Reg’s Wine Blog – Post # 47, June 19, 2017, the Bordeaux 2016 Vintage, Priced and Over Priced

The 2016 Bordeaux vintage has been appraised and evaluated by critics as a major success (see my previous blog post # 46 for details). A killer frost did some isolated vineyard damage at the end of April in the region, and clearly influenced most growers to raise their prices. Prior to the frost, about a dozen properties had announced their 2016 pricing, and the emerging trend was “no increase” for 2016 (which was expected since most growers had already raised prices for the 2015 vintage by an average 30%). Since the frost damage, most properties have raised their prices for their 2016 wines by about 25%, even if they themselves suffered no frost damage (which was the case for most of them).

So let’s take a look at the price increases applied to the wines in Reg’s Top 30 Bordeaux wine list for 2016. There are indeed a few surprises, some good and some not so good:

  • Leoville Las Cases – 30%
  • Palmer – 14.3%
  • Eglise Clinet – 25%
  • Pichon Lalande – 25%
  • Pontet Canet – 44%
  • Angelus – not released yet
  • Ducru Beaucaillou – 16%
  • Figeac – 47.1%
  • Haut Bailly – 27%
  • Vieux Chateau Certan – 28%
  • Cos D’Estournel – 0%
  • La Conseillante – 32.7%
  • Pichon Baron – 18.7%
  • Trotanoy – not released yet
  • Smith Haut Lafite – 28%
  • L’Evangile – 20%
  • La Fleur Petrus – not released yet
  • Lynch Bages – 14.2%
  • Montrose – 0%
  • Canon – 20%
  • Calon Segur – 17.7%
  • Leoville Poyferre – 19.5%
  • Pavie Macquin – 11.4%
  • Clos Fourtet – 23.6%
  • Pape Clement – 12.2%
  • Leoville Barton – 17.7%
  • Troplong Mondot – 23.2%
  • Domaine de Chevalier – 18.9%
  • Grand Puy Lacoste – 25%
  • Rausan Segla – 18.8%

Only 3 properties above have yet to announce their 2016 pricing. Of the 27 properties already priced for 2016 releases, only two properties, Cos D’Estournel and Montrose have kept their price the same as 2015. There is a strong message here, focus on buying those two wines for openers. But there is more information to be learned. Remember from my previous blog post # 46, Ducru Beaucaillou lost 40% of their 2017 crop to frost damage, yet they only raised their 2016 price by a very modest 16%, so take a good look at their wine as well. La Conseillante lost about 30% of their 2017 crop to frost, and they raised their 2016 price by 32.7%, and Haut Bailly lost 33% of their 2017 crop and raised their 2016 price by 27%. Both those price increases would be justified. It would appear that none of the other 27 wines on my Top 30 list lost any production to frost damage, so how can these other properties justify large price increase. If I am the owner of Haut Bailly and I have lost 33% of my vines to frost damage, of course I am going to raise prices to help finance replanting. But if I am the owner of Pontet Canet or Figeac and have sustained no frost damage at all, how can I possibly justify increasing prices by 44% and 47.1%, especially when I increased price by 30% the previous year? The answer my friend is “greed”, just pure greed.

In my previous blog post # 46, I highlighted 6 wines that I liked because of the low price at $100 or less per bottle in 2015. Those wines have price increases ranging between 11.5% and 25%, and because their base prices were already low, they still end up being reasonably priced in 2016: Leoville Poyferre at $125, Calon Segur at $123, Leoville Barton at $123, Grand Puy Lacoste at $112, Pavie Macquin at $111, and Domaine de Chevalier at $100. Domaine de Chevalier would be my choice.

So there are some good wines to look for as 2016 futures, including Cos D’Estournel, Montrose, Ducru Beaucaillou, Domaine de Chevalier, Pavie Macquin, and Grand Puy Lacoste.

 

 

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Remember, all these wines score over 95 points by the average of the best 5 wine critics in the business. Some others such as Figeac and Pontet Canet I would avoid on principle alone as they are clearly just price gouging the consumer.

Speaking of overpriced Bordeaux, I noticed that the Bordeaux first growth properties generally applied less of a percentage price increase for their 2016 wines, as follows:

  • Margaux – 9.7%
  • Cheval Blanc – 2.2%
  • Mouton Rothschild – 9.4%
  • Haut Brion – 9.1%
  • La Mission Haut Brion – 12%
  • Lafite Rothschild – 8.3%

Could it be that first growth owners are getting concerned that they may be pricing themselves right out of the market, as I have been suggesting for a while now? Or could it be that a modest 10% increase on these wines now costs between $100 and $150 per bottle, and their prices are just getting totally out of control. Of course there are always some who just do not know the meaning of restraint, so Chateau Ausone, a first growth from St. Emilion, and already one of the more expensive first growths, announced a price increase of 29.6% for their 2016 wine,ouch! This sounds like more greed in action.

There is an excellent interview reported on Liv-ex between Bernard Magrez (owner of Chateau Pape Clement and eleven other Bordeaux properties) and Liv-ex Director Anthony Maxwell conducted June 2, 2017 (to read the entire interview use this link, http://www.insights.liv-ex.com/2017/06/liv-ex-interview-bernard-magrez.html). In that interview Bernard makes several interesting comments:

When asked about Bordeaux price increases in general, Bernard responds saying:

“In my opinion, the error of some in Bordeaux is to believe that prices can keep going up. It happened with very great wines due to demand from China, but it won’t happen again.”

When asked about the speed at which some growers are raising prices, Bernard responds saying:

“It is an issue of ego and greed. They just want to have higher prices than their neighbors.”

When asked about the price a consumer will pay for his wine, Bernard responds by saying they will pay a decent price. When pressed to define what he means by a decent price, Bernard responded as follows:

“It’s the price that the consumer is willing to pay. If he thinks it’s too high, he won’t buy. And that’s life! Our boss is the consumer who puts the bottle on the table to drink it with his friends.”

So indeed it is the consumer who is the boss, and sometimes we have a tendency to forget that. Bernard states elsewhere in the interview that it is a much more competitive wine industry today with so much high quality competition from other maturing wine regions, the implication being that Bordeaux must be careful not to overprice their product, or they stand to lose their traditional markets to the competition.

I also found Bernard’s comments about the influence of wine critics on wine prices since Robert Parker’s retirement to be very interesting:

“I think there will be less speculation. 100-point scores today are not the same as they were from Robert Parker. Currently there are four or five major critics such as Suckling or Galloni. It is clear that the merchants look at the average of the top five as well as the competitiveness of prices.”

In fact what I gave you in my previous blog post # 46 was the combined average score of those top 5 wine critics (Martin, Suckling, Galloni, Molesworth, and Anson). I also gave you Reg’s Top 30 list of the most competitively priced wines rated 95 to 98 points by those 5 top critics in the business, and I quoted current 2015 futures prices on all 30 wines. Now in this post you can see the actual 2016 increases, and you have plenty of information by which to make your own purchasing decisions. You even have the thoughts of Bernard to guide you in terms of fair pricing, greed, and that consumers have the power to say “no”.

Here’s to Bernard for having the courage to tell it like it is, and for having seriously upgraded Chateau Pape Clement since he bought it in the 1980’s.

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You the consumer can see for yourself how producers such as Cos D’Estournel and Montrose are far more consumer friendly by not increasing their 2016 prices at all, verses producers like Figeac and Pontet Canet who are out of control by raising prices over 40% in 2016. You can also see how much the quality standards with properties such as Domaine de Chevalier, Pavie Macquin, and Grand Puy Lacoste have risen to rival the quality of top producers. Now it is up to you to shop for your 2016 futures wisely. I know I will be doing the same, happy hunting!

Reg.

 

 

 

Reg’s Wine Blog – Post # 46, May 13, 2017 Bordeaux 2016 – Reg’s Top 30

In my previous Post # 44 about the 2016 Bordeaux vintage I suggested that collectors should take a good look at buying 2016 Bordeaux futures, and focusing on the cheaper 2nd, 3rd, 4th, and 5th growth properties because the quality of those wines was looking very good. At that time only some of the best known wine critics had reported on the 2016 vintage so some critical information was still missing.

Over the last 4 weeks three very important developments have taken place: 1) the rest of the wine critics have reported, 2) the first few Bordeaux Chateau announced their 2016 prices, and 3) there was a major killer frost April 27, 28, and 29 that did serious damage in Bordeaux, Burgundy, and Champagne.

In Post # 44 I discussed in detail the high scores issued by James Molesworth and James Suckling, and since then Antonio Galloni and Neal Martin have released their own reports and scores, and they too are just as high. So all the critic scores are now released, and those scores are all high, higher than 2015. Early pricing by the first few Chateau to release prices was as expected, prices were the same for 2016 as 2015, which you will recall I had expected because the 2015 increases were much higher than expected at 30% or more.

Then a killer frost struck and did serious damage to several properties in late April while the vines were full of buds. Damage was extensive in St. Emilion and Pomerol, but Pessac, Graves, and the western edge of the Medoc escaped. Some properties report up to 90% of vines have been wiped out, particularly if they were in lower lying vineyards. Early reports have Ducru Beaucaillou losing 40% of their vines, La Conseillante losing 25-30% of their vines, Haut Bailly losing 33% of their vines.

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The immediate effect of that event was to halt any further announcements about 2016 release prices while owners assess the damage and decide whether or not to raise prices immediately to finance replanting. So if you are the owner of Chateau Ducru Beaucaillou where 40% of your vines may have been wiped out, you are now rethinking your pricing strategy for your wonderful 2016 vintage, and instead of pricing 2016 the same as 2015, you are probably now thinking of raising the price by as much as you dare.

So here is what I have done. I have put together my own shopping list of what I consider to be the Top 30 Bordeaux Chateaux of 2016, representing Best Value for Best Quality. I have taken the wine scores of my 5 top wine critics for the 2016 vintage. My top critics are:

  • Neal Martin (The Wine Advocate)
  • James Suckling (James Suckling and ex Wine Spectator)
  • James Molesworth (Wine Spectator)
  • Antonio Galloni (Vinous and ex The Wine Advocate)
  • Jane Anson (Decanter)

I have taken an average score based on the scores given by all five critics. On my Top 30 list I have not included first growths because they will be overpriced, first growth second wines like Les Forts de Latour because they are all rated below my cutoff point, and clearly overpriced wines like Petrus and Le Pin. I have also eliminated anything scoring an average of 95 points or less, and I have eliminated anything that has too wide a variation in scores between the 5 critics (so if one critic rates the wine at 90 points and another rates it at 99, the wine comes out because we are looking for consistency). The result is 30 properties rated between 98.3 points and 95.3. This by itself is an incredible display of quality rarely seen.

Next, I have also listed the average wine critic score for each of these 30 wines in the 2015 vintage so you can assess consistency and improvement in quality in 2016. In all 30 cases, the wine’s score in 2016 is the same or higher than 2015, another indication of improving production standards by these producers and the high quality of the 2016 vintage. Finally I have listed current international prices for the 2015 vintage of each wine (in Canada add an average 30% to these prices due to foreign exchange rates and provincial liquor board taxes). Keep in mind the 2015 vintage is not yet released, so these prices are up to date futures prices. These prices are what you want to see for the 2016 vintage when they eventually do get announced. This becomes your target price to pay per bottle (in Canadian dollars), which you may not see if the Chateau decides to raise prices to finance replanting of frost damaged vines.

The result is a pretty interesting list that I call Reg’s Top 30. I have listed the wines in order of wine scores, top to bottom. But I have also given the wines a best buy number reflecting the cheapest price, keep in mind all these wines range in quality from 98.3 to 95.3 points, so every one of them is an excellent wine and worthy of purchase as a future.

Quality   Property Name        2016 Avg. Score     2015 Price    2015 Avg. Score    Best Buy Rating

1         Leoville Las Cases                 98.3                  $250.00                 96                             23

2         Palmer                                     97.5                  $380.00                 96                             29

2         Eglise Clinet                           97.5                  $340.00                 95                              28

4         Pichon Lalande                     97.3                  $180.00                  95                              16

5         Pontet Canet                         97.25                 $150.00                  95                              12

6         Angelus                                  97.25                $460.00                  95                             30

7        Ducru Beaucaillou                97.1                   $220.00                  95                              21

7        Figeac                                      97.1                   $215.00                   95                              19

9        Haut Bailly                             97                      $135.00                   96                              10

9        Vieux Chateau Certan          97                     $335.00                   97                               27

11      Cos D’Estournel                    96.75                $215.00                   95                               20

12      La Conseillante                     96.7                  $210.00                   94                               18

12     Pichon Baron                         96.7                  $175.00                    95                               15

12     Trotanoy                                 96.7                 $ 290.00                   95                               26

12     Smith Haut Lafite                 96.7                  $115.00                     95                                 7

16     L’Evangile                               96.5                 $280.00                    95                               25

16     La Fleur Petrus                      96.5                 $250.00                    94                                24

16     Lynch Bages                           96.5                 $155.00                     93                                 13

16     Montrose                                96.5                 $185.00                     94                                 17

20      Canon                                    96.3                 $240.00                    96                                 22

20      Calon Segur                         96.3                  $105.00                     93                                   4

22      Leoville Poyferre                95.9                   $105.00                     94                                  5

22      Pavie Macquin                    95.9                   $100.00                     92                                  3

22     Clos Fourtet                          95.9                  $135.00                      94                                 11

25     Pape Clement                       95.5                  $120.00                      93                                   8

25     Leoville Barton                    95.5                  $105.00                       94                                   6

27     Troplong Mondot                95.4                 $155.00                        94                                  14

28     Domaine de Chevalier       95.3                  $  85.00                       94                                    1

28     Grand Puy Lacoste             95.3                  $  90.00                       93                                    2

28     Rausan Segla                       95.3                  $120.00                       95                                    9

 

This “Top 30” list can be very useful to you when 2016 Bordeaux futures finally do get offered. There are several advantages to you that this list will bring, such as:

  • If you want the best quality and highest rated wine you can get without paying 1st growth prices, then select a wine with as high an average 2016 score as you can get from this list, I suggest the top 10 wines rated 97 points or higher.
  • If you want the cheapest wines then select a wine from the best buy column rated 1 to 10. Keep in mind that even though these wines should get priced between $85 and $135 per bottle, the lowest rating on all of them is still a very respectable 95.3 points. Frankly I like the thought of being able to buy a 2016 future of Domaine de Chevalier or Grand Puy Lacoste, both rated at 95.3, for less than $100.00 per bottle, knowing that I can get between a case and 15 bottles of either one for less than the price of a single bottle of first growth. Now that is good value!
  • When the 2016 futures do get priced, use the current 2015 price column as a guide, and look for a wine where the 2016 price is closest to the same wine’s 2015 price. In Canada, you should expect all wines to be about 30% higher than the numbers quoted above, so if you see the 2016 Chateau Rausan Segla offered at $150 per bottle in Canada, then the pricing is pretty good.
  • Watch out for properties that have not suffered any frost damage last month raising the prices of their 2016 futures. They really have no reason for doing so, and are only trying to capitalize on the misfortunes of those Chateaux that did suffer losses. You should expect properties such as Ducru Beaucaillou, La Conseillante, and Haut Bailly to raise prices by maybe 15% for two years to recoup their losses and replanting costs, but others who have no frost loss have no such excuse for raising prices.
  • Finally, note that the 2016 score, IN EVERY CASE, is equal to or higher than the 2015 score. This is both an indication that the 2016 vintage is at least as good if not better than 2015, and that 2nd, 3rd, 4th, and 5th growth properties are making steadily improving, first growth level quality wines.

When I look at this Top 30 List I am really excited to see some great choices at close to $100.00 per bottle, such as Domaine de Chevalier ($85.00), Grand Puy Lacoste ($90.00), Pavie Macquin ($100.00), Calon Segur ($105.00), Leoville Barton ($105.00), and Leoville Poyferre ($105.00).

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I am also looking very seriously at some very high scoring wines at some very reasonable prices, such as Pontet Canet (97.25 points, $150.00), Haut Bailly (97 points, $135.00), and Smith Haut Lafite (96.7 points, $115.00).

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These would be my top selections for 2016 futures if you can buy them close to these prices quoted above (remember to add 30% in Canada). Do not be surprised if you cannot get Haut Bailly at $135.00 per bottle, they may have no choice but to raise prices as it appears they have lost about 1/3 of their 2017 crop to frost damage.

So which would you rather have, one bottle of 2016 Chateau Lafite, Latour, or Mouton Rothschild at $1,500 per bottle and scoring 98.3, or 10 bottles of Chateau Pontet Canet at $150.00 per bottle and scoring 97.25. I know for me, the decision is obvious, the price for first growth Bordeaux has increased too fast and way out of proportion to the rest of the market, while at the same time, 2nd, 3rd, 4th, and 5th growths have greatly increased quality levels so as to be almost as good as first growths. Plain and simple, this is a crossroads where consumers now have the ability to buy first growth quality in a 3rd, 4th, or 5th growth Chateau at 10% of the cost.

Shop carefully, shop wisely, buy quality in quantity, and follow Reg’s Top 30 list!

Reg.

Reg’s Wine Blog – Post # 44, 2016 Bordeaux – Best Wines and Best Buys

Wine critic reviews of the 2016 Bordeaux wines have started, with James Suckling releasing his thoughts at the end of March, and most recently James Molesworth the first week of April. So far critics are very high on the vintage, especially James Suckling who says this is a strong year for Medoc and Grave wines, especially in Pauillac and St.Estephe. Suckling rates an astonishing 23 wines between 98 and 100 points. Within that group of wines there will be some relative bargains that you should watch closely for.

By contrast James Molesworth is more conservative with his praise and his ratings, rating 15 wines at 95 points or higher. In total, we have seen James Suckling review 92 different Bordeaux wines from the 2016 vintage (both red and white), and he has rated all but one of those wines at 90 points or higher. That is high praise indeed. James Molesworth has released ratings so far on only his top 37 wines which all range from 93 to 100 points. But oddly enough Molesworth has either not included yet or has not sampled yet all the first growth wines and all three of the wines that James Suckling has rated at 100 points.

Missing in action so far are some important wine critics such as Neal Martin, Jancis Robinson, and Antonio Galloni, so it is a little early yet to form any final opinions.

In my earlier blog # 41 on February 28th I noted that Gavin Quinny, Bordeaux grower/winemaker and frequent writer for Liv-ex, has described the 2016 Bordeaux vintage as an especially good year for Merlot, therefore favoring Pomerol and St. Emilion. Now we have James Suckling describing 2016 as a Left Bank Year, meaning the best wines are from the Medoc and Graves regions, particularly in Pauillac and St. Estephe, where Merlot is not as prevalent. So we clearly have differing opinions, and therein lies opportunity for consumers and investors.

I have also been talking in Blog # 41 and earlier blogs about how Bordeaux first growths have been pricing themselves right out of the market for the average Bordeaux collector, and therefore the need to migrate to other less expensive alternatives where the quality is almost as good as first growth at 10% to 20% of the cost. First growth Bordeaux from 2015 and 2016 is going to hit retail shelves at an estimated $1,000 to $1,200 CDN per bottle. So with Bordeaux 2016 futures soon to be offered, where will the smart money get the best quality for the lowest price?

I looked at the ratings from both James Suckling and James Molesworth for the 2016 Bordeaux vintage, specifically looking for the cheapest wines with the highest ratings by comparing the 2016 ratings against today’s prices for the not yet released 2015 vintage on www.winesearcher.com. I think this is a fair comparison because I expect the 2015 and 2016 vintages to be similarly priced. I came up with my top ten suggestions for 2016 Bordeaux futures, check out my list below:

  • Chateau Leoville Barton – rated 95-96 by Suckling and 96-99 by Molesworth at $100 per bottle. The 2015 is rated at 94 points. This price is only 10% of the price of first growths at similar scores.
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  • Chateau Calon Segur – rated 98-99 by Suckling and 94-97 by Molesworth at $100 per bottle. The 2015 is rated at 93 points. This price is only 10% of the price of first growths at similar scores.
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  • Clos Fourtet – rated 95-96 by Suckling and 96-99 by Molesworth at $130 per bottle. The 2015 is rated at 94 points. This price is only 13% of the price of first growths at similar scores.
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  • Chateau Haut Bailly – rated 98-99 by Suckling and not yet rated by Molesworth at $130 per bottle. The 2015 is rated at 96 points. This price is only 13% of the price of first growths at similar scores.
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  • Chateau Pontet Canet – rated 98-99 by Suckling and not yet rated by Molesworth at $145 per bottle. The 2015 is rated at 95 points. This price is only 14.5% of the price of first growths at similar scores.
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  • Chateau Lynch Bages – rated 98-99 by Suckling and 96-99 by Molesworth at $150 per bottle. The 2015 is rated at 93 points. This price is only 15% of the price of first growths at similar scores.
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  • Chateau Pichon Baron – rated 98-99 by Suckling and 96-99 by Molesworth at $170 per bottle. The 2015 is rated at 95 points. This price is only 17% of the price of first growths at similar scores.
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  • Chateau La Conseillante – rated 99-100 by Suckling and 93-96 by Molesworth at $205 per bottle. The 2015 is rated at 94 points. This price is only 20.5% of the price of first growths at similar scores.
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  • Chateau Figeac – rated 96-97 by Suckling and 95-98 by Molesworth at $210 per bottle. The 2015 is rated at 95 points. This price is only 21% of the price of first growths at similar scores.
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  • Chateau Ducru Beaucaillou – rated 97-98 points by Suckling and 97-100 points by Molesworth at $215 per bottle. The 2015 is rated at 95 points. This price is only 21.5% of the price of first growths at similar scores.
  • reg's wine blog - photo 44-8

Well I don’t know which you prefer, snob appeal or value for your money, but I would much prefer getting 10 bottles of Chateau Leoville Barton or Chateau Calon Segur for the price of one bottle of Lafite or Latour, especially if the critics view them to be of similar quality. So while first growth estates have raised their prices relentlessly, lesser chateaux have been busy focusing on raising the quality of their wines to the point where today they are very similar in quality to the big names. We as consumers therefore have a tremendous opportunity here to send a clear message by switching to much cheaper 2nd, 3rd, 4th, and 5th growth wines without sacrificing much in quality. Hopefully, if enough people switch to better value the first growth producers will stop raising prices as much as they have been doing over the last 5 years.

30 years ago the 1982 vintage was on store shelves, Chateau Lafite, along with Latour, Margaux, Mouton Rothschild, and Haut Brion were all selling retail for $40 US per bottle, and all rated 95 points plus by Parker. At $25 you could get all the super 2nd growths like Leoville Las Cases, Pichon Lalande, and Palmer. At $15 to $20 you could get everything else like Ducru Beaucaillou, Cos D’Estournel, Figeac, L’Evangile, etc. Super seconds were rated at 92-95 points, just one rung down the ladder and frankly for the additional $15 per bottle it was much easier to just buy the best.

By contrast, today the difference between second growths and first growths is completely different. In terms of price the first growths are going to hit store shelves at over $1,000 per bottle, while second growths will cost about $400 per bottle. So that price differential is going to be $600 per bottle, that is very significant. But, as this article clearly demonstrates, there will be many high quality 3rd, 4th, and 5th growth wines in the $100 to $150 range. Perhaps the biggest and best surprise is that several of those have upgraded their quality so much that some of them are equal to or better than the 1st growth wines. My how times have changed!

My personal favorites among my top ten suggestions above are Calon Segur, Leoville Barton, Pontet Canet, Pichon Baron, and Ducru Beaucaillou. In great years these are all fabulous wines.

Watch for these names when the 2016 futures become available, I expect these will sell out quickly. Happy hunting.

Reg.