WIne Investment Friday

This newsletter is designed to bridge the gap between trade and the investor. Each week we will help investors better understand the nuances of why some cases appreciate and some standstill. We will unpick the characteristics that construct financial potential to help your money work smarter. 


This week we are analysing a case of:

Lafleur, 2005

Explaining what creates a great investment wine and how it interacts with the market. Ultimately showing you the role this case could play in your portfolio.  


Beneath the Label: 

When you think of the best wines of the right bank, Lafleur is undoubtedly one of the first wines to make the list. Sitting comfortably on a par with such titans as Petrus and Le Pin it is a true legend. 

Critic Score: 100 Points – Robert Parker
This wine is described by Parker as rivalling the 1982 and 2000 vintages, a truly titanic statement. 

Region Rating: Pomerol, 95 T
The T is key, a tannic wine and subsequently a slow developer. 

Drinking Window: 2020-2050
After quite some time maturing the wine has entered into the drinking window and will begin being consumed in volume. 

Production Volume: 1000 cases
Right bank productions are typically smaller than the Bordeaux average but 1000 is small by any global measure. 

Summary:
This is one of the only wines that consistently competes with Petrus and Le Pin. When you consider that a case of Petrus 05, holding equi-scores for quality, demands £17,000 per 6, this is somewhat of a bargain. 
Lafleur’s production volume and packed waiting list ensures it is one of the most exclusive wines in Bordeaux. This is a top top wine and the price action acts accordingly.


“The only wine to not just rival, but outperform Petrus countless times”


Money Matters:

Brand Power: 96/100, rank 4th in JF Tobias Brand Power Metric
The highest-ranked Bordeaux Brand in the world, an extremely relevant wine and one that can take on the dominance of the top Burgundian producers.  

Liquidity: 50%
The wine is less liquid because of the price point.   

Inter-Trade Price Volatility: 4.8%
The wine has performed extremely steadily over the past 5 years as to be expected from such a fundamentally sound wine. These top right bank wines are very uncorrelated from the market thanks to their well-heeled, insulated buyers. 

Price History: 

Summary:
The wine has tracked along extremely well for the last 5 years and it is likely to continue to do so. It has entered into its prescribed drinking window suggesting the primary underlying driver of price, the supply and demand imbalance, is likely to become an ever-increasing driver of the price. As the item becomes ever rarer those end consumers desperate to try or own the item should drive the prices consistently higher.  


Position for Profit: 

Shrugged off the Black Swan. 

The first thing to note is the stability of the top right bank wines. All three of Lafleur, Le Pin and Petrus have all held their value through the recent market slide. Their lack of correlation to the market is very appealing. The pool of buyers drinking this wine are more insulated than most and it shows. 

Lafleur is a wine which holds very little downside risk, but the potential for a very big win in the long term. Described by Parker as an equal to 1982 in terms of quality, the 05 it would increase nearly 4 times in value if it were to reach the same heights as its comparison. That sort of potential is rarely found in an asset that has just shrugged off a black swan event. 

The Author

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Jake Leighton