2015 Bordeaux Futures: Worth Buying?

Posted by | Posted in Commentary | Posted on 07-14-2016

From Wikimedia.

From Wikimedia.

The excitement over the 2015 Bordeaux vintage is palpable. Early indications suggest that it is the best vintage since the superlative duo of 2009 and 2010. However, the quality of the 2015 vintage likely is not as high or as uniform as these prior years. The communes of Margaux, Pessac-Leognan and Pomerol appear to be the stars with the northern Medoc being of more variable quality due to late arriving rains.

The absence of a quality vintage for almost a half-decade has led to high expectations for the 2015 futures campaign. However, the stratospheric release price and subsequent poor investment performance associated with the 2009, 2010 and 2011 vintages have caused many to view the Bordeaux futures system with skepticism. Therefore, before we get too seduced by the hype surrounding this new vintage, we should consider whether the current price of these wines make them a compelling value proposition at this juncture.

When analyzing any futures offering for a specific wine, I ask the following three questions:

  1. Is this a wine worth purchasing based on my prior experience with previous vintages and/or its initial description and critical rating? Basically, is this a wine I really want to own?
  2. Is this a wine that is made in such limited quantities that I would need to purchase it via futures to obtain an allocation? Think Le Pin, Ausone, Lafleur, Hosanna, etc.
  3. What is the relative value of this wine compared to the most recent similar quality in-bottle vintage? Put another way, is the current futures price of the wine at least 20% below the lowest current retail price of the most recent similar quality in-bottle vintage? As an aside, I use 20% as a threshold because I feel that it is the minimum discount needed to justify the time-value of money and counterparty default risks associated with buying a wine two years before it is delivered. For example, if I can earn at least 5% per year by investing in stocks and bonds and I want at least a 10% discount to cover the risk that the merchant may not actually deliver the wine when promised, my minimum discount is 20%. I also feel that this discount is sufficient to justify purchasing a wine that has not yet received a final in-bottle rating.

If I can answer question #1 and either question #2 or #3 in the affirmative, I will consider purchasing the wine via futures. However, as you may have guessed, the most important questions is #3. Why? Because it is the only question that deals with monetary value and risk. Moreover, it is the only criteria that can be used as a litmus test to determine the relative value of a specific futures offering for an entire vintage, not just a specific wine.

Now that you understand how I generally analyze a futures offering, let’s look at the 2015 futures campaign to see if it passes muster.

In applying my relative value test (i.e., question #3), I chose to examine a broad cross-section of wines from all of the major Bordeaux regions. This group includes both classified and non-classified wines. I also elected to use the 2012 vintage as the most recent comparative in-bottle vintage. I chose this vintage over 2009 or 2010 because I feel that, although 2015 is definitely a superior vintage to 2012, the variable quality of the 2015 vintage makes it more closely aligned with that of 2012. In fact, if you look at the wine scores in the chart below you will see that for many wines their 2012 and 2015 scores are fairly similar. Moreover, the older age, significantly better quality and high initial release price of the 2009 and 2010 vintages make them a poor relative value benchmark.

2015 Bordeaux Futures: Relative Valuation Chart

 

Wine 2015
Futures Score
2012
Bottle Score
2015
Futures Price
2012 Current Price Percentage
Difference
St. Estephe
Montrose 93-95 92+ $135.00 $85.00 59%
Cos d’Estournel 92-94 93+ $159.00 $124.00 28%
Phelan Segur 91-93 87 $40.00 $38.00 5%
Lafon-Rochet 90-92 86 $38.00 $43.00 -12%
Capbern (Gasqueton) 88-90 86 $19.99 $22.00 -9%
Pauillac
Mouton-Rothschild 97-99 94 $515.00 $390.00 32%
Pichon Baron 96-98 93 $125.00 $93.00 34%
Lafite-Rothschild 94-96 91 $570.00 $489.00 17%
Pontet-Canet 94-96 93 $100.00 $80.00 25%
Grand-Puy-Lacoste 94-96 91 $65.00 $49.00 33%
Lynch-Bages 93-95 87 $115.00 $99.00 16%
Batailley 93-95 92 $42.00 $53.00 -21%
Lynch-Moussas 92-94 89 $37.00 $36.00 3%
Haut-Batailley 92-94 92 $40.00 $38.00 5%
Pedesclaux 90-92 89 $40.00 $40.00 0%
Pibran 89-91 88 $32.00 $30.00 7%
St. Julien
Leoville-Las-Cases 95-97 93+ $185.00 $125.00 48%
Ducru Beaucaillou 94-96 90-92 $160.00 $100.00 60%
Beychevelle 92-94 92+ $67.00 $72.00 -7%
Leoville-Poyferre 92-94 92+ $75.00 $68.00 10%
Lagrange 90-92 86 $41.00 $40.00 3%
Margaux
Chateau Margaux 98-100 95 $519.00 $395.00 31%
Rauzan-Segla 96-98 94+ $70.00 $58.00 21%
Giscours 94-96 90 $50.00 $44.00 14%
D’Issan 93-95 95 $56.00 $48.00 17%
Malescot St. Exupery 93-95 93 $47.00 $43.00 9%
Brane Cantenac 93-95 91 $62.00 $50.00 24%
Cantenac Brown 92-94 88+ $47.00 $45.00 4%
Siran 92-94 87 $26.00 $25.00 4%
Dauzac 91-93 87+ $40.00 $55.00 -27%
Alter Ego de Palmer 90-92 93 $61.25 $69.99 -12%
Pessac-Leognan & Graves
Haut-Brion 98-100 98 $515.00 $395.00 30%
La Mission Haut-Brion 97-99 97 $399.00 $195.00 105%
Haut-Bailly 95-97 96 $93.00 $72.00 29%
Pape Clement 95-97 97 $77.00 $80.00 -4%
Malartic Lagraviere 94-96 94 $47.00 $39.00 21%
Les Carmes Haut-Brion 92-94 94 $63.00 $50.00 26%
Latour Martillac 92-94 90 $33.00 $29.00 14%
Larrivet Haut-Brion 92-94 89-91 $32.00 $36.00 -11%
De Fieuzal 92-94 89+ $34.00 $37.00 -8%
Domaine Chevalier (Blanc) 92-94 93+ $90.00 $85.00 6%
Chateau Olivier (Rouge) 91-92 88 $30.00 $35.00 -14%
de Chantegrive (Rouge) NR 89 $14.99 $18.00 -17%
Haut-Medoc & Medoc
Cantemerle 90-92 88 $29.00 $30.00 -3%
Lanessan 90-92 86 $14.99 $25.00 -40%
Senjac 89-91 86 $16.00 $24.00 -33%
Listrac & Moulis
Fourcas-Dupre 91-93 85 $22.00 $27.00 -19%
Poujeaux 90-92 89 $29.00 $30.00 -3%
Pomerol
Vieux-Chateau-Certan 98-100 92-94 $230.00 $140.00 64%
Lafleur 97-99 94+ $750.00 $475.00 58%
L’Evangile 96-98 94 $209.00 $145.00 44%
L’Eglise-Clinet 96-98 96 $250.00 $240.00 4%
Hosanna 95-97 97 $139.00 $170.00 -18%
La Conseillante 95-97 96 $153.00 $120.00 28%
Clinet 95-97 95 $80.00 $85.00 -6%
Gazin 94-96 95 $63.00 $67.00 -6%
Le Gay 94-96 94+ $100.00 $76.00 32%
La Fleur Petrus 94-96 95 $169.00 $144.00 17%
Trotanoy 94-96 96 $205.00 $208.00 -1%
Latour a Pomerol 93-95 93+ $99.00 $80.00 24%
Feytit Clinet 93-95 93+ $70.00 $65.00 8%
Clos de Clocher 92-94 92 $47.00 $48.00 -2%
La Cabanne 92-94 NR $33.00 $30.00 10%
Rouget 92-94 92 $44.00 $45.00 -2%
La Violette 92-94 97 $280.00 $216.00 30%
Neinin 92-94 91-93 $60.00 $46.00 30%
Enclos Tourmaline 91-93 89 $149.00 $130.00 15%
Les Pensees de Lafleur 91-93 87-89 $139.00 $150.00 -7%
St. Emilon
Canon 98-100 92+ $90.00 $63.00 43%
Figeac 97-99 91+ $139.00 $80.00 74%
Tetre Roteboeuf 97-99 NR $159.00 $179.00 -11%
Cheval Blanc 97-99 94 $659.00 $469.00 41%
Pavie 96-98 95 $325.00 $280.00 16%
Angelus 95-97 95 $325.00 $249.00 31%
Belair-Monange 95-97 95+ $155.00 $100.00 55%
Clos Fourtet 95-97 95 $95.00 $80.00 19%
Valandraud 95-97 95+ $140.00 $115.00 22%
Le Dome 94-96 93 $119.00 $100.00 19%
Larcis-Ducasse 94-96 95 $65.00 $56.00 16%
Bellevue 93-95 90+ $45.00 $55.00 -18%
Pavie-Decesse 93-95 95+ $125.00 $160.00 -22%
Troplong Mondot 92-94 96 $117.00 $80.00 46%
Barde-Haut 92-94 90 $34.00 $27.00 26%
La Gaffeliere 92-94 91+ $60.00 $74.00 -19%
Grand Mayne 92-94 89+ $37.00 $37.00 0%
Quintus 92-94 89 $129.00 $90.00 43%
Cote de Baleau 92-94 89+ $22.00 $23.00 -4%
Pavie-Macquin 91-93 93+ $72.00 $59.00 22%
La Dominique 90-92 93 $50.00 $36.00 39%
Virginie de Valandruad 90-92 87 $36.00 $45.00 -20%
Right Bank Satellites
Cap de Faugeres 92-94 87 $13.00 $18.00 -28%
Les Cruzelles 91-93 90 $26.00 $25.00 4%
La Chenade 91-93 NR $18.00 $25.00 -28%
Joanin Becot 90-92 90 $21.00 $22.00 -5%
Roc de Cambes 90-92 NR $50.00 $50.00 0%
d’Aiguilhe 90-92 NR $22.42 $24.00 -7%
Average Premium/ Discount vs.  2012         12%

*All wine scores are from The Wine Advocate. NR means Not Rated.
**All prices represent the lowest per bottle price listed by a reputable wine merchant on Wine-Searcher.com.

As the above chart shows, the average price per bottle for the 2015 futures vintage represents a 12% premium to that of the average current price for the 2012 in-bottle vintage. This price premium suggests that the 2015 futures campaign is generally over-priced.

Actually, this analysis is a bit simplistic in that not all of the wines offered in the 2015 futures campaign represent a poor value. Rather, several wines are priced at a significant discount to their 2012 counterparts. However, most of these wines are conservatively priced because they were released early in the futures campaign. See Pape Clement, Gazin, Hosanna, Batailly, Dauzac, Bellevue and La Gaffaliere. As the campaign proceeded, and it became clear that the first wines were well received, the trend was for each successive new release to come out at a higher price. The end result being that, as a whole, the 2015 futures campaign is not one to get excited about – at least from a comparative value standpoint. For my money, I would rather cherry pick a few of the highly rated and fairly priced 2012s and look to buy a select few of the best 2014s when they are released in-bottle this fall. If, however, you want an allocation of the 2015s, I would wait until they are released in-bottle since the majority of these wines likely will be selling at or close to their current futures price.

Mark E. Ricardo is a contributing writer for the Terroirst Wine Blog, the author of Simply Burgundy: “A Practical Guide to Understanding the Wines of Burgundy” and the founder of Trellis Fine Wine Investments, LLC, a boutique fine wine advisory firm. He also is the former wine and food columnist for the Washington Theater Review and an avid collector of fine wine. In addition to his wine related endeavors, Mark is a practicing attorney.

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