Louis Roederer’s "bottled bling" is consistently outperforming the competition
ACTIVITY IN September was pretty flat. It is a month that usually takes a week or two to get going (after the holiday hangover), but this year the market struggled more than usual. Trade through the exchange was flat on August’s levels, and flat year on year.
The Liv-ex 100 composite was flat for the month while stock held by the UK’s leading stockholders was … marginally up! The table below – which shows the major movers for September – tells a pretty interesting story.
Having banged the drum on a number of occasions in this report to the effect that young wines are clearly overvalued relative to the back vintages, this theme is starting to play itself out in the market.
While 2003s have come off in recent months, the biggest decliners in September were 2000s. Conversely, wines from the eighties and 1990 dominate the gainers.
This is a theme that is becoming more and more prevalent as the best 1982s and 1990s, in particular, are becoming more difficult to find. Another wine that has regularly featured is Louis Roederer Cristal 1996, which this week broke through the £1,000 per case level on the exchange for the first time.
The favourite tipple of every gangster rapper and footballer’s wife, demand for this wine has been without peer over the last few years. We have created a composite (see right) of the best vintages from the three biggest brands in the game – Krug, Dom Pérignon and Louis Roederer Cristal – and have charted these against three of Cristal’s most recent vintages.
While the chart shows that these top marques have produced steady returns, Cristal is the consistent outperformer. These superior returns are not down to critical acclaim, because Krug or Dom Pérignon regularly get higher scores.
Apart from the "bling" factor, which has driven demand for the wine since the new millennium, the cause of the out-performance is supply. Only about 25,000 cases are made, which is less than Krug and materially less than Dom Pérignon.
Furthermore, the make up of Cristal’s customer base means that it is being consumed early rather than cellared. As a result, stocks quickly dry up in the secondary market. It is perhaps not surprising that Cristal 1996 has also trounced our blue chip Bordeaux index by 50% since its release!
The Liv-ex 500 composite index tracks the world’s top 500 wines from the most celebrated regions and vintages. Prices reflect the best offer or last trade from the UK’s leading merchants.
The index value was 100 in May 2001. Red Bordeaux accounts for over 60% of the index value, which is broadly representative of industry stock levels.