Lafite hits the fan | FT Alphaville

Lafite hits the fan

As markets in general turn a deeper shade of claret…

This passed us by: August was also a poor market month for fine wines. Really quite poor given their massive run in the last year. A snapshot of the benchmark indices via Liv-ex, the guardians of the market:

The major culprit here appears to be recent vintages of Chateau Lafite Rothschild Bordeaux. As Liv-ex note on their blog, Lafite accounts for a large weighting in the Fine Wine 100 index and its earliest vintages tend to sway prices quite a bit. There’s a bit going on here — questions over Chinese demand (a recent auction of Lafite vintages in Hong Kong set 2011 records for wine prices but still fell below pre-sale estimates) but also a market structure that may be out of whack and more than a bit illiquid. The Lafite 2008 vintage was praised to the high heavens by the critic Robert Parker at the time, whose influence is such that the wine was (over?) priced to suit. The first growths of 2010 Bordeaux went through similar pricing troubles only recently, as the FT’s Jancis Robinson noted.

We’d say it’s a market hobbled by its own structure… although looking at other asset classes, hardly an exception these says.

Related link:
Vive le vin de Bordeaux – FT Alphaville (2009)