Wine Lister Economics scores not only reflect a fine wine’s economic clout, but also predict its future price performance. The economics of fine wine are increasingly important. Some purists wish it weren’t the case (wouldn’t it be wonderful if quality could exist in isolation from pecuniary concerns?), but consider the plight of the producer making an exceptional wine, that without any brand recognition or commercial strategy doesn’t ever see the light of day. It never finds an importer, or its way into the consumer’s glass, let alone the investor’s portfolio.
That is why Wine Lister scores capture 12 data points across three rating categories, to measure the all-round performance of a fine wine in its journey from vine to glass. After Quality and Brand, the third Wine Lister rating category is Economics. The Economics score shows the producer whether its commercial strategy is working, but more than that, it can also serve to indicate to the collector whether the wine makes an economically sound investment.
Bordeaux wines with an Economics score above 900 in November 2016 had increased by 17% in price on average by January 2018. By contrast, those with Economics scores below 600 gained just 8% subsequently. We can see this pattern in action in the chart below, which looks at Saint-Estèphe wines over the same 14-month period. The wines with the highest Economics scores at the beginning of the period proceeded to increase more in price than those with lower scores as a general rule.
The below screenshots of Wine Lister’s price history tool illustrate graphically the difference between two wines with different economic profiles. Vieux Château Certan’s Economics score lies in the “strongest” portion of the Wine Lister 1000-point scale at 907/1000. While Château La Providence’s Quality score is strong (708/1000) its low Economics score of 389 is the result of a lower price, weak price performance, volatile prices, and modest trading volumes.
Wine Lister analyses five criteria in order to measure a wine’s economic strength, expressed as an Economics score out of 1,000. Four of these criteria use pricing data from our data partner, Wine Owners, while the fifth uses trading volume figures from the Wine Market Journal:
- 3 month average bottle price
This “market price” is the ultimate measure of what people are willing to pay for each wine in each vintage. Data is updated weekly, and bases prices on a three-month rolling average. Prices are shown In Bond per bottle.
- Short-term price performance
A wine’s financial strength also depends on its price performance. Wine Lister calculates price changes over six months for an indication of short-term price trends.
- Long-term price performance
Long-term performance measures a wine’s compound annual growth rate over three years.
- Price stability
Price fluctuations over a 12-month period are distilled into the measure of a wine’s stability. Wines with less volatility are more consistent, less risky and therefore earn a better Economics score.
- Volume traded
Added to pricing information is data on a wine’s liquidity. A wine can have good price performance but lack the current market demand, potentially making it a less attractive wine for investment.
Bodegas Vega-Sicilia has today released a host of wines. Alongside the 2018 edition of Unico Reserva Especial (£240 per bottle / £720 per case of three) and Valbuena 2013 (£78 per bottle / £234 per case of three), comes Unico 2006 at £195 per bottle / £585 per case of three. Below we look at all the facts about Spain’s top wine.
You can download the slide here: Wine Liser Fact Sheet Vega-Sicilia Unico
Confirming the outstanding economic performance of Piedmont’s top crus, Italy’s top five wines for economics all hail from Barolo and Barbaresco. Tuscany doesn’t get a look-in. Featuring just two producers – Giacomo Conterno and Bruno Giacosa – this week’s listed section boasts wines achieving outstanding Economics scores of over 960.
Wine Lister’s Economics score combines five criteria: three-month average price, six-month-price performance, three-year compound average growth rate (CAGR), price stability, and liquidity (volume traded).
A three-month average price of £595 per bottle tips the Economics rating in favour of Giacomo Conterno’s Barolo Monfortino Riserva, which scores a mighty 978. Its three-month average price is over double that of the second-most expensive wine.
Seven points behind in second place is the Barbaresco Asili Riserva from Giacosa’s Azienda Agricola Falletto, with an Economics score of 971. Just one point behind that, in third place, with an Economics score of 970, Giacomo Conterno’s second wine to make the top five is the Barolo (Cascina) Francia. Following a slump in its score at the end of 2016, it bounced back January and continued to rise throughout the year.
Giacosa’s Azienda Agricola Falletto Barbaresco Rabajà is fourth-highest with a score of 963. This wine has the strongest three-year CAGR of the group, at 27.5%.
Bruno Giacosa’s third entry, completing the top five with an Economics score of 963, is his Barolo Rocche Falletto Riserva. It has the highest liquidity of the group, with 500 bottles of its top five vintages traded in the past year.
All of the top five hold Buzz Brand status, but their soaring prices equate to lower price stability across the group, averaging 8.6% standard deviation compared to 7.1% for the top five Tuscan wines by Economics score. Piedmont might offer more potential upside, but by definition this makes it riskier investment territory.
Wine Lister’s Economics scores are based on a variety of price and liquidity metrics, including a wine’s three-month average bottle price, six-month price performance, and three-year CAGR. This week’s newly updated Listed section features the five top-scoring Australian wines by Economics score. Noticeably, all are red, and red wines outperform for Australia in this category (the top white, Leeuwin Estate Art Series Chardonnay, has an Economics score of 498, its top traded vintages only trading 10 bottles in auction over the past year). While there is quite a difference in points between the first and fifth wine on today’s list, all are considered very strong (750–900) or among the strongest (900+) wines in Wine Lister’s database.
Several of Australia’s best-known producers feature in our top five, including Penfolds, which accounts for the top two entrants: Penfolds Grange and Penfolds Bin 707 Cabernet Sauvignon. While both wines excel on three-month average bottle price and three-year CAGR, Penfolds Grange is particularly strong for liquidity, its top five trading vintages having traded 626 bottles over the past four quarters.
The third wine on this list, Torbreck Run Rig, experiences good trading volumes but has the lowest three-year CAGR of the five (3.27%). Fourth place goes to Henschke Mount Edelstone Shiraz, which is the lowest in price and sees fewer bottles traded than the others, but has an excellent six-month price performance of 11.88% and good price stability. Finally, the list is completed by Grant Burge Meshach Shiraz, which has one of the higher three-year CAGRs, at 6.4%.
Don’t forget – if you’re not yet a subscriber to Wine Lister, you can still fully explore this week’s five Listed wines, and those for the previous four weeks, via the homepage.
Trading volumes are a key measure of a wine’s success in the marketplace. To evaluate these, Wine Lister uses figures collated by Wine Market Journal from sales at the world’s major auction houses, looking at the total number of bottles sold of the top five vintages traded for each wine over the past four quarters.
A change in trading volumes impacts a wine’s Economics score. The chart below pulls out the biggest gainers in the last quarter of 2016, comparing auction data from the 12 months leading up to the end of Q3 2016 to data for the calendar year.
Wines from a variety of regions saw their Economics scores boosted by auction sales in the final quarter of 2016, suggesting a healthy broadening of interest in addition to the usual suspects.
Gaining most was Artadi Rioja Viñas de Gain, which saw trading volumes from January-December 2016 increase tenfold. Its Economics score remains relatively low, at 420/1000.
Australia and the Loire also made an appearance. Domaine Huet Cuvée Constance enjoys a very strong Economics score of 796/1000, and also excels in terms of Quality and Brand, leaving it with a very strong overall Wine Lister rating of 856/1000.
Burgundy is still on the rise at auction, and was the only region to feature twice, with Maison Louis Jadot Gevrey-Chambertin Premier Cru Lavaux Saint-Jacques and Domaine Hudelot-Noëllat Chambolle-Musigny.