Catching up on some overdue reading during the long Fourth of July holiday weekend, I was struck by a disconnect between two really interesting pieces of material. Wine enthusiasts face significant challenges that threaten a pronouncement of clipped shackles found in the primarily good spirited and reflective recent Alder Yarrow “Declaration of Independence” . Enthusiasts continue to be repressed by a profound problem, overlooked in Yarrow’s celebration of expanding wine availability and information sharing, and inadvertently demonstrated in Robert Parker’s recent reappraisal of the 1982 and 1990 Bordeaux vintages in issue #183 of the Wine Advocate. Fellow wine enthusiasts that cut their teeth in the mid eighties on accessible and fairly priced Bordeaux were sucker punched and drawn in to be slaughtered like feeding schools of tuna attracted to fresh chum slicks.
If you missed it, Parker revisited 50 wines that he acquired and cellared from both of the outstanding 1982 and 1990 Bordeaux vintages (the report includes more wines that were only revisited in one of those two vintages). The cases of wine were all acquired in the futures market and the article included those case prices for each of the revisited wines. Besides the interesting commentary on the speed of evolution that has the 90’s moving at an accelerated pace compared to the 82’s, the important subplot to this retrospective is how inaccesible Bordeaux has become to the average enthusiast with a palate to appreciate the beauty of these wines.
Disturbing facts emerge from Parker’s report. First, he bought futures contracts on 50 cases of 1982 Bordeaux for a total investment of $9,245 in 1983. Those exact same wines eight years later in 1991, from the also excellent 1990 vintage, were acquired in the futures market for $42,585. That is a multiple of 4.5X in just eight years. Either Wine Advocate readers are experiencing exponential disposable liquid asset (excuse the pun) growth or they are equally frustrated by Parker’s failure to sufficiently critique this crippling price escalation and by his addtional reference to “Fair Value” in the report:
I have included the original case price paid for the wines…..While I have rarely believed in purchasing wine futures in most Bordeaux vintages, it did make sense to do it in both 1982 and 1990, both generally superb vintages, and priced fairly on initial release prices.
Taking things one step further, I took eleven wines from the report (there is no magic to the number 11 and the wines are mixed top and bottom classified growths) and tracked the case offering prices in the 2006 futures market for the outstanding 2005 vintages of the following wines: (1) Cheval Blanc (2) Ausone (3) Cos D’Estournel (4) Haut Brion (5) Lafite (6) Margaux (7) Mouton (8) Latour (9) Pichon Lalande (10) Rauzan Segla (11) Vieux Chateau Certan. This is what the investment comparison looks like if you bought these 11 cases of wine from these three vintages on a futures basis in 1983, 1991, and 2006:
Vintage 11 Case Futures Price
The 2005 Bordeaux cost the collector 21.5X the price he or she had to pay for the 1982 and 4.7X the 1990 vintage. To compare, and according to Yale University’s economics professor Robert Shiller’s data, the median U.S. home price in 1981 was approximately $60,000. In 1991, the median home value rose, unadjusted for inflation, to just under $100K, a 1.7X growth multiple. In 2006, the peak of the housing bubble that preceded the giant burst, median priced homes were $250,000, a 4.2X growth multiple of 1981 prices. Today, median home values are $170,000, reflecting a downward adjustment to a 2.8X growth multiple over 1981 prices. Last I checked, fine wine’s secondary and futures markets are holding strong.
Parker defined the Wine Advocate brand and secured his influence when he astutely pronounced the greatness of the 1982 vintage early. It is no coincidence that 1982 was the last great value buying opportunity for great Bordeaux and Parker’s scores play a role in price escalation trends that outstrips even housing, the modern day poster child for unrestrained and unnatural price creep.
It is disappointing that over time, the consumer’s self declared ultimate wine advocate fails to apply nearly enough critical pressure to this suffocating trend. And, it is refreshing to cling to some of the developing fundamentals that Alder Yarrow recites in his references to growth in popularity of high quality and visionary value importers, Specialty Wine Retailers Association’s focus and pressure on state legislators to repeal the suffocating laws that suppress fair trade in wine, and wine blogs like this and many others that share information with a sensibility steeped in the realities of contemporary wine enthusiasts that did not have the opportunity to stuff their cellars full of classics in the 60’s, 70’s, and early 80’s and refuse to sacrifice other pleasures in their lives to drink trophy wines when quality alternatives exist.
If you started drinking fine wine in 1985, a bottle of Latour or Cheval Blanc every Friday night equaled a monthly car payment. Doable! Today it’s a mortgage payment and from what I can gather, luxury cars are still a fraction of the price of luxury homes.