Wine Investment Friday

This newsletter is designed to bridge the gap between trade and the investor. Each week we aim to 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:

La Mondotte – 2010

We start the year by exploring the decline in demand for mid-tier right bank wines and the consequences this has when it comes to your potential investment.

Beneath the Label: 

Part of the large Von Neipperg stable, La Mondotte is a wine of notable pedigree. Despite the estate’s relative youth, the first vintage coming in ’96, their wines have on multiple occasions garnered top critic scores including the illustrious perfect 100. Yet like many of the right bank estates that sit beneath the ethereal tier of the super right banks, this estate is very much out of vogue. 
*photo is ’05, not ’10*

Critic Score: 99 Points – Robert Parker / 96 points – Lisa P.B
For the year and the release, 99 was the minimum to keep pace with the average score from Parker. Lisa giving a more reasonable yet respectable score. 

Region Rating: St. Emillion – 94T
2010 in Bordeaux is celebrated as one of the best, yet this appellation lagged behind the rest a touch. 

Drinking Window: 2020-2043
There is some debate as to the ageing capacity of some of the right bank. While this tends to be in relation to taste preferences it is worth holding this somewhere in the back of your mind. 

Production Volume: 1,000 cases
Right bank production averages are lower than the left, yet this is still a particularly finite supply. 

The dilemma with many of these right bank wines is that from a quality perspective we have many of the key boxes ticked. Good critic scores, lowered production volumes, strong pedigree and classification. From this perspective, these wines are perhaps even sizing up to be a potential substitute for the somewhat bloated super second class. 

“A skyscraper-like mouthfeel, silky tannins and a tremendous finish”.

Money Matters:

Brand Power: 61/100, rank 154th in JF Tobias Brand Power Metric
This score places the estate amongst the very bottom of the table. Unfortunately, collected here are many comparable right bank estates.

Liquidity: 20%
Right bank wines are at present extremely difficult to sell on. They have been out of vogue for some time and the liquidity levels have been seriously hurt. 

Inter-Trade Price Volatility: 3.87%
While this wines initial price history is somewhat marred by the anomalous release prices of ’09 and ’10, the trades that have occurred show this wine to have very much plateaued, lacking in positive volatility despite the small volumes. 

Price History: 

It is clear then that it is the financial traits of these wines where we find the weakness. The lack of brand power is a crucial fault, this is, after all, a consumable product. Without consumption, positive media and an awareness from those consumers that matter, frankly the quality is almost entirely muted. Wine trends like any other good moves through cycles and for some time now Merlot has been out of favour. Combine this with a historically high financial barrier to entry that has not be addressed and you have a stagnant tier of the market. This naturally spills over into another key characteristic, liquidity. The exit of a trade is just as important as the entry. If you cannot do this maximising profit, then the whole experience has produced an opportunity cost on that capital. 

Position for Profit: 

This article gives off the impression that at present right banks are to be avoided. The lack of brand power and therefore liquidity is, at present, a terminal issue and one that should not be taken lightly, especially with the markets present attitude toward the appellations.

Now if we were to force a scenario where you might speculate on some of these wines, there is perhaps one. Trends in all goods are cyclical, there is going to be a time when these wines are back in vogue. Is that going to be within in the next 10+ years? Maybe. Threfore the approach has to be a long term one, and one certainly employing as a risk-averse approach as possible. A purchase must be of a young wine, to maximise the lifetime and therefore the chance of trends altering. Furthermore, do not consider anything other than a wine with a top critic score, 98 points or above. Then cross your fingers and ultimately be prepared to enjoy what is a delicious wine if it does not work out.

The Author

Jake Leighton