Top 10 worst estates for en primeur returnsBy Rupert Millar
Following up on the 10 best estates for en primeur returns, now is the turn of the 10 worst. Once again, this list is based on Liv-ex data taking the average ex-château release price per bottle (p/b) and current average bottle price relative to merchant release between 2004-2013.
Similarly, Lafleur, La Fleur Petrus, Le Pin and Petrus have been excluded from both lists as they don’t strictly adhere to the en primeur system and the Sauternes estates bar Yquem have also been excluded as they generally suffer unfairly in comparison with the reds and do not attract as much investment interest.
If they were included then Sauternes estates would have accounted for half of this list, Climens, Rieussec, Coutet and Suduiraut all having struggled to hold their value over the last 10 years.
Unlike the 10 best performers, this list is rather more balanced between Left and Right Bank estates and includes far more esteemed names.
The average bottle price at release over the last 10 years for these estates rarely dips below €100 p/b in comparison to the best performers where only two had an average ex-château price of over €50 p/b.
And although the best returns never went under 25% gains, the very worst returns range between over 35% and 3% losses over their 10 year average, most seeing losses of below 20%.
It should be noted too that while these are categorised as the “worst” performers in terms of en primeur returns, only one estate on this list has seen its average bottle price go below its average ex-cellar price although taken individually several of these estates have vintages were prices have tumbled below ex-chateau prices..
All prices quoted unless stated otherwise are ex-château and the “current price” quoted is based on prices relative to their merchant releases, from which the return is measured.
Straight in with this Pomerol standard bearer which has been having a torrid time of it of late. Underperforming in the Right Bank 100, four of the last 10 vintages are trading at or below the ex-château release price.
However, with an average ex-cellar release of €90.50 p/b over the last 10 vintages rising to around €121.60 p/b from the merchants, prices have only drifted -3.4% in total and now average €117.50 p/b.
9. Mouton Rothschild
The first growth of the moment and catching up to Lafite (which sits in 11th place) but not yet.
Mouton has generally outpaced its fellow firsts over the last year and picked up some momentum going into the Chinese new year of the Ram with a successful ex-cellar sale in Hong Kong.
An upgrade for the 2005 from Robert Parker was also beneficial. Be that as it may, the disparity between its average price ex-merchant and current price is -4.9%.
Ex-cellar prices p/b have averaged €282 since 2004, rising to €381.90 on delivery but the average price now is €363.10 p/b.
2013 price ex-négoce: €215 (-10%)
Average ex-château price: €279
Average ex-merchant price: €396
Average current price: €372
Yet another first growth and on that Liv-ex notes has “slipped marginally behind its peers” since the 2005 vintage. It apparently now trades at a 12% discount to the first growth average.
Although secondary market prices have apparently improved in the last year, buying en primeur has delivered “scant reward since 2008”.
Ex-château prices have averaged €279 p/b and risen to €396.5 when offered on merchant’s lists but the loss has since been -6%, current prices per bottle averaging €372.80.
And yet another (and final) first growth entry. The first with the best recent scores (back-to-back Parker 100 points in ’09 and ’10), Haut-Brion has seen trade pick up of late but high prices in recent years, has meant returns have been negative with many prices drifting back to their ex-cellar levels.
With an average château release of €284.50 p/b since 2004, merchants have been offering it at €376 but returns have softened by -7.9% to €346.30 p/b.
6. Léoville Las Cases
A Super Second that’s among the highest priced in the Left Bank 200 and highly rated by Parker (92 on average).
However, with spiralling prices buyers of LLC will only have seen a return on the 2004 and 2008 vintages.
Overall returns are down -10.6% on average, with prices from the merchants declining from €131.90 p/b to €117.90 on average.
5. Cos d’Estournel
Often praised (though not always) for its quality, high release prices have made Cos one of the least attractive estates to acquire en primeur and eight of the last 10 vintages (2006-2013) have posted losses since release.
Average returns for the St-Estèphe property are -11%, prices declining from €114.70 p/b ex-merchant to €102.10 p/b currently.
4. Cheval Blanc
Famous, soughtafter but after owner LVMH decided to “realign” pricing for the Saint-Emilion “A” estate its en primeur fortunes and general secondary market performance have dipped.
Prices for the 2006, 2007 and 2011 have indeed fallen past their ex-cellar pricing and no wine has held its value since 2004.
Possibly the only reason Cheval Blanc isn’t lower is the heroic effort of the 2004 vintage which alone from the last 10 years has seen a return and a good one too – up 76%.
On average though returns have been a lousy -16%, the wines released at €378 p/b ex-cellar, then €479 from the merchants but only averaging €402 p/b currently.
Another Saint Emilion titan, Ausone was reportedly a “stand-out buy en primeur until 2005 since when its returns dropped from 95% the previous year (04) to a paltry 4% and then really declined 2006-2011 before making marginal recoveries in the 2012 and 2013 vintages.
Average returns are down -19% over the 10 year span, per bottle prices going from €448 ex-cellar to €709 through the merchants and now languishing at €576.
2. La Mission Haut-Brion
The highest priced wine on the Left Bank 200, “awkward” pricing – it matched the first growths in 2009 and 2010 – has meant it has underperformed over the last five years.
Overall returns are down -24%, with the current pricing of €211.30 p/b only just keeping abreast of its average ex-cellar price of €207 and really some way below the €277 p/b many merchants will have generally offered it for.
Yet another LVMH property and, like Cheval Blanc, one whose returns have dropped off the proverbial cliff since prices were overhauled post-2004.
Of all the wines on this list, it is the only one whose current average prices are below the average ex-cellar price.
The Sauternes first growth has suffered a -37.5% reversal since it was offered by merchants for €364 p/b, now costing €227.70 p/b on average, it is just over €60 a bottle cheaper than its average ex-cellar release price of €288.