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11 October 2009Mouton – the one to watch?

I must have been boring you to death will all my talk about Lafite. I have also speculated on the next in line to Lafite. A wine that, possibly, will enjoy some of the demand that we see for Lafite, given that at some point in time quality might catch up with status. Or, failing that, a wine that will somehow – at least from an Asian perspective - will start to become "the next best First Growth after Lafite".

Well, I think it’s about the right time to wager a bet on that: I think it will be Mouton Rothschild.

Why? Because, recently there have been some significant developments in demand and prices of Mouton, where the other First Growths - bar Lafite of course – have not experienced a similar price increase.

Let’s start with the 1982 Mouton. This is a 100 Parker point scoring, iconic wine. Always has been. It traded at GBP 7,000 at the start of 2007. Now, you would have a hard time finding it below GBP 11,000. An astonishing return of 50% in just a few months.Why this jump? The other 100 point scoring First Growths – Lafite and Latour –  didn’t see such a move in price.

The reason, IMHO, is twofold: 1) Parker’s re-scoring of 1982 and 2) Mouton is hot.

Parker did revisted 1982. He downgraded Lafite to 97+. At GBP 25,000, this was the most expensive 1982 First Growth. Given the downgrade, it’s expected that other wines will be closing the gap – potentially even overtaking Lafite. Yet, GBP 25,000 for Lafite is quite a difference to the prices of Latour (GBP 13,000 and stable) and Mouton (GBP 11,000). Mouton having increased so much, this wine seems to be the one that is stepping in the void left by Lafite.

But this is just 1982. Hardly enough to validate my claim to Mouton being the next in line to Lafite. So let’s have a look at the other vintages.

The 1986 Mouton is the next 100 point scoring wine. It peaked at GBP 7,000 and was last traded at Liv-ex at GBP 5,000 (see below graph, courtesy Liv-ex). Current market price is around GBP 5,700. A nice return, but quite in line with the overall market so not really a case in point. At the same time though, does this make a good investment opportinity....?

To put some more flesh on the bones of my statement that Mouton will be the next in line to Lafite to experiece lofty prices increases, let’s look at some other vintages.

I see demand for the next best scoring vintages of Mouton, notably 1996, 1998, 2000 and 2006. This demand comes from investors most of all, but complemented by orders from our Asian customers. Most telling though is demand for "off – vintages" like 1999, 2001,2002, 2003 and 2004. After Lafite and Carruades, these are the most demanded by our customers.

More and more requests we get are for Mouton, in addition to Lafite. This of course drives up prices. Have a look at below graph for the Mouton 2004 (again, courtesy Liv-ex) to illustrate this:

After having dropped to an astonishingly low GBP 1,000 a case in January 2009, prices are now at the GBP 1,600 mark and rising. Unbelievably, still below the price of a case of Carruades de Lafite 2004 but at least rapidly closing the gap.

Now, above is by no means a thorough analysis of why Mouton Rothschild should merit your attention. Rather, it’s based on some facts on the one hand and some observations from our own trades on the other hand, meant to raise your attention to what we believe is a very interesting wine to follow.

 

 

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