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:

Mouton Rothschild, 1986

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: 

A first growth that fought for the designation. The bloodymindedness of the Baron to have the Chateau’s legal designation raised, is a trait that has become an integral part of the DNA at Mouton. The Chateau leads the way with innovation and is constantly pushing regional standards. 

Critic Score: 100 Points – Neal Martin / 100 points – Robert Parker
“An Aristocratic wine… that is yet to hit its peak.”

Region Rating: Paulliac, 94T
This is a tannic wine that is going to trade for 50 more years at the very least. 

Drinking Window: 2021-2050

The fact it is yet to reach its peak makes it a really exciting prospect from a price perspective.  

Production Volume: 20,000 cases
Incredible to consider that the Chateau manages to produce some of the best wines of the vintage on such a large scale.

Summary:
The two focal points here are the critic scores and the position within its maturity timeline. 

To hold two 100 points from both the top critics for over 20 years is an accolade rarely seen. Many wines maintain similar scores for a decade or so, but only those that have a certain austere composition are able to stand the test of time and once they breach 20 years, another 20 is a given!

This feat is made even more impressive considering this Mouton is not yet reached its peak. Both critics talk of this wines potential to evolve further which is exciting from a quality perspective, but more importantly for price speculation. 


“This is a serious, aristocratic Mouton, a true vin de garde”

Martin 


Money Matters:

Brand Power: 92/100, rank 14th in JF Tobias Brand Power Metric
Recent best in show E.P performances have boosted Moutons image significantly around the globe. 

Liquidity: 70%
First growths such as this with years left in the tank, are incredibly liquid even at this elevated price point. 

Inter-Trade Price Volatility: NA
As shown in the graph below, trading on the exchange has dried up in the last 5. This reflects the demand for the wine and its increasing rarity. Merchants do not need to list the wines publicly, they can always find a home amongst their connoisseurs. 

Price History:

Summary:
The wine is underpriced when you consider the vectors and upside potential. From a fundamental quality perspective, it is rivalling the very best in Bordeaux’s history despite not yet getting into its stride. The anticipation of this improvement in quality is normally met with an increase in price. Speculators and connoisserus keen to secure their supply. This noticeable uptick is yet to occur leaving spread for it to explode into.


Position for Profit: 

Tail end Momentum. 

Both retail customers and trade members alike follow critic advised drinking windows with an incredible amount of reliance. Whether dictating their buying patterns or aiding the decision making around which cork to pop, there is a total trust in these suggestions. Whether this is an accurate practice or not is a whole other conversation for another time, the underlying observation remains accurate, drink dates are pivotal. 

There is a correlation between wines approaching their drink dates and their prices beginning to take off for a second time. The pricing for the 86 is yet to take off, despite sitting just a year from the opening of its drink date. I believe this represents a great opportunity to catch the start of the second price move of a 20+-year-old double hundred first growth.

This growth period could extend across the next 50 years, making this a rock to position in your portfolio. A superb wine and a better investment.

The Author

Avatar

Jake Leighton