Ditch the Bordeaux plonk futures

As part of our ongoing service to our friends and allies suffering on Bay Street (see prior post “An i-bankers survival guide” July 9-08), here is a gentle reminder to delete the email reminder that will be soon coming from the marketing team at the L.C.B.O,’s Vintages regarding the 2007 French Bordeau Futures. It isn’t that you shouldn’t be putting money into illiquid assets right now – even if they’re liquid – it’s that the deep thinkers who price these things have no concept about what they are pricing, and the market conditions they are trying to sell into.

Compare the prices and ratings of these fine bottles:

2006 Haut-Brion: 92-94 at WS, 92-94 at RP, $768.45
2007 Haut-Brion: 89-92 at WS, 91-94 at RP, $575.00

2006 Lafite Rothschild: 92-94 at WS, 91-94 at RP, $768.45
2007 Lafite Rothschild: 89-92 at WS, 90-93 at RP, $575.00

2006 Latour: 95-100 at WS, 93-96 at RP, $768.45
2007 Latour: 89-92 at WS, 90-93 at RP, $575.00

2006 Margaux: 95-100 points at WS, 93-95 at RP, $768.45
2007 Margaux: 89-92 points at WS, 92-94 at RP, $575.00

2006 Mouton Rothschild: 95-100 at WS, 96-100 at RP, $818.05
2007 Mouton Rothschild: 90-93 at WS, 90-94 at RP, $575.00

2006 Palmer: 92-94 at WS, 91-94 at RP, $292.55
2007 Palmer: 88-91 at WS, 91-93 at RP, $279.00

Note the inelastic pricing of the 2006 and 2007 futures, regardless of the House in question or what Wine Spectator or Robert Parker have to say about the quality of what’s inside. Hard to believe that all of these great Chateaus have produced wines of such similar quality in 2007. Or that the LCBO believes that in the face of a recession, consumers will fork over almost $600/bottle for wines that are barely in the “90” point category.

The Dow Jones is down almost 40% from the 2007 highs, yet the Bordeaux futures seem to be holding their prices just fine. How long will the LCBO be able to hold that line?

MRM