The chart above shows the historical relationship between the average prices of the wines in the Liv-ex Fine Wine 50 Index (the ten most recent vintages of the Bordeaux First Growths) and the DRC Index (composed of DRC’s six wines) – dividing one by the other to create a ratio.
At the beginning of the year it was observed that DRC prices looked overstretched and that an adjustment in this relationship was overdue. This briefly proved to be correct.
The DRC:First Growth ratio peaked at 6.11:1 in November 2015 when the Fine Wine 50 Index bottomed out, suggesting the First Growths had reached a point where they offered relative value compared to the wines of DRC. As can be seen from the chart, however, the ratio has recently changed direction and now stands at 6.16:1 – above its peak level last year.
While merchants were preoccupied with Bordeaux 2015, Burgundy sailed on. The Burgundy 150 Index (which contains DRC’s six wines) rose 5.2%. It was the best performing sub-index of the Liv-ex 1000 in June. It is also the strongest performing Liv-ex index over one year, rising 8.2%.
Activity in June was boosted by several big movers from DRC on limited volume. DRC, Richebourg 2003 was up 35% month on month with the 2007 vintage up 24%. Likewise, DRC, Echezeaux 2010 increased 23%. The 2011 that was up 22%. DRC, Romanee Conti 2005 firmed 22% over the same period.
The ratio currently stands at 1.75 standard deviations from the mean of 4.5 for the ten-year period.
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