Simon Larkin (Master of Wine and Managing Director of Atlas Fine Wines) was interviewed last week by Guy Collins, Bloomberg’s Wine Correspondent. From Bloomberg's offices in Finsbury Square, they discussed all things Bordeaux, focusing on its impact on the market. You can also view the full interview on Bloomberg.
Bordeaux 'Disconnect' as Collectors Wary of 2014s: Larkin
Guy Collins, Bloomberg, 29th June 2015
Collectors’ reluctance to buy the Bordeaux 2014 vintage partly reflects a disconnect between what growers, merchants and consumers are seeking from the market, according to Simon Larkin, managing director of Atlas Fine Wines.
Although Liv-ex data indicate it sold better than the weather-hit 2013 wines, traded volumes fell from levels seen in vintages such as 2012 and 2009, with demand focused on 10 or 15 producers, he said in an interview June 23.
While collectors and investors who bought Bordeaux wines at the time they were released into the market over the past four years have seen prices decline, historically such wines sold in barrel have appreciated over time. The market slump since June 2011 has sapped appetite for new Bordeaux, even with critics citing an improved 2014 vintage, and stocks have built up in the supply chain.
“With a market that’s proven incredibly soft, with a lot of supply kicking around in previous vintages, I think it’s slightly dissuaded people from taking the plunge,” Larkin said. “It would possibly be a brave man to say some of these wines won’t be cheaper by the time they ship in a couple of years’ time.”
Brand Strategy
Many top Bordeaux producers either held 2014 release prices stable relative to 2013 or pushed them a little higher, reflecting the improved quality of the wine.
That pricing strategy came as the Liv-ex Fine Wine 50 Index, comprising the most recent 10 physically available vintages of the five Bordeaux first-growth wines, has dropped 19 percent over the past five years and 1.7 percent over the past year. It has recovered 1.9 percent so far this year.
“I think there probably is a slight disconnect between the way the consumer and the merchants themselves view the market and the Bordelais as well,” Larkin said. “Increasingly at the top end of Bordeaux the wines are functioning as brands, there is an intrinsic value that’s being associated.”
“The Bordelais are looking at brand value, they don’t want to see dramatically fluctuating values in tune with even the economic scenario, they want to have some structure to the way they’re developing their brand and see their price retaining its premium.”