Indices3

Robert Parker’s retirement from tasting Bordeaux has left the market questioning what the fine wine world will look like without the promise of future 100-point wines. Parker created the 100-point rating system, and it has become the key quality indicator in the market. Parker’s scores have significant influence on price performance and an upgrade to 100 points can cause prices to rise rapidly.

The ‘Liv-ex Parker 100 Index’ has been developed to track the performance of Bordeaux Parker 100-point wines. Wines are incorporated only once they are scored or upgraded to 100 points in bottle by Parker. Likewise, wines have only been removed once they are downgraded from 100-point status.

As can be seen from the chart above, the Parker 100 Index outperformed the Fine Wine 50 Index in the run up to the China-led boom. At this early stage of the bull cycle, buyers were focussed on quality. Between 2010 and 2011, brand-focussed Asian buyers purchased First Growths regardless of quality, and the Fine Wine 50 Index shot ahead. Once the froth was removed from the market after the 2011 peak, the Parker 100 Index recovered its primary position. It has risen 5% from the recent low in August 2014.

In the last few years, post-bull market, the performance of the Fine Wine 50 Index and the Parker 100 Index have been quite closely correlated. With Parker’s retirement announced and the supply of Parker 100-point wines therefore finite, will we see them begin to outperform once again?