Frightening tales of the financial markets have filled the papers for the past week or so, and I’m sure I’m not the only visitor to wikipedia looking up “volatility”, “margin call”, “naked short selling” and the like. It has been educating.

The wine market is thankfully much more simple, and much more stable. Essentially, I think, because merchants and customers buy and sell something that is tangible, something real. Much as the Americans refer to buying “en-primeur” as “futures”, there are no “fine wine derivatives” for the moment, something for which we can be grateful.

Compared with the financial markets, the fine wine market appears to be in excellent health. Our recent offer of 2006 Ch. Lynch-Bages was overwhelmingly successful, with more than 1,000 cases sold in 24 hours - our buyers are still making calls to Bordeaux to try and source more. And up the road at Christie’s, a private collection of 2000 Bordeaux realised a total of £1,654,775 with 2000 Ch. Lafite-Rothschild, a wine that is a good barometer of the market, fetching an impressive £10,925 per case from a trade buyer. That the first half of this collection was sold on “Meltdown Monday” and the second part, including the Lafite, sold the following Thursday is surely a good indicator of the wine market’s current good health.

Moreover, I guarantee that drinking a glass of Lafite is infinitely more pleasurable than eating a share certificate

The description of wine is a very personal matter. Some think in terms of cherries, gooseberries and the like (which can be difficult for those of us brought up in cities), others more simply in terms of structure, class, balance. I am in the latter camp: ask me what aroma jumps out at me from Ch. Lynch-Bages, for instance, and I’ll invariably say “Pauillac” as opposed to cassis and cedar.

One way to make the expression of a wine’s quality easier is of course to award it a mark. Robert Parker scores out of 100, Jancis Robinson out of 20 and BBR out of 20 too. This does make sense, particularly when one is marking within a consistent context such as the wines of one vintage from a specific region.

Parker’s scoring system has more structure than many think. A wine gets 50 points for turning up, up to 5 points for colour and appearance, 15 points for aroma and bouquet, up to 20 points for flavour and finish, and finally, up to 10 points for overall quality and potential for further ageing.

Our scores aren’t quite so structured and, unless I’m wrong, nor are Jancis Robinson’s. Where they do excel, though, is that they are almost always the product of collective opinion - what we all think about a wine rather than one person’s opinion. This is vital I think, particularly when tasting young wines and cask samples as there are frequently wines that one simply doesn’t “get”: I almost always leave Ch. Palmer scratching my head whilst my colleagues are raving, for instance.

Ultimately, though, I don’t really like scores. If pushed I’ll give my scores (out of 100, just to confuse things) but the rare 100-pointers aside (1927 Taylor being one of a few Fowler 100s - this wine is sheer perfection) it does seem rather odd that the sheer beauty of something like, say, 2005 Margaux, can be summarised by a number. Parker’s note for this wine is summed up by “98+”. My note finishes “love”: I had ran out of words and a number just wouldn’t do the job.

In 1855 the wines of the left bank were “classified” on the orders of Napoleon III (who, incidentally spent some time in BBR’s St James’s cellars during his exile in the 1830s). This new classification was designed for the Exposition Universelle de Paris, at which the wines would be on display. The wines were ranked by the brokers of the time, with rankings largely based on the wines’ selling prices at the time and the reputations of the various châteaux.

There has been one major change to the classification since (minor changes being the addition of Cantemerle in 1856, and the incorporation of Ch. Dubignon into Malescot St Exupery in the 1870s) when in 1973 Mouton-Rothschild was “upgraded” to first from second growth status. Those who believe that Mouton should have stayed a second would say that this upgrade was all about politics and strong lobbying from the powerful Phillippe de Rothschild; fans of the château will point to the fact that Mouton was under english ownership when the original classification was made - more than reason enough for it to miss the cut first time round…

In the world of fine wine the first growths are still very much the aristocracy; the best. Petrus & Le Pin may sell for more money, though this is largely down to a lack of supply, and Ausone may get the Parker points, but in terms of brand the first growths have it. These are the vinous Rolls Royces.

So how much are they worth? And are they worth it at seemingly ever-increasing prices?

In 1983 a case of 1982 Lafite would set you back in the region of £450; the same case today would set you back around £20,000. The best wines do seem to appreciate in value. The “is it worth it?” question is twofold and needs two answers. The first answer is a simple “yes”: a case of 82 Lafite is worth twenty thousand pounds because someone will pay twenty thousand pounds for it. The second answer is more tricky, because the question is: “is there twenty thousand pounds’ worth of pleasure in a case of 82 Lafite or, more simply, is there two thousand pounds’ worth (with the additional bit for the taxman) of pleasure in a bottle of 82 Lafite?

My answer to this again is a definite yes. It’s not just about the experience of tasting the very best, about an experience that is nigh on impossible to match or replicate, though these do play a part. For me, it’s a meeting. A meeting with Lafite, a meeting with the vineyards, a meeting with the sunshine of 1982 and a meeting with the harvesters, the grapes, the barrels, the chais and with Bordeaux. A meeting with whoever you’re sharing the bottle with and a meeting with whoever else has tasted the wine - from the winemaker as he made it to the banker drinking it at the next table . A meeting with ones maker, who is ultimately the creator of what’s in your glass.

I’ve read many discussions as to the true definition of “fine wine”. My answer is that a fine wine is a wine that will provoke thought or conversation other than a simple “that’s ok” or “yup, goes well with the lamb”. A step up is truly fine wine - the icons, and I have been lucky enough to taste and drink bottles that have not only provoked thought or conversation, they have provoked emotion. Barrel samples of both Le Musigny, Mugnier and Ch. Margaux 2005 overwhelmed me: what moved me was that an experience so beautiful could come from vines, soil, sunshine and some finishing from man. Epiphany isn’t quite the right word; I prefer theophany: a divine disclosure. Which seems like a good deal for a couple of thousand pounds.

We are nearing the end of the 2007 Bordeaux en-primeur campaign, with the last few wines expected to be released in the coming days. This time of year is usually a busy and hectic one in the Fine Wine office, though this year it has been a little quiet. Our favourites have sold relatively well, though we have walked away from our allocations of a great deal of wine, largely on account of prices.

We pride ourselves in this office on not selling wine that we wouldn’t buy ourselves (funds permitting) and there have been many 2007 releases where we just couldn’t see the value. The key advantages for buying en-primeur are simple: one is assured of the provenance of the wine when it comes to drink it, one has a greater degree of flexibility in terms of bottle size (I have a penchant for double-magna) and, importantly, it is often the cheapest way to buy, the idea being that the châteaux offer the wine early at a lower price in order to help their cashflow.

The final factor has been the sticking point for a few wines this year. The strong euro hasn’t helped us by any means though the pricing policy of the châteaux has varied from the reasonable (Mr Barton, as always) to the unbelievable (plenty of examples here). Wines such as Leoville-Barton will almost certainly sell out, and should be more expensive to buy once physically available; this also holds true for Lynch-Bages, which almost invariably jumps in price at some stage (the trick is to call the timing of this jump).

Pontet-Canet and Haut-Bailly are different calls: they don’t quite have the “form” of Leoville-Barton or Lynch-Bages - we follow these wines because we know that a great deal of passion, expertise and investment is going into these properties and that they are very much on the up.

So how much is a case of wine worth? Is a case of 2007 Lynch-Bages worth £408? My answer is yes, no question. In five or ten years’ time buyers of this wine will be able to drink a bottle of outstanding Pauillac for an “on the table” price of less than £42.00. Our cheapest retail price for Lynch Bages is £66.00 for the 1994 (a vintage comparable with 2007 in terms of quality, maybe) and it’s notable that en-primeur buyers of the 1994 paid just over £180 per case for their wine…

At the time of writing we have one first growth available: 2007 Ch. Margaux at £2460 per case in bond. I personally think that the price is about right: it’s cheaper than the 2006, a quarter of the price of the heavenly 2005 and, most importantly, an excellent wine, well worthy of its status as one of the best wines in the world.

It does make the 2004 look like exceptional value at £2400 per case, though stocks of the 04 are dwindling. The release price of the 2007 is more than 150% up on the release price of the 2004, and this does prompt arguments of a lack of realism on the part of the Bordelais, though can we really argue that they should be giving their wine away when they see their previous releases more than double in price in a matter of a few years?

The Fine Wine Market enjoyed an eagerly anticipated boom from late 2005.  Prices had been somewhat flat for a couple of years and the top wines, particularly those from the 1996 & 2000 Bordeaux vintages, were beginning to look exceptionally cheap.  By early 2006 the bull was up and running, fed by massive demand from the “new” markets, investment funds and private customers increasingly aware of the value, both in drinking and investment terms, of the best wines in the world.

At the same time, we were waiting for the 2005 Bordeaux vintage to be released.  We had been hearing great things almost as soon as the grapes had been picked; talk was that we would have a legend on our hands.  Trips to Bordeaux in early 2006 to taste these young legends in the making confirmed the hype - this was a truly exceptional vintage.  The wines were released slowly, at prices that we hadn’t imagined, and they sold as quickly as we could offer them - we sold 1,000 cases of Lynch-Bages on the day that it was released.  Prices continued to rise, and the boom continued into 2007.  Customers buying wine in February and March 2007 quite often found that their investments had “washed their faces” even before the invoice had been settled.

The market slowed a little in August 2007, which is nothing unusual - the majority of Bordeaux negociants take the month off and much of the wine trade follows suit.  However, the September pick up was late in arriving - some chaps with salaries larger than most of us had a bit of a problem with some bad debt.  The “credit crunch”, as the media called it (thankfully not “creditgate”) was on the front page, and stayed there.  Try to find an article on this without the words “the first run on a bank in living memory”.  The economy, or at least the financial markets, became rather nervous.

There is little or no correlation between the financial and fine wine markets, though the doom and gloom in the financial pages and on the television news did make some buyers a little more cautious.  On the surface, the wine market has remained fairly flat since.  Prices for a few wines have softened a little - though this can easily be put down to a few merchants discounting a little to get stock moving, a bit of nervous selling by small investors, and some cautious buying prices on the part of some trade buyers, some very happy to exploit the situation. 

Look beneath the surface, however, and a great deal of wine has been changing hands: there has been no shortage of trade - there is no glut of first growth claret.  Demand for the top wines remains strong, the current highlights being the 2005 vintage (still) which will be arriving in the UK over the next few months, and, as ever, there is remarkable demand for all vintages of Lafite (and the second wine, Carruades de Lafite) in the Far East. 

I personally believe that the market is having a much-needed “breather”.  How long this consolidation will last is a key question, though my thoughts are that this period represents an excellent buying opportunity for those with the conviction and the cash to make the most of it.  The fundamentals remain unchanged: fine wine is a tangible, luxury asset that more and more of us aspire to own and enjoy.  Demand is rising, and once a vintage has been harvested its supply is constantly dwindling.

That the best wines have proved to be sound investments over the past few years is undeniable: one only need to look at the numbers to see that the fine wine market has been exceptionally buoyant since 2005 (the year, not the vintage) and customers who own top end 1996 & 2000 clarets will have done very well indeed. Prices for the best 2005s have also moved upward and we look forward to their physical arrival in the UK in the Spring, which should coincide with Robert Parker’s report of the wines in bottle.

The recent turmoil in the financial markets has had relatively little effect on the fine wine market. The lack of any significant crossover or correlation between the financial and fine wine markets has been well documented, and to me it’s quite simple: fine wine is a tangible asset, it is a luxury product that we aspire to own, consume and know more about. It’s much more useful than gold, and easier to enjoy than art.

Moreover, the supply of any particular vintage of, say, Margaux, is constantly diminishing and, in the case of younger vintages, is constantly improving. Is a case of 2005 Chateau Margaux worth it?

Yes, every penny and more.

Interest and demand for fine wine is growing. The price rises that we have seen for the very best, driven largely by the super-wealthy and the “new” markets of the Far East, etc, are the ones that have grabbed the headlines but it is important to note that these are not the only wines that are selling. I see no sign of this demand falling and the number of potential new wine lovers, drinkers, buyers and connoisseurs in this increasingly wealthy and sophisticated world is unbounded.

We will shortly be launching our own measure of the fine wine market - The BBR 100. This of course will be no measure of the quality, the class, the sheer beauty of the wines that will be included, but it will make for an unbiased and unemotional gauge of the market’s ups and downs.

Will the price rises that we have seen over the past two years continue?