The Right Bank seems to have bucked a downward price trend seen across Bordeaux since 2011 - and only arrested in recent months - but it’s not quite that straightforward, explains Ella Lister.
Investment analysis: Pomerol v St-Emilion
Overall, there has been little separating the performance of the leading Right Bank appellations of St-Emilion and Pomerol, particularly if you exclude the effect of the former’s updated classification (see Chart 2). However, Pomerol prices for individual wines have shown less movement than those of St-Emilion over recent years (see Chart 3).
In the experience of Philippe Castéja, CEO of Bordeaux négociant Borie-Manoux, ‘Pomerol is steady, with no ups and downs.’ This is partly due to its lack of any classification system, leaving the wines to speak for themselves. In terms of quality, too, Pomerol was probably the most consistent appellation over the difficult vintages of 2011, 2012 and 2013. Would it benefit from its own classification system? Not according to Jean-Valmy Nicolas, in his unique position as co-managing director of La Conseillante (in Pomerol), and Figeac (in St-Emilion). ‘Pomerol is lucky not to have a classification,’ he says, adding that St-Emilion’s ‘is becoming more and more of a nightmare.’
WAM has been ‘gently’ adding Right Bank wines to its fund portfolios, bringing the total to 13%, up from 9% nine months ago (whereas Left Bank first growths are down from 63% to 59%). ‘We like L’Evangile and Vieux Château Certan,’ says Davis, who looks for the ‘right blend of sensible price and liquidity’. The portfolio also contains a tiny amount of Pétrus, whose ‘price tends to hold up incredibly well’, while Le Pin ‘doesn’t appeal’ due to its ‘tiny’ production and ‘massive’ prices. Boom, on the other hand, believes Le Pin to be a more ‘shrewd investment’ than Pétrus. ‘Guys I know drink Le Pin and collect Pétrus,’ he says, adding: ‘What makes the price really go up is it being drunk.’
Boom wouldn’t put his own money in the Right Bank – ‘not a great hunting ground for investment’ – and instead fancies the chances of the first growths. Indeed, both Right Bank indices have been floundering over the past 18 months (see Chart 1), as was the Left Bank until more recently. From July 2014 to February 2015, though, the Liv-ex Left Bank 200 index gained 4%, and the first growths 1%, while the two Right Bank indices have run flat.
The Right Bank may have been Bordeaux’s panacea during the downturn, but it’s conceivable that investors will turn their backs on the Libournais now that Médoc-classed growths are showing signs of re-emerging from hibernation.
