Bordeaux 2014 - where is the value?

by Liv-ex

As Bordeaux 2014 is released in bottle, Liv-ex takes a closer look at it in terms of price, quality and value compared to other vintages. 2014 is the first recent vintage that has not been reviewed by Robert Parker. It is being released in bottle following strong price gains by the Bordeaux market, albeit aided by a weaker Sterling. Liv-ex has applied its “fair value” methodology1 to help identify where wines might offer value relative to other vintages. 

Price rises led by the second wines 

The Liv-ex Bordeaux 500 index has gained 23.1% since the end of 2015. The second wines of the First Growths have witnessed some of the most spectacular gains as brand-driven buyers, particularly in Asia, seek exposure to the most prestigious brands at lower prices. For example, Petit Mouton 2014 has already more than doubled in price since its merchant release. Interestingly, Liv-ex’s “fair value” methodology shows age to be more important than critic score in determining prices for certain second wines, particularly Carruades Lafite. 

Left Bank receives the most praise from critics 

The 2014 vintage received an average of 93 points by The Wine Advocate, putting it on a par with the 2006, 2008 and 2012 vintages. The top five scoring wines according to The Wine Advocate were Cheval Blanc, La Mission Haut Brion, Latour, Montrose and Vieux Chateau Certan which were all awarded 95-97 points by Neal Martin. Martin, along with other critics including James Suckling have praised the quality of the Left Bank 2014s, in particular. 

Where’s the value? 

Liv-ex’s “fair value” methodology suggests that, on average, the 2014 vintage looks attractively priced relative to other vintages. Lafite Rothschild 2014, in particular, looks interesting compared to the Chateau’s other vintages. Likewise, Haut Batailley, Chapelle Mission, Pichon Lalande and Clinet might offer value. On the other hand, Beausejour Duffau, Pontet Canet, Haut Bailly, Petrus, Lagrange Saint Julien, Haut Brion, Leoville Barton and Palmer appear to be priced quite highly relative to similarly scored wines from the same estates.

Liv-ex previously commented that Bordeaux 2014 was priced quite attractively during En Primeur (see: “Bordeaux 2015: Price Guide for Liv-ex Members”, Spring 2016). This was the result of ex-chateau prices falling back in line with the secondary market for the first time since the release of the acclaimed 2009 and 2010 vintages. Since then, the fall in Sterling has also helped to boost prices of Bordeaux 2014, along with the rest of the fine wine market. With Bordeaux 2014 now being released in bottle, Liv-ex takes a closer look at the vintage in terms of price, quality and value, using its “fair-value” methodology. 

Price rises led by the second wines 

The 2014 vintage is being released in bottle as the Bordeaux market enjoys some impressive upward momentum. After four years of decline, the Bordeaux market stabilised in 2015 and posted impressive gains in 2016. Currency has played an important role in the Bordeaux market’s recovery with a weaker Sterling making fine wine prices more attractive for Euro and Dollar-based buyers. 

The second wines of the First Growths have enjoyed some of the largest price rises since En Primeur release. The Second Wine 50 Index is the best performing sub-index of the Bordeaux 500 since the market low in June 2014, having increased by 35.6% over the past twelve months. As can be seen in the table below, the top three highest risers of the entire vintage are all second wines: Petit Mouton, Carruades Lafite and Pavillon Rouge. Second wines have become particularly popular with the brand-driven Asian market where they are seen as extensions of the Premier Crus, offering access to the top Bordeaux brands at more attractive prices. 

Historically, prices for the second wines have tended to increase only when they have become physically available. However, with the broader Bordeaux market now in recovery, it would seem that buyers have decided to get ahead of the game.

How is 2014 priced compared to other vintages? 

The chart below plots the average price of recent Bordeaux vintages against their respective average Wine Advocate scores, based on the wines of the Bordeaux 500 index. The trend line highlights the relationship between average score and price. Robert Parker’s scores are used for the 2004-2013 vintages and the mid-point of Neal Martin’s scores are used for the 2014s. 

The trend line shows that lower-scoring wines tend to trade at similar prices, while points become increasingly valuable for higher scoring wines. Vintages below the line potentially offer greater value for money than those above the line. The 2014 vintage falls just below the line, hinting that prices may be relatively attractive on average.

Digging deeper to find value in Bordeaux 

In order to identify which Bordeaux 2014 wines offer the best value compared to other vintages from the same estates, we plotted individual charts for 100 Bordeaux wines. Prices were plotted against scores, and trend lines were drawn for the 50 wines of the Bordeaux 500 index as well as for 50 other prominent Bordeaux reds. Each chart and trend line was plotted for ten vintages (2005-2014) using Robert Parker’s scores for 2005-2013 and the mid-point of Neal Martin’s barrel ranges for 2014. Sauternes and wines that do not have a full set of Wine Advocate scores have been excluded. We then focused on the wines within this group that displayed correlation between price and score of at least 50%. In total, 42 wines qualified. 

For each of these wines we quantified the difference between the current Market Price for the 2014 vintage and the price suggested by the trend line. Wines with Market Prices significantly above the line may be considered most overvalued while those falling below the line may be potentially undervalued. For example, the chart below shows the individual trend line for Lafite Rothschild, where the 2014 vintage is priced 31.8% below the price suggested by its trend line.

Conclusion 

In the context of a rising market many wines from Bordeaux 2014 have seen significant increases since En Primeur, even ahead of their physical releases. Despite this, a number continue to appear attractive next to other vintages. Lafite Rothschild 2014, for example, falls well below the price generated by our “fair value” methodology. Others – Beausejour Duffau, Pontet Canet and Haut Bailly, to name a few – are priced well above this level. With the wines being released in bottle during this interesting time for the market, buyers will no doubt be more aware than ever of the need to hunt for relative value.