Crystal ball

Anything to do with Port.
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uncle tom
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Crystal ball

Post by uncle tom » 17:13 Thu 02 Aug 2007

When it is possible to buy nicely matured '83's for much the same money as young raw '03's, you don't need a degree in maths to realise that something odd has happened to the market place.

In justifying the high price of young wine, the producer's stock answer is that they're making better VP now than in the past.

Is it true?

Certainly the ethos in the vineyards has been changing from the somewhat chaotic mixture of vine types to more orderly varietal planting - which must be of some assistance to the blender.

Also the push for quantity against quality seems to have changed, with major plantings of Touriga Nacional - a fine but notoriously low yielding vine, which only made up 0.5% of the total at the end of the seventies.

Then there is the return to foot treading - and now the advent of robotised foot treading...

Add to that temperature control, better weather forecasts at harvest time and the arsenal of gadgetry that takes the luck out of wine-making.

All in all there is a fairly convincing argument that across the whole spectrum of port production, quality should have risen.

But are the best VP's better than they were? Possibly, but it's less convincing, and certainly hard to justify the price differential.

Has the tendency for vintage port to be drunk younger left the older wines high and dry?

This could be a factor, but without clear data on the age of wine drunk, it's hard to make calculations. With vintage port consumption seemingly on the increase, one might expect the opposite effect.

- Could it be that in modern bar-code commerce, the great majority of wine merchants find old bottles in varying condition just too much hassle - that it's so much easier to just trade in clean fresh stock??

Which begs the question - what sort of market will there be in 20 years time for the 00's and 03's?

I have a suspicion that the days of people buying port in 100 case lots to lay down has pretty much come to an end, but there are still many small investors buying odd cases - and probably many more than 20 years ago.

If I'm right, then there will probably be no shortage of supply in 2027, but that supply will be even less merchant friendly than today.

So my crystal ball tells me that in 2027 we'll be paying much the same for the 03's (after adjusting for inflation) - as we are today.

Tom
I may be drunk, Miss, but in the morning I shall be sober and you will still be ugly - W.S. Churchill

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Frederick Blais
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Post by Frederick Blais » 21:39 Thu 02 Aug 2007

Hey! you are right :lol: Cruz sells its 89 for 34$ can and the 2000 for 32$. YOu might even buy the 2035 with the inflation for -drum roll- 40$ :lol:

Seriously there was a boom in port price when the 94 where release. Since that it affected the new release prices but I don't think it affected the old ones that much.

I don't see why the prices would increase appart from inflation, unless it becomes very fashionnable again... but now Douro wines seem to be.

LGTrotter
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Re: Crystal ball

Post by LGTrotter » 21:02 Tue 17 Jan 2017

This thread came up while the software update was being cranky and I thought that ten years later and halfway there would be a good time to think again about some of the issues.

Well the 2003s do not seem to have romped away in price, even the good ones are available at less than the release prices of the latest releases. Still the same old reasons come out; the wines are made better, and now the latest is that less vintage port is made. Neither of these address the underlying difficulty: I cannot imagine why I would buy a wine I need too keep for twenty or thirty years when I can buy one which has already been kept for that long for the same price or less.

It seems to me that the fashion for vintage port being drunk young is on the wane and Tom's view that older ports would be left high and dry does not seem to have come to pass. Certainly my searches for older ports indicate there is no slacking of demand, indeed the reverse seems true. I suppose this is a function of Internet buying, with more specialist outlets and online selling by individuals. Auction prices seem to have edged closer to retail prices in the last ten years.

The buying, and the selling of 100 case lots has gone. But I wonder if port will fall victim to the same malaise as Claret has been through and burgundy is going through, ie somebody (or an algorithm) decides it will produce a quick return. However unlikely this may sound I see no obvious reason why it should not. Certainly there is a fashion for producing super cuvée ports which seem detached from the usual models of consumption.

So we are halfway there and it seems to me Tom is halfway right.

My crystal ball tells me that the contraction of the vintage port market has finished, but I don't see much expansion on the horizon. And despite the best efforts of some producers to convince us to buy limited production super cuvees the best vintage ports will still be found elsewhere. Now what's all this talk of Quarles Harris 1980 I have been hearing about...

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AHB
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Re: Crystal ball

Post by AHB » 18:10 Thu 19 Jan 2017

Quarles Harris 1980 is delicious. I don't own any so I would be very grateful if lots of other people could buy some to share with me (and I will bring something equally delicious, of course).

I bought some 2003s on release or shortly after. I bought (prices are ibd):
Croft @ £26 (Dec 06) - now £30 - 1.4% (-1.1%)
Fonseca @ £31 (May 05) - now £37 - 1.5% (-0.6%)
Vesuvio @ £29 (May 05) - now £29 - 0.0% (-2.2%)

I've also roughly calculated the average compound annual growth in price without (and with) storage. When you factor in storage (75p per bottle per year) I have lost money by buying early and storing. I should be letting someone else do this for me but I'm not buying port as an investment - just as well really! Just to stand still against RPI I would have had to have achieved something like 2.8% cagr so as an investment 2003 port bought on release sucked.

At roughly the time that I bought these, I also bought some 1983 ports (retail):
Dow @ £29 (Oct 05) - now £42 - 3.4% (1.2%)
Graham @ £37 (Jul 05) - now £55 - 3.4% (1.5%)
Offley @ £20 (Sep 05) - now £48 - 8.3% (5.0%)
Warre @ £28 (Oct 05) - now £48 - 5.0% (2.6%)

So buying 1983 port in 2005 instead of 2003 port would have been a better investment but prices have still not gone up in line with RPI.

The conclusion I come to is that people should buy port to drink and not to resell.

I wonder at what age port suddenly starts to materially increase in price. I might have the data to look back at what price I was paying for 1970s and 1960s ports in 2005-06...
Top Port in 2017 (so far): Graham Stone Terraces 2015 and Quinta do Vesuvio 1994
2016 Port of the year: Cockburn 1908

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DRT
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Re: Crystal ball

Post by DRT » 23:01 Thu 19 Jan 2017

AHB wrote:
18:10 Thu 19 Jan 2017
I wonder at what age port suddenly starts to materially increase in price.
Based on a trend that seems to have developed in the past decade or so I would suggest that the best investment in VP is to buy general declarations from top houses about two or three years before they reach their 40th or 50th anniversary. Less than five years ago we could buy 1967 VP for between £30 to £50. Have a look on wine searcher today :roll:
"The first duty of Port is to be red"

Ernest H. Cockburn

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Re: Crystal ball

Post by forest26 » 08:11 Fri 20 Jan 2017

Two points -

- there is a lot of consolidation in the wine industry at the moment. This has resulted in a lot of 2000, 2003 coming onto the market as the companies minimise stocks.

- counter to the anniversary uplift - prices tend to fall for 18 -21 year old port as port laid down from Christening comes onto the market.

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uncle tom
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Re: Crystal ball

Post by uncle tom » 09:04 Fri 20 Jan 2017

The price gradient with gathering age has greatly increased over the last few years, part of the reason being mainly Chinese buyers buying anything that is old irrespective of quality - a trend that is much more noticeable in the Whisky markets, where bottles of ordinary mainstream blends that have somehow escaped being drunk for fifty years, now often sell for three figure sums at auction, whereas a decade ago they would fetch a tenner or so.

In addition, there was no significant interest in ancient rum a few years ago - but watch what happens when bottles go to auction now..

With port there are some definite price trends aside from that though - a tendency for prices to go nowhere (or down) between ten and twenty years of age and a sharp ramp up on the approaches to 40th and 50th years, as DRT notes.

There is also the overhang of the period when the big brewers were buying very large quantities of vintage port as a tax avoidance exercise, resulting in production significantly exceeding consumption between the 60s and 80s.

I fear that when we have nobly drunk through that excess, we will find that the greatly reduced production volumes since the millennium will fall short of demand as they reach maturity, resulting in inflated prices.

That said, when the world finally returns to 'normal' returns on investments, interest in alternative investments, such as wine, will fall away and depress prices - when the financial markets pulled out of the malaise of the 70s, the Bordeaux market imploded..
I may be drunk, Miss, but in the morning I shall be sober and you will still be ugly - W.S. Churchill

LGTrotter
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Re: Crystal ball

Post by LGTrotter » 13:30 Fri 20 Jan 2017

I looked at some of the prices I was paying for 1970 ports around 2003ish. Croft 1970/£40, Cockburn 1970/£38 Martinez 1970/£35. And that is all in, from a shop a bottle at a time. I remember thinking that the bigger names, being over £50/bottle, seemed excessively priced. Oh for a time machine.

The point I am making is that older ports (1970 and older) have increased in price a great deal in the last 5 or so years. Whether this is a flash in the pan or a longer term trend I could not say. I doubt that they will fall in price and I think this is as much driven by the price of new releases as it is new markets (eg China). I also don't believe that the Chinese are inherently foolish when it comes to buying wines. Indeed the story of the 2010 claret is a case in point. Having ordered stacks of them they then changed their minds and kept the money (around £70 million it was rumoured).

Consumption is a difficult one in port. How would we know? I think there is still plenty of stock, in the UK at least, and as prices go up more will appear.

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AHB
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Re: Crystal ball

Post by AHB » 17:41 Fri 20 Jan 2017

I'm glad you nudged this thread. With the benefit of 10 years of development it has been really interesting to go back to.
LGTrotter wrote:
13:30 Fri 20 Jan 2017
I looked at some of the prices I was paying for 1970 ports around 2003ish. Croft 1970/£40, Cockburn 1970/£38 Martinez 1970/£35.
So today those same ports would cost £60, £65 and £53.

For the purposes of my calculations, I'll assume that there is 13 years between these two sets of prices.
Croft price has grown by 3.2% cagr
Cockburn by 4.2%
Martinez by 3.2%

Taking into account the costs of storage @ £9.75 per bottle:
Croft by 1.5%
Cockburn by 2.4%
Martinez by 1.3%

Taking into account RPI
Croft by -1.5%
Cockburn by -0.6%
Martinez by -1.7%

Tony - stop reading now!
So in real terms today is clearly the time to be buying 1970 vintage ports if our predictions of a price hike in 2018-2020 are correct.
Top Port in 2017 (so far): Graham Stone Terraces 2015 and Quinta do Vesuvio 1994
2016 Port of the year: Cockburn 1908

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uncle tom
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Re: Crystal ball

Post by uncle tom » 07:34 Sat 21 Jan 2017

So today those same ports would cost £60, £65 and £53.
Should have added 20% VAT to those numbers.. :wink:
I may be drunk, Miss, but in the morning I shall be sober and you will still be ugly - W.S. Churchill

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AHB
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Re: Crystal ball

Post by AHB » 08:42 Sun 22 Jan 2017

uncle tom wrote:
07:34 Sat 21 Jan 2017
So today those same ports would cost £60, £65 and £53.
Should have added 20% VAT to those numbers.. :wink:
That's what Winesearcher was telling me you could buy these wines for in December, including VAT and duty.
Top Port in 2017 (so far): Graham Stone Terraces 2015 and Quinta do Vesuvio 1994
2016 Port of the year: Cockburn 1908

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uncle tom
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Re: Crystal ball

Post by uncle tom » 09:15 Sun 22 Jan 2017

That's what Winesearcher was telling me you could buy these wines for in December, including VAT and duty.
I used winesearcher too - the merchants offering at those prices all said 'excludes sales tax'
I may be drunk, Miss, but in the morning I shall be sober and you will still be ugly - W.S. Churchill

LGTrotter
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Re: Crystal ball

Post by LGTrotter » 12:48 Mon 23 Jan 2017

I would imagine that making port is a labour intensive business. The changes in working practice and conditions may account for some of the rises in release prices. However I do not really believe that prices have much correlation to production costs. Not much problem for the crystal ball to predict that the pressure on production costs will continue.

The crystal ball grows dim, the mist swirls, but I think I can just make out increasing production of table wines at the expense of vintage port production as a continuing trend. Wait, I see a dark figure, it is the unkown producer stepping out of the shadows to make great vintage port. Who can he (or she) be?

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Re: Crystal ball

Post by forest26 » 14:43 Mon 23 Jan 2017

AHB wrote:
17:41 Fri 20 Jan 2017


Tony - stop reading now!
So in real terms today is clearly the time to be buying 1970 vintage ports if our predictions of a price hike in 2018-2020 are correct.
Have you tried buying G70, F70 or T70 in the last 6 months? - Ouch!

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