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Bordeaux ‘looks undervalued right now’

Having flirted with Italy, investors are “turning strongly back to Bordeaux” as the wines “look under priced” at the moment, according to one fine wine merchant.

Château Palmer in Margaux is a solid investment according to Matthew O’Connell of Bordeaux Index. Photo c/o Sotheby’s

Speaking to db, Matthew O’Connell, head of investment for Bordeaux Index, said: “Bordeaux is very attractive at the moment and has a lot of momentum in the market, despite the fact that a lot of the noise last year was about other regions.

“Within Bordeaux, there are interesting investment opportunities across the first growths, super seconds and top Right Bank properties, but the real activity at the moment is centred around the first growths, with an increasing number of people thinking that these wines look under priced.

The 2000 vintage of the first growths are selling well. Photo c/o Christie’s

“Some of the older vintages are starting to see significant upticks in price as there is a lot of demand and less supply, so the prices are moving more quickly.”

While O’Connell pointed out that the fine wine market is “a lot more diverse than it used to be”, he revealed that Bordeaux was still at the core of active daily trading on Bordeaux Index’s trading platform, LiveTrade.

“People are turning back to Bordeaux as the wines look cheaper than they should be right now. Investors have confidence in Bordeaux due to its consistency, longevity and track record,” he said.

For those looking to invest in classed growth claret this year, O’Connell’s tips are the 1996, 1998 and 2000 vintages, which he said are “looking very attractive right now, and there’s also some value in the 2015s.”

“Outside of the first growths, investors should be looking at estates like Pichon Lalonde, Figeac and Palmer to name just three. The 2009 and 2010 vintages are also being actively traded – it’s hard to overstate the interest in activity in Bordeaux trading at the moment,” he said.

As for fine wine’s performance this year, O’Connell is optimistic for a strong year of trading. “We’re bullish about the market this year. In addition to the interest in Bordeaux, buying patterns in Burgundy are also very strong.

“We’ve had three years now without significant gains in the market, so I think we’re posed for a significant uptick this year. Momentum is gathering for a really positive year,” he told db.

When it comes to Burgundy, O’Connell said the interest is centred on the blue chip names like DRC and Rousseau. “From 2016 to 2018 it was a story of a rising tide lifting all ships, and there was a step change in the prices of premier crus across all producers.

“Right now there is a lot of confidence behind the blue chip names and more price sensitivity as you move down to second tier premier crus and grand crus,” he said. He also revealed that Italian wine sales at Bordeaux Index had “almost doubled” over the last five years.

“The 2015 and 2016 vintages produced a lot of interest in Tuscany and Piedmont, and the US tariffs were favourable to Italy. I think their impact was over-stated but it was a factor. We expect a good continued performance for Italy this year,” O Connell’ told db.

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