2009 Sine Qua Non Allocation

September 2 is the deadline for reserving your 2009 Sine Qua Non allocation.  This year’s offerings are 6 x 2009 Syrah “The Thrill of …” (RP 96-98) and 6 x 2009 Grenache “Upside Down” (RP 94-96).  Grenache fans will appreciate the increased Grenache offering, which is often about half the Syrah availability.

If you are buying these to drink, the release price of $145 compares favorably with the $250+ typical auction price.

If you are buying these to flip, Parker’s sub 100 point ratings will keep these wines from getting much higher than $250 in the near term.  Auction house fees of 22%, together with shipping fees, plus state tax fees will drive all the profit from re-sale.  A profitless re-sale of Sine Qua Non is perfectly acceptable for speculators who want to remain on the allocation list, saving their dry powder for either a better vintage, or an Eleven Confessions offering.  Bottom line: buy your entire allocation.

1994 Bordeaux First Growths - a Time to Sell

If you're still waiting for these to come around, they won't.  The 1994 Bordeaux first growths peaked from 2000-2004.  Look at the 2011 auction prices and cash in.

1994 Mouton ......$350-$400
1994 Lafite..........$1008-1321
1994 Haut Brion..$300-$400
1994 Latour.........$350-$600
1994 Margaux......$300-$500

Price ranges are for the first half of 2011.  Recent prices (April, May, and June auctions) show all these wines are at or above $400/bottle.  The 5-year price charts on wine-prices.com show all of the 1994 Bordeaux first growths going vertical now, after spending the last decade at or under $200/bottle.

In 2004, I sampled all the 1994 Bordeaux first growths, and I was impressed.  Many tasted quite good, and all could be had for $125/bottle or less.  I bought about 10, from different chateaux, and waited.  As the years went by, I pulled them out proudly for guests and family.  One was austere, another was bitter, a third was closed, and a fourth was past its peak.  Seven years later, I get it; these wines are not closed.  They are amber, austere, and fruitless.  They peaked, and another decade in the cellar is not worth the wait.  At these prices, they're not worth keeping.

2007 Sloan Allocation

Anyone still on the list for Sloan may want to consider taking their 2007 allocation. Like many Napa 2007s, Sloan earned 100 points from RP. With local tax and shipping, expect to be on the hook for about $360/bottle. If you want to sell, consider that the typical auction house fee of about 20% means that the market needs to value 2007 Sloan at $450 for a speculator to break even.

Typical vintages of Sloan get 96-98 points from Parker, and price on the secondary market is highly sensitive to very small variations in Parker's rating. The 2003-2005 vintages got 96 points, and their resale value is in the $225-$300 range. The 98-point wines from 2001 and 2006 seldom trade under $350, and $400 is a typical retail price for the 2006. The only other 100-point from Sloan, the 2002 is a $500 bottle (sometimes higher, rarely lower).

Finally, recognize that large variations in auction price can be the result of selling a couple of odd bottles vs an original wooden case (six bottles in the case of Sloan). The wine market volatility of the past couple of years hurt small speculators disproportionately. As I described here, with the example of 1982 Mouton, sellers of an owc get plenty of protection in a falling market; plan accordingly.

2005 Bordeaux First Growths

Wine investors speculating in the 2005 Bordeaux first growths should consider the 2005 Mouton Rothschild.

First, the range of scores for these wines is not big. Parker scored them all in the range of 96-98+, so the price differences are not representative of relative quality.

The following chart shows today's pricing of the 2005 First Growths compared to their prices as futures in the summer of '06:

Wine..............Futures Price/Current Price ..... % Change

Mouton.................... $575/$570....................... -0.08%

Latour...................... $765/$980....................... +28%

Haut Brion............... $626/$660........................ +5%

Margaux.................. $712/$830........................ +16%

Lafite........................ $604/$1200..................... +99%

Over a long enough time span, inflation, diminishing supply, and a long window of maturity should be expected to drive all the 2005 first growth Bordeaux to higher prices. However, buyers of Latour, Lafite, and Margaux appear to be premature, and I would expect these wines to be at risk for a correction.

While Haut Brion may also appear to be poised for growth, anyone willing to pay $660 for a Haut Brion should have a close look at the 1990, or the 2000, both of which trade for around $600 at auction, and have a much lower supply, because we've been drinking them up.

The 2005 Mouton, in contrast, has not budged in price in the last three years. Older vintages (like the 2000 - $840) actually cost more, which is what a speculator would expect. It may be the first of the 2005 first growths to move higher from present levels.

M Etain Price Revealed

The Scarecrow winery has priced M. Etain at $125/bottle. The un-rated wine is from the 2008 vintage, and is available in 2-bottle cases (maximum 2 cases).

From a collector's perspective, anything Scarecrow puts out is highly desirable. But does M. Etain make sense for a wine investor?

Consider that the Grand Cuvee, Scarecrow, received a (92-94) score from Robert Parker, which is his lowest score for any Scarecrow wine. What would we predict the second wine to score? It's anyone's guess, but further consider that the year 2008 had big problems for the Napa Valley, including a devastating spring frost, and a summer drought. The bottom line is that it was very difficult for anyone to make a great wine, and M. Etain is unlikely to offer wine investors a significant profit.

Scarecrow Introduces M. Ètain

In an email to allocation members, Scarecrow announced a new wine called M. Ètain for 2008. Is this a luxury cuvee, or a second wine? Probably the latter. The email describes:

“The portion of juice that wasn’t included in the final Scarecrow blend was so undeniably superb that we were inspired to bottle it...M. Étain 2008, a stunning Cabernet Sauvignon which charmingly displays a perfect balance between power and elegance.”

The email goes on to say that M. Ètain won’t necessarily be offered every year. To me, it sounds like a second wine, with limited availability.

Should you buy it?

Scarecrow is coming from a big success with its 2007 offering, but consider that 2008 was a difficult year for Napa. The 2008 Scarecrow has a Parker score of (92-94), the lowest of any Scarecrow, and the 2008 M. Ètain is still unrated -and unpriced. This year’s 2008 M. Ètain offering might be fun for collectors and consumers, but it is unlikely to be worthwhile for speculators. I expect the best juice went into the 2008 Scarecrow.

Wine Market Forecast and 2009 Bordeaux Futures

Top vintage Bordeaux futures are often recognized as having delivered handsome returns, and investors may be particularly tempted by the 2009 futures when they consider the other great vintages released into recessions: 1990 (futures offered during the recession of 1991), 1996 (futures offered during the currency crises of 1997), and 2000 (futures offered during the recession of 2001).

Buyers of 1990, 1996, and 2000 Bordeaux futures did very well (around 300-400% for the first growths), but their outsized returns were powered by the internet bubble of the late ‘90s and then credit bubble of the early 2000s. Other great Bordeaux vintages, such as the 2005 have not done as well, with the ’05 first growth futures collectively delivering 5% average annual returns to date. Should 2009 Bordeaux futures follow the historical precedent of the other recession offerings, such as the 2000? Or will it be more in line with the bubble prices of the 2005s?

Investing in 2009 Bordeaux futures is not without substantial downside risk; bubble money is still chasing these wines. See the full story of how the un-popped Asian real estate bubble is inflating Bordeaux prices here.

At $1000-$1500/bottle, the 2009 first growths cannot be justified, when there is mature wine selling for less. Wine investors would be better off buying OWCs of 1982 Mouton, or 1989 Haut Brion, which trade at similar levels to the ’09 futures. Today’s situation is very different from July 2001. At that time, 2000 first growth futures were offered at $250/bottle, while the 1982 first growths traded between $400 and $500. The 60% premium for the ‘82s made sense; older vintages should cost more. Today, they don’t. Wine investors should expect either a price drop in the 2009s, or a big price jump in the mature vintages.

I wouldn’t rule out both.