Run up in port prices?

[g-man]

Has anyone else seen the recent run up in prices amongst the big houses?

[Alex Bridgeman]

I am seeing port prices increase quite significantly at the moment. Mostly, I am seeing this at retail but it is also a very clear trend at auction - despite what Decanter's wine index says. I've got some notes that I ought to consult, but off the top of my head I think that over the last year prices have gone up by 10-20%, with the larger price increases being seen for some of the ports which were more expensive anyway!

[uncle tom]

Auction prices took a very sharp, and seemingly inexplicable, hike at the beginning of this year; and hopes that they might then settle back have been confounded.

Nor is this price rise confined to Port - Bordeaux prices also rose very sharply; and whilst I don't track the prices of other wines, I'm not hearing anyone say 'yes, but..'

Retail prices for Port have also risen - in the last year, the supermarket SQ's have rocketed by 50% from an un-discounted base of £17-£18 to around £26-£28.

There is talk within the trade of an imminent price crash...

..while everyone is agreed that the 2009 Bordeaux vintage is very good, the deluge of sales emails suggests a crazy feeding frenzy - and possibly the prelude to a market bust..

- We shall see..

Tom

[g-man]

Food for thought.

The 94 Fonseca was a wine spectator WOTY in 97 and also 100 pter I believe.

It was released at 60$.

I bought it for 100$ last year and the last auction I attended some lucky contestant found a lot that had 1 94s and 2 00s for a paltry 170$ hammer price (I should have paid more attention during the auction).

There seemed to be a recent resurgence in port perhaps also due to the dow 07 getting the 100 pter.
But how can the dow 07 possibly sell more then the fonseca 94?

[Glenn E.]

But how can the dow 07 possibly sell more then the fonseca 94?

Because people are idiots.

There is one factor that might be in play - when you purchase an '07 Dow you will know almost its entire provenance, and so can ensure that it has been cellared properly for its entire life. That may or may not be true of a '94 Fonseca purchased today, but you won't know it until you open the bottle(s) 20+ years from now. For some people, that's worth something. How it can possibly be worth as much as 16 years of free aging, though, is beyond my comprehension.

[mosesbotbol]

But how can the dow 07 possibly sell more then the fonseca 94?

2007 wholesale prices are more than it was for the '94 and 1994 is not on every liquor store shelf.

Auctions aren't what they use to be. Even though the crowd of bidders is quite small, several are willing to pay a premium.

[Roy Hersh]

I have a slightly different take on this.

I do agree Port prices have gone up, although that seemingly began during the 4th quarter of 2009. However, the same can be said for Burgundy, Bordeaux, CA Cabernets ... especially from Napa and also Oregon & Cali Pinot Noir ... amongst many wine types that have really taken off in the past 9 months. Given the economy it is surprising, yet one only has to look as far as airlines ticket pricing in 2010 to see that Port is not alone in significantly higher prices than in 2009.

Tom mentioned:

There is talk within the trade of an imminent price crash...

Hmm, I must have missed that and I peruse about 40-50 wine websites every week and that does not include the copious quantities of blogs I read. This is the first i've heard of any talk about an "imminent price crash." I personally do not see this happening any time this year, or at least through the end of Q1 2011. So it would be great Tom, if you would please elaborate, was this within the wine trade (UK only?) or within the Port trade that you heard this?


Gman,

The 2007 Spectator co-wines of the year were the 1994 Taylor & Fonseca VPs, odd that Quinta do Noval Nacional was not included as all 3 were rated 100 points by James Suckling at the time of his reviews on the 1994s. I purchased cases of the Taylor VP and Fonseca VP pre-release in CA and paid $38 and $40 respectively, with no case discount due to the fact that Port's popularity and its sales were at their apex in the USA at the time. I can only think that it was due to the fact that David Guimaraens made both of those wines in his very FIRST vintage, where his father was not directly involved, that those two wines garnered the accolades. An amazing achievement by David, to say the least. Both are great VPs, although IMHO, the Taylor deserves the perfect score, the Fonseca not so much ... (and definitely the Nacional is deserving).


Lastly, I do not believe that the 2007 Dow has had any lasting affect on the overall Port pricing beyond the 2007 Dow VP itself. Having had it on a handful of occasions now, I must say, for my palate it does not achieve the 100 points it received by JS. Nonetheless, I think it is an excellent Vintage Port. Just my two cents.

[g-man]

[quote="Roy Hersh"]I have a slightly different take on this.

I do agree Port prices have gone up, although that seemingly began during the 4th quarter of 2009. However, the same can be said for Burgundy, Bordeaux, CA Cabernets ... especially from Napa and also Oregon & Cali Pinot Noir ... amongst many wine types that have really taken off in the past 9 months. Given the economy it is surprising, yet one only has to look as far as airlines ticket pricing in 2010 to see that Port is not alone in significantly higher prices than in 2009.
[/qoute]

Being a buyer of cali wines, the 07s where deeply discounted when it hit my wallet. I've only seen the Bordeaux's really start taking off and stay up there. I've seen no correlation between the rise in bordeaux prices with the prices of wines out side of france. I'd also argue that the high price of airlines can be more readily attributed to rising fuel prices as beginning of 09, fuel prices were half of what they are today.

Would the rise in 4th quarter of 09 being simply the seasonal adjusted winter prices as more people buy port for consumption in xmas? But even so, that doesn't give a reason to the new floor in prices that was set. Like I've said, I've seen a weakness in both california and austrialian wine prices so I don't feel it's Bordeaux dragging up the prices of the other regions.

Are the asians drinking more port finally?

[Andy Velebil]

Are the asians drinking more port finally?

No, as far as I know. The Russians are another story....they are becoming a large consumer of Port. So that may be part of the issue as they've really increased their buying.

[mosesbotbol]

No, as far as I know. The Russians are another story....they are becoming a large consumer of Port. So that may be part of the issue as they've really increased their buying.

Did they polish off all their Massandra? Russians prefer a sweet wine so it makes sense they'd go after port wine. They are also very status symbol and history conscious.

[Alex Bridgeman]

Unfortunately, I don't keep records of retail prices for ports over the past years - although Julian might have that from his research into declared vintages. But I do keep records of auction prices. I'm not sure if this shows that port prices are rising, but here is an illustration of the prices paid for a bottle of Croft 1963 at various auctions over the last 6 years:
Oct 2005 - £45
Jun 2006 - £55
Oct 2006 - £46
Apr 2007 - £70
Oct 2007 - £30
Oct 2007 - £60
Oct 2008 - £48
Nov 2008 - £54
Nov 2008 - £44
Nov 2008 - £145
Nov 2008 - £50
Feb 2009 - £41
Feb 2009 - £41
Jun 2009 - £49
Sep 2009 - £48
Sep 2009 - £82
Sep 2009 - £49
Dec 2009 - £66
Feb 2010 - £75
Feb 2010 - £45
Apr 2010 - £49
May 2010 - £50
May 2010 - £43
Jun 2010 - £80

So, statisticians, are prices increasing?

[Glenn E.]

Without doing an actual analysis, I would say that the trend looks like no more than about a 10% increase over the last 6 years.

[g-man]

Let's take the Fonseca 77

when I bought it in 3Q of 09, I paid 130$
4Q of 09 according to spectator which avgs all of the major houses auctions, the F 77 sold for 153$/bottle
1Q of 10 using the same source it was 222$/bottle

[Glenn E.]

Let's take the Fonseca 77

when I bought it in 3Q of 09, I paid 130$
4Q of 09 according to spectator which avgs all of the major houses auctions, the F 77 sold for 153$/bottle
1Q of 10 using the same source it was 222$/bottle

Several problems with this from a statistical point of view. (And, to be fair, also with AHB's data.)

The first data point is a single purchase which is - statistically - unrelated to the other data points. As you can see from AHB's data there is considerable variation in prices. They go up, they come down, they go up again, they come down again. Since you personally purchased the bottle in 3Q09, we must either assume that it was a low price at the time or that you are financially irresponsible. Given what you do for a living I dearly hope it is the former.

Second problem is that we have no data to tell us whether or not 3Q pricing, 4Q pricing and 1Q pricing are normally similar. It may be that prices in the 1st Quarter of each year are normally the highest of the year.

The third problem is that this data is for a depleting resource. It tell us nothing about the price of Port in general, and is virtually guaranteed to rise over time as the resource depletes. Supply and demand, etc. That rising price does not indicate that there is a run up going on, though, as it is completely natural.

In order to properly evaluate whether or not the price of Vintage Port is going up in general, one would need to examine market-wide pricing over many years and normalize it across the age of the Port. Even that isn't completely accurate because one should also normalize across the perceived quality of the Port, and that would be difficult (though not impossible) to do properly.

[g-man]

Let's take the Fonseca 77

The third problem is that this data is for a depleting resource. It tell us nothing about the price of Port in general, and is virtually guaranteed to rise over time as the resource depletes. Supply and demand, etc. That rising price does not indicate that there is a run up going on, though, as it is completely natural.

In order to properly evaluate whether or not the price of Vintage Port is going up in general, one would need to examine market-wide pricing over many years and normalize it across the age of the Port. Even that isn't completely accurate because one should also normalize across the perceived quality of the Port, and that would be difficult (though not impossible) to do properly.

Supply, never seems to be in short when it comes to post 1970s port

You're right, but as the buyer from my perceived standpoint, when it comes to buying in case lots, I certainly see no bargain.

and i'd very much doubt you could find a sealed owc of 1977 fonseca for less then 130/bottle nowadays

[uncle tom]

Hmm, I must have missed that and I peruse about 40-50 wine websites every week and that does not include the copious quantities of blogs I read. This is the first i've heard of any talk about an "imminent price crash." I personally do not see this happening any time this year, or at least through the end of Q1 2011. So it would be great Tom, if you would please elaborate, was this within the wine trade (UK only?) or within the Port trade that you heard this?

It's not what they put on their websites and blogs Roy, it's what they say privately and off the record, when they know you're not likely to buy from them.

Wine has become an asset bubble, with much of the 2009 Bordeaux being sold to people who the merchants believe have not the slightest intention of ever drinking them, at prices that are, I have been told, eight times higher than for the 1995 vintage.

Comparisons are being drawn with the 1970's, when there was a similar craze for fringe investments, only for prices to subsequently crash.

The notion that Asia would generate an enduring demand for fine wines has always been suspect, and it is interesting to note Sotheby's report of a 30% drop (by value) in the proportion of wine lots sold to Asian buyers.

It is always very hard to predict the bursting point of an asset bubble, and it's anyone's guess whether this one will burst in one, two, or five years time.

However, I am quietly confident that when the 2009 claret is ready to be drunk, it will be cheaper than it is today.

Tom

[clawhit]

Let's take the Fonseca 77

and i'd very much doubt you could find a sealed owc of 1977 fonseca for less then 130/bottle nowadays

12 bottles currently on bidforwine @ £885 ends in 8 hours happy bidding

[Glenn E.]

Let's take the Fonseca 77

and i'd very much doubt you could find a sealed owc of 1977 fonseca for less then 130/bottle nowadays

12 bottles currently on bidforwine @ £885 ends in 8 hours happy bidding

[g-man]

Hmm, I must have missed that and I peruse about 40-50 wine websites every week and that does not include the copious quantities of blogs I read. This is the first i've heard of any talk about an "imminent price crash." I personally do not see this happening any time this year, or at least through the end of Q1 2011. So it would be great Tom, if you would please elaborate, was this within the wine trade (UK only?) or within the Port trade that you heard this?

It's not what they put on their websites and blogs Roy, it's what they say privately and off the record, when they know you're not likely to buy from them.

Wine has become an asset bubble, with much of the 2009 Bordeaux being sold to people who the merchants believe have not the slightest intention of ever drinking them, at prices that are, I have been told, eight times higher than for the 1995 vintage.

Comparisons are being drawn with the 1970's, when there was a similar craze for fringe investments, only for prices to subsequently crash.

The notion that Asia would generate an enduring demand for fine wines has always been suspect, and it is interesting to note Sotheby's report of a 30% drop (by value) in the proportion of wine lots sold to Asian buyers.

It is always very hard to predict the bursting point of an asset bubble, and it's anyone's guess whether this one will burst in one, two, or five years time.

However, I am quietly confident that when the 2009 claret is ready to be drunk, it will be cheaper than it is today.

Tom

Lets' not forget the fact that in china, it is believed that over 30% of all first growth clarets sold is counterfeit in classic chinese fashion.

[g-man]

Let's take the Fonseca 77

and i'd very much doubt you could find a sealed owc of 1977 fonseca for less then 130/bottle nowadays

12 bottles currently on bidforwine @ £885 ends in 8 hours happy bidding

psh converted to US is 1362.9 and this is pre bonded. You'd need to pay extra to either ship it here or take collection both of which will be more then 130$US a bottle to my door

[Glenn E.]

Let's take the Fonseca 77

and i'd very much doubt you could find a sealed owc of 1977 fonseca for less then 130/bottle nowadays

12 bottles currently on bidforwine @ £885 ends in 8 hours happy bidding

psh converted to US is 1362.9 and this is pre bonded. You'd need to pay extra to either ship it here or take collection both of which will be more then 130$US a bottle to my door

Yeah but that's because you live on the wrong coast. Adventures in Wine can get it back to the West Coast for about $15/bottle, which would result in a final cost of $128.50 per bottle.

[jdaw1]

The news earlier this month that three bottles of Château Lafite, from the 1869 vintage, had sold at auction in Hong Kong for £437,900 gives a new meaning to the ‟China price”. This phrase usually means the lowest price ”“ reflecting the competitiveness of Chinese manufacturers. But there is also a ‟China price” at the top end of the market, as rich Chinese bid up the price of rare, luxury goods to levels that make western rivals go pale and slink out of the auction room.
!
Over the past decade I have inadvertently conducted a controlled experiment that has allowed me to track the soaring price of Château Lafite !

[jdaw1]

A single bottle of wine has sold for £135,000 in a London auction.

The six-litre bottle of 1961 Chateau Latour was sold to a Chinese bidder at Christie's auction house.

The sum was more than three times the expected price. Wine experts said the bottle was of "perfect provenance".
!
Gary Boom, founder of London-based fine wine merchant Bordeaux Index, said: "The prices were encouraging but not surprising and shows how important the provenance is and how essential it is to buy from trusted and immaculate sources.
!
Mr Boom added: "What was most interesting is that in all vintages, including the younger ones, there was a big appetite for the large bottles such as double magnums and jeroboams.