Bordeaux En Primeur 2019: Second Wines Strategy

Bordeaux En Primeur 2019: Second Wines Strategy

For people who wish to get affordable access to the brand name and parallel level of winemaking technique of the Grand Vin, Second Wines of the five First Growths would naturally be their go-to choice. Strong brand reputation from the First Growths and solid returns have underpinned our positive stance toward Second Wines. To date our overweight on Second Wines has paid off. These have been consistent top performers for the past 15 years although EP release prices have crept up in recent years. At the right price, we remain optimistic in the category and expect them to continue to provide potential for returns, especially from En Primeur to physical release. Benefiting from strong brands and consistent performance across various vintages, Second Wines have now become an increasingly important part of any diversified wine portfolio.

Although the price gap between the First Growths and their Second Wines has continued to narrow, making Second Wine labels less attractive at recent prices, a few names stand out due to their outstanding medium- to long-term performance. Carruades de Lafite and Petit Mouton undoubtedly are the two names to watch, and they have consistently been amongst the top performing wines in terms of returns (Exhibit 1).

What’s driving demand for the second labels?

• Consumers of wine around the world are buying into the quality and success of the top Bordeaux brands at a fraction of the price.
• Nowadays, the top Bordeaux estates only put 50% of their production into the First Wine – this was 75%+ decades ago.
  • In 2019 Chateau Margaux only deemed 37% of their total production at the level of the Grand Vin.
• Many seconds are better than the First Wines that the estates were producing up until the 2000s.
• Consumers are attracted to the style and accessibility – many of the 2019 second labels will be ready to consume immediately whereas their elder siblings won’t be consumed for years!
• The top Chateaux have invested heavily in their Second Wines to further improve quality
  • 2019 is the first year for Carillon (Second Wine of Angelus) to be made at a dedicated new winery for this label.
• Many of the second labels are packaged or designed in a way to appeal to consumers, especially in Asia.
  • For 2019, Le Dame de Montrose has a new, feminine, rose gold label.

The Second Wine strategy has required a more diligent approach for investors in recent En Primeur campaigns. Overall, the go-to-names for En Primeur 2019 have hit the right price level for the release of the Grand Vin and second labels, but there are still opportunities to take advantage of mispricing, particularly for estates producing First Growth quality wines, who have a very strong presence in international markets.

What’s the investment criteria for choosing a second label?

1. Grand Vin is highly sought after and consistently receives high scores.
2. Grand Vin has a very active and liquid secondary market.
3. Second Wine has an attractive price ratio vs Grand Vin – 3 to 1 + is a useful guide.
4. Second Wine has scores above 90pts.
5. Second Wine has a recognisable label or memorable name.

What are the Second Wines to buy in 2019

Often the strongest performing second labels buck the idea that they are ‘second choices’ bought by consumers who cannot afford the First Wines. The most successful second labels have been able to carve out their own identity and in some cases are just as desirable as the first. With this in mind, we have identified the following five labels as must buys in 2019:

This portfolio recommendation is indicative and can be adjusted according to your interest.