How exposed is DRC?

Is Domaine de la Romanée-Conti dangerously exposed by the gap that now exists between it and other fine wines?

peak drcLiv-ex today (12 August) put up a post which shows the gap between its DRC Index and first growth tracker, the Liv-ex 50.

There is no doubt that DRC has hit something of a peak and is unlikely to go higher in the short term.

One can see from the graph that it began to steam ahead of the Bordeaux firsts in 2011, hit its upper limit in early 2012 and then has tended not to vary much beyond 10% up or down ever since.

As was examined by the drinks business in July, DRC tends to – or has so far at any rate – avoid the usual pitfalls of boom and bust that hit other high-flying wines or other assets but merchants and buyers are increasingly – and justifiably – wary. Armand Rousseau’s 2012 Chambertin was the best performing wine on the exchange last month but as buyers trickle out of top echelon Burgundy from DRC and Jayer to Rousseau and Roumier and beyond, so prices will begin to stagnate and, ultimately, sink – though not necessarily crash.

The Bordeaux market meanwhile is starting to firm up and as it does so the starker the difference in perceived value between top Bordeaux and top Burgundy (not just DRC) will get. With 2009s and 2010s hitting their nadir in pricing terms and with lots of them in the market their ascent may not be as heady as in times gone by but it’s a sure bet – interest in the ’10s in particular is already palpable.

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