to offer less upside potential. Current auction ranges of the '01, '02, '03, and '04 in regular bottles are $150-$250, $250-$280, $220-$280, and $140-$315 respectively. The '05 cabernet in regular bottle recently pre-sold on winecommune for $166. At $115 (allocation price) I bought it, but I like the magnum better. Both offerings appear to be only barely prifitable at 98 pts. A 100 point score would make the magnum saleable at 260% of its release price, while the regular bottles would apear to be worth about 190% of their release price.

The merlot, at $75, is probably cheaper than it would be on the secondary market, but I just don't see the same potential as with their cabs. I didn't buy it.

Do I still think the wine market is overpriced? Yes, at the high end -I'm still predicting drops in '08 for DRC, Petrus, and anything that can't be bought new for $2000. But the deep pocketed consumers won't quit the wine game altogether. They'll be drinking the more "affordable" Quilceda Creeks instead.