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Bordeaux Buyers Snap Up $5,000 Pichon as Lafite’s Prices Surge

By Guy Collins
Nov 17, 2010 6:00 PM CT

 

The message from wine investors in London is there’s more to Bordeaux than Chateau Lafite.

While the Rothschild-owned vineyard is setting records at auction, demand for the region’s top wines is reflected in a price surge for Chateau Pichon-Longueville, a 300-year-old Medoc wine estate.

Prices for top Bordeaux have soared this year, propelled by demand from China and a jump in the market for 2009 futures on sale since June. Pichon 1990 climbed to an average $3,694 a case in Europe last month among brokers, up 22 percent from a year earlier, according to the London-based Liv-ex wine exchange. A case of the same vintage fetched as much as $5,377.50 at a Hart Davis Hart Wine Co. auction in Chicago in September.

“Pichon is an extraordinary story,” said Peter Lunzer, chief executive officer of Lunzer Wine Investments, a London- based fund backed by Richmond Park Capital LLP. “The amount of money they have spent on it is eye-watering. There is potential for price appreciation.”

Other Pichon-Longueville vintages are in demand. A case of 1989 sold for $4,270 at Acker Merrall & Condit in Hong Kong on March 26, and three cases of the 2000 fetched $3,050 each at Acker in Hong Kong on May 28.

The Liv-ex 100 Fine Wine Investables Index has risen 33 percent since the start of this year; Pichon 2000 has risen 28 percent in Europe over the same period, based on broker prices.

Gironde Gravel

Pichon-Longueville, formerly known as Chateau Pichon- Longueville Baron, is an estate stretching over 73 hectares in the southern part of Pauillac, on the gravel of the Gironde estuary’s left bank. It was bought in 1987 by Axa Millesimes, a division of French insurer Axa SA set up to manage vineyards.

“When we acquired Pichon it was symptomatic of Bordeaux at that time,” said Christian Seely, managing director of Axa Millesimes. “It had 20 years of serious decline.”

Pichon-Longueville’s vineyards comprise 62 percent Cabernet Sauvignon grapes, 35 percent Merlot and 3 percent Cabernet Franc. The property is dominated by an 1840s chateau. Pichon doesn’t disclose how much has been invested.

Its wine-making dates back to the late 17th century, when it formed a single property with what is now the estate of Pichon Longueville Comtesse de Lalande. The land was divided in 1850 after Baron Joseph de Pichon-Longueville died. Its neighbors include Chateau Latour and Chateau Leoville Las Cases.

“What we try to do is pick up underperforming jewels, which Pichon certainly was,” Seely said. “That’s a 20-year program. It started in 1987 and hopefully we’re getting there.”

Based on Liv-ex list prices for the 1990 vintage, Pichon- Longueville ranks third among the 14 second-growths of the left bank, after Montrose and Leoville Las Cases.

First Growths

In price, most second-growths trail the five left-bank first growths Lafite-Rothschild, Mouton-Rothschild, Latour, Margaux and Haut-Brion, as well as La Mission-Haut-Brion and right-bank producers Petrus, Cheval Blanc, Le Pin and Lafleur.

Lafite is attracting most headlines and setting auction records, notably a world-beating $233,000 last month in Hong Kong for each of three bottles from its 1869 vintage. The broader Bordeaux market benefits from the interest.

For Pichon-Longueville, the most obvious competition is from its former sibling Lalande, which it faces across the road winding through the vineyards of the Medoc.

While Pichon-Longueville’s 1990 vintage sells for more than double the price of Lalande’s, its sibling has pulled ahead in years such as 2000, 2003 and 2009. According to Liv-ex, Lalande’s millennial vintage is priced at 1,770 pounds ($2,818), 31 percent more than Pichon-Longueville.

“Lalande normally goes for a premium,” said William Beck, partner of Wine Asset Managers LLP, which has $25 million of wine under management in two funds.

Champagne house Louis Roederer acquired Lalande in 2007 from May-Eliane de Lencquesaing. She ran the estate for almost 30 years. Her father bought it in 1924.

U.S. wine critic Robert Parker rates the 1990 Pichon- Longueville “one of this estate’s two or three finest wines made in the last 40 years.”

Read this article directly from Bloomberg.