Pretty much every vintage of Chateau Lafite Rothschild, one of the original First Growths in the 1855 classification of Bordeaux, has increased hugely in price in the past couple of years. This has been driven primarily by huge demand from the Far East, and China in particular. The annual production of the Chateau wine is 15,000 to 25,000 cases depending on the vintage. They also produce 20,000 to 30,000 cases of a second wine Carruades de Lafite. This number has not changed much in the past few decades, but the demand, on a global scale has vastly increased. Basically there is the same amount to be shared out between many more people.
In the first week of each April the previous year’s wine is tasted in an unfinished form (it requires another couple of years in oak cask to properly mature) in many tastings organised in Bordeaux after which the wines are released for sale as futures. This is the best way to get hold of rare wines at probably the most reasonable prices. However, the catch is that you have to wait two years until the wine is bottled and then a few more before it reaches maturity. Though the prices are not instantly available, the Chateaux of Bordeaux release prices from the middle of April into June, and sometimes July. The protocol is usually that the lesser estates release first with the top properties at the end.
This year the system was turned on its head by a new, potentially inevitable development. Liv-ex (London International Vintners Exchange) is a fine wine trading platform set up in 1999 on which private collectors and merchants can offer their wines for sale and set bids for prices which they would like to pay for wines. It recorded the trade of a case of Chateau Lafite Rothschild 2009 at £10,000 before the chateau had released the wine onto the market. This has several implications. First, the business men at Lafite were aware that there are people who are prepared to pay £10,000 for a case of their wine that has never released over £4000. Many vintages of Lafite are currently trading in excess of £10,000, but certainly not all. Taking influential American wine critic,Robert Parker’s score of 98-100, which puts the 2009 in the bracket of potentially being a perfect wine, into account, it is a reasonable assumption that at some stage in its life the 2009 will exceed £10,000 per case.
With that in mind, will these trades determine future release prices? Secondly, someone is assuming that the release price will be lower than £10,000 and is intending to take a quick return once the wine is available for sale. The problem with this is being sure that the contract of the trade is completed by actually getting some of the wine. Allocations have been extremely small this year with many merchants unable to get sufficient stock to fill all orders for certain wines. Lafite will be rarer than usual this year; let’s hope the seller can deliver to the buyer. The third aspect of this trade is the increasing price of fine wine as an investment and the fact that this trade illustrates how distant from the normal wine lover these top wines are getting. The world of wine is changing, and when we start to see futures of futures, it is not really just fermented grape juice any more.