fg-fair-value

Robert Parker’s 100-point rating system has had a significant influence on fine wine prices. A perfect 100-point wine typically trades at a substantial premium to a lower scored wine. An upgrade can see prices increase dramatically. Despite Parker’s recent retirement from reviewing Bordeaux his scores still have a profound influence on the fine wine market.

The chart above plots prices for First Growths from the Liv-ex Fine Wine 50 index against their Parker scores, with a trend line highlighting the relationship between Parker score and price. The trend line shows that not all Parker points are equal – lower scoring wines tend to trade at similar prices, while Parker points become increasingly valuable for higher scoring wines.

The trend line might be helpful in determining a wine’s “fair value” with wines below the line potentially offering greater value for money than wines above the line, based on their Parker score. Of course, there are other factors that influence the price of fine wine such as brand, vintage and age. However, the chart and trend line still offer a useful starting point in the identification of wines that might be mispriced.

The chart highlights 98-point Haut Brion 2012 as perhaps one of the most undervalued First Growths in the Liv-ex Fine Wine 50 index. It trades at a 41.1% discount to the average price of the other 98-point First Growths and was heralded by Parker as “one of the stars of the vintage”. It is the second most viewed wine on Liv-ex this year, is actively traded in the secondary market and has already been on the rise for several months. Since the market low in June 2014, Haut Brion is the second best performing First Growth of the Fine Wine 50 index.