Lafite became the first of the first growths to announce their price, at €280 per bottle. In the background, Carruades de Lafite, the second wine of Lafite, was released at an ex-negotiant bottle price of €90 which realistically puts the market price just under €100. How does this compare to the current mid-prices of recent vintages?
Sticky – in a word.
Carruades tells an interesting story of price appreciation. Along with many other fine wines prices reached record highs in 2011 and came down thereafter; vintage 2000, for example, reached SFr 485- and has since fallen to SFr 270-. Vintages 2009 and ’10 were released at appropriate prices relative to others at that time, and consequently have shown negative returns as the general market prices have since corrected sharply. However, as Carruades is consistently released below market value, these release prices have had head-room to retain nominal rigidity since the rises of 2009 and ’10 - and consequently the back vintages have held their appreciation alongside the premium for aged wine closer to its drinking window.
Below we chart Carruades release prices against the price of comparable physical vintages at the time of release. The gap between the market price of comparable physical vintages and the Carruades release price is still high, but the market may not be in the same place in 18 months from now, when the vintage becomes physical. Indeed both 2009 and ’10 that were bought en primeur will currently have negative returns (-27% and -47% respectively) and, for recent vintages in general, the deflation of the market has limited the consumer surplus when recent vintages have been delivered.
Therefore, as with any futures market, forecasting the real rate of return hinges on what the market is likely to do as the futures contract matures. Looking finally to the most recent vintages, Carraudes 2011 has produced some modest returns in this falling market, although 2012 will struggle and the 2013s probably need a more general shift in the market sentiment in order to find favour.