Can you improve fine wine portfolio performance with the First Growths’ Second Wines?

Peter ShakeshaftWhen planning the strategic composition of your fine wine portfolio and ongoing acquisition strategy you will most likely consider diversifying your holdings around a core of highly liquid, blue-chip Bordeaux First Growths.

The performance of the Bordeaux First Growths (Lafite Rothschild, Latour, Mouton Rothschild, Margaux and Haut Brion) is tracked by the Liv-ex Fine Wine 50 index, which has risen 250% since data first started being collected in 2003. This provides an average indicator of the increase in the values of First Growth vintages traded, but of course some have enjoyed greater growth than this despite the challenging period between 2011 to 2014.

Chateau Lafite RothschildWhat is perhaps less well understood is the performance of the second wines from Bordeaux’s flagship wine estates and whether they offer the potential for investors to diversify into other wines of this region?

The Second Wine 50 index records the performance of Carruades Lafite, Forts Latour, Petit Mouton, Pavillon Rouge and Bahans. Haut Brion’s second wine has varied between Bahans and Le Clarence de Haut Brion and is now recognised as the latter but Liv-ex records have used the former for a study published this week due to the vintage focus.

The Second Wine 50 has risen an impressive 670% in the same period from 2003, with some wines now trading at higher levels than the en primeur release prices of their chateau’s Grand Vins. Liv-ex points out that the current prices of some second wines would have bought you a First Growth wine 15 years ago.

Liv-ex has published details of those second wines trading above the first release price of their senior stable mates since the 2000 vintage, the details of which can be seen in the table.

First wine / Second wine Vintage First wine release price Second wine last trade Difference
Lafite / Carruades 2002 £680 £2,200 £1,520
Lafite / Carruades 2000 £1,850 £2,832 £982
Lafite / Carruades 2004 £950 £1,920 £970
Latour / Forts Latour 2002 £680 £1,500 £820
Lafite / Carruades 2001 £900 £1,705 £805
Margaux/ Pavilion Rouge 2001 £900 £1.450 £550
Margaux/ Pavilion Rouge 2002 £730 £1,245 £515
Lafite / Carruades 2008 £1,850 £2,350 £500
Haut Brion / Bahans 2002 £695 £1,136 £441
Lafite / Carruades 2003 £1,795 £2,190 £395
Margaux/ Pavilion Rouge 2004 £950 £1,285 £335
Latour / Forts Latour 2001 £950 £1,160 £200
Margaux/ Pavilion Rouge 2000 £1,595 £1,750 £155
Latour / Forts Latour 2004 £1,200 £1,350 £150
Haut Brion / Bahans 2001 £950 £980 £30
Latour / Forts Latour 2008 £1,590 £1,615 £25
Margaux/ Pavilion Rouge 2008 £1,590 £1,600 £10

Source: 24th October 2017

Lafite Rothchild’s second wine, Carruades Lafite, is probably the top performing First Growth second wine. The table shows that the 2002 vintage saw Carruades traded at 200% more than the original release price of Lafite Rothschild 2002 in June this year, and an eye-popping 1,150% more than its own release price.

The performance reported by Liv-ex is impressive but we would caution investors to be careful on the inclusion of Second Wines in their portfolios and to do so strategically over the long term. For more information, speak to a member of our team on 0203 384 2262