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'Super-star' fine wine prices plummet as market crashes

Published:  05 January, 2012

Lafite 2008's 45% drop in value is the "pin-up for what's gone wrong in the market", according to Liv-ex's co-founder.

Lafite 2008's 45% drop in value is the "pin-up for what's gone wrong in the market", according to Liv-ex's co-founder.

Liv-ex's Justin Gibbs said the 15% overall fall in its Fine Wine 100 index in 2011 was "rational behaviour".

He said the combination of already very high prices for Bordeaux first growths, capped by the "ridiculously-priced" 2010s, the Chinese moving out of the market and global problems with the Euro, led to the correction.

The Liv-ex index showed that during the first half of last year, prices for top Bordeaux rose rapidly - eventually reaching a peak in June. But since then demand for the first growths softened and the index fell by 21.5% - matching the drop in August 2008 when Lehman Brothers collapsed. Gibbs said: "22% is a big number, it's beyond a correction, it's probably a crash."

Gibbs added that the "rational" market behaviour meant the most recent vintages were experiencing the greatest "pull-back", while the scarcity value of older vintages was helping maintain value. He also predicted that "people will start to dip their toes in the market again quite soon".

Stephen Browett, managing director of Farr Vintners, was also optimistic. "The big names in Bordeaux did indeed rise dramatically and have now fallen back. The most extreme example of this is Lafite and the most extreme vintage is 2008. It was released at £2,000 in 2009, hit £15,000 in June 2011 and has now dropped back to £8,000 to £9,000. Lafite is a wine that became too expensive, as a result of speculative buying, and it was no surprise when prices started to fall."

But Browett said although other top wines had "come off the boil", they hadn't had such dramatic falls as Lafite 2008. Older vintages, including Haut Brion 1989 remained steady. It was on sale at £12,000 in January 2011, hit £14,500 by June 2011 and is now at £12,000. Latour 1990 started at £6,800 last January, six months later was £7,300, and is now trading around £6,900.

Browett pointed out that wines outside of the stellar first-growths are still holding their own. He said: "The price of 'good' Bordeaux and Burgundy that is not of 'super-star' quality has not gone down at all. An example of this would be wines like Grand Puy Lacoste, Lagrange or Domaine de Chevalier - top quality Bordeaux that is not bought for speculation, not especially strong in the Far East and the sort of wine that connoisseurs around the world actually drink, rather than just collect. Prices are firm on wines like these."