Thursday, August 28, 2008
Here's an interesting article about speculation in Bordeaux. As with many other commodities, investors can buy a portion of wine while it's still in the barrel in the hopes that the price will rise after bottling. Ratings from influential critics like Robert Parker make a big difference in these prices. But like all futures investing it's basically a form of educated gambling. It turns out that speculators mainly from Russia and China are buying the 2007 vintage (still in the barrel) at prices similar to the ones had from the now legendary 2005 vintage. The problem is that the 2007 vintage was good but not great. Robert Parker only gave 90-93 Points for the 2007 Chateau Lafite-Rothschild - not a high rating for a wine that sells for about $1500-$2000. Anyone who's studied economics knows what this means: they have an investment bubble. Expect Bordeaux prices to come crashing back down in a couple of years. Good news for consumers.