A Study in Second Growths

Even for a bad vintage, second growth can become lucrative.

 

We all know what 2007 was. It was a bad year. And I am not just talking about Bordeaux. That having been said, 2007 is not a dog per se, at least not according to those in the press who review such wines. Some wines that I think are of

interest if not from an investment potential, then from a drink now and enjoy the discount perspective:

For fans of Parker, he has rated several 2007 St. Emilion properties as 90+ potentials based on barrel tastings, and what is interesting is that many are "affordable" as Bordeaux goes, especially in light of the more favorable exchange rates of recent history( 1.2824 at the time of this writing). Let's look at two properties:

 

Larcis-Ducasse, St. Emilion, $45/btl 92-94RP

Croix de Labrie, St. Emilion, $51/btl 92-94RP

 

Just three examples of wine that even in an all around poor vintage, managed to garner some praise (and even if they "pan out" at a 92, not a bad showing for the $45-$53 price range) despite it all.

 

Larcis-Ducasse

 

2003 - sold at auction for - $24/btl

2002 - unsold at auction for - $21-$23/btl

1998 - sold at auction for - $16-$22/btl

1997 - sold at auction for - $17/btl

1996 - unsold at auction for - amount undisclosed

1995 - sold at auction for - $23/btl

1994 - sold at auction for - $9-$11/btl

1993 - sold at auction for - $9/btl

 

2004 currently sells online for $60ish a bottle, 2005 starts out at $180 a bottle, 2006 can be had for about $48 a bottle, and 2007 futures are still being had for around $45-$50 a bottle. Note the spike in 2005, where the Chateau had an unprecedented high score (98RP) versus the years either side of it (2006 with a barrel tasting rating of 91-94RP and 2004 with a 92RP). All of this, mind you, regarding a wine made by Derenoncourt, a well respected force in winemaking in Bordeaux.

 

Croix de Labrie

 

2007 - sells retail for - $52-$58/btl (futures)

2006 - sells retail for - $50-$59/btl (futures)

2005 - sells retail for - $85-$114/btl

2004 - sells retail for - $50/btl

2003 - sells retail for - $70-$93/btl

2002 - sells retail for - $81-$101/btl

2001 - sells retail for - $85-$95/btl

2000 - sold at auction for - $78-$140/btl

(Precious little auction data available, small and until recently unnoticed producer in St. Emilion despite being a Rolland joint.)

 

 

2000 currently sells retail for $110/btl on up. So whoever got the bottles for $78 made a nice little buy, but those who dropped the $140 (plus buyers premiums) took a bath percentage-wise. Note the prices for 2002 retail, an anomaly in my mind as the wine scored one of it's worst scores in a decade (88RP), but the relatively minor bump in price in 2005 where the wine received a 94RP, second only to it's 2000 score of 95RP. So why are the superior vintages of 2000 and 2005 trading at more or less equal prices to 2002 and 2003? I don't know. What I do know is that 2007 is far less, as it should be given the vintage's reception in the press, but note that 2007 is rated a 92-94RP. That means that it could be theoretically tied with the 2005, and one point behind the 2000. One point means a difference in price of anywhere from 30% to 55% of the price of the more "successful" vintages.

 

I'd buy a wine that was one point lesser, for half the price of a wine that scored only one point higher. Caveat, the 2007 score is a barrel tasting, which means a lot can change over time as the wine is transferred from barrel to bottle, and aged prior to shipping. This is why you will see barrel age ratings listed almost as a quote, with a range of scores separated by a hyphen (i.e. the 2007 Croix de Labrie score of 92-94RP) to allow the wine and more importantly the taster, some wiggle room.

 

So conversely, the 2007 could go as low as 92 points, maybe even 91 points, and be potentially 3 points behind the 2005 and four points behind the 2000. Here is where speculation comes to bear. A 95 point Bordeaux and a 91 point Bordeaux, for trading purposes, are two completely different animals, even when produced by the same chateau, the same winemaker, etc... so if the release scores (when the wines are released in their bottles and submitted to the press for review) settle high, you got a killer deal, if they settled low, well, you got a wine similar to the 2001 (91RP) which means you are still making out well, seeing that the 2001 is trading at $85-$95 retail, versus your still available futures price for 2007 of $52-$58 per bottle. Even worse case you are making a return of around 38%, day one, based on a comparative buy of 2007 versus 2001.

 

These are just two players in the "secondary" Bordeaux market that we have considered today. I still think while it is chic to bash the 2007 vintage, a lot like it was in Napa in 1998, a 94 point Bordeaux for $50, that shows signs of only increasing in value is not a bad investment.