Canon’s critical conundrum

08.03.18 – Fine Wine Investment –

Thanks to everyone for the feedback to last week’s “Magnificent Seven” note. The consensus view seems to be that we may well go through a phase where the average critics’ score is the guiding principle for a while, and certainly until evidence manifests itself to the contrary that is a perfectly sensible view. That does leave scope for outlier opinions to have an impact, of course, and we should always remember the scope for competitive conflicts; the “average score” might cover a wide spread in some instances.

The crunch will come when we see a meaningful upgrade from one of them, a distinct possibility with this round of 2015 bottlings. James Suckling fans out there will have been hoping for a nice fillip for Vieux Chateau Certan when he raised his en primeur score of 98-99 to a bottled 100, and the price did indeed nudge up, but only from £2,300 to £2,400 before settling back now at £2,350.

There may well be more upside here though because the Wine Advocate is yet to finalise its score from a 98-100 point range, and with the 2009 and 2010 scores at 99 and those wines costing £2,550 and £2,750 we could see a quick 10% uplift should it give it 100 points. That would not be at the “credit” of Suckling though, obviously.

To digress for a second, the Wine Advocate range was set by Neal Martin prior to his departure for Vinous. Curiously, his in-bottle scores have just been released under Robert Parker’s banner but with endless notes to the effect that whilst he is no longer there the tastings were done when he was, so they feel justified in publishing. How that leaves Lisa Perotti-Brown is anyone’s guess, as is why it has taken so long to get them aired, mind you when you see how many there are it could well have taken months to compile.

Lafleur 2015 also looks interesting at this level, around £9,000. WA offered a range of 97-99 en primeur, and is yet to make a physical assessment (as per the above, Martin gives it a 99). Suckling and Jane Anson give it 100, and at this price it trades at a 17% discount to the 99 point (WA) 2010, and 24% to the 99 point (WA) 2009, not to mention the 32% discount to the 2005, to which Parker gave a maximum. If the Wine Advocate does give it 100 and the market still accords it a lot of influence post-Parker it won’t stay at £9,000 for very long.

There is always the possibility, of course, that Lisa Perotti-Brown will not feel the need to disclose either VCC or Lafleur at this point, although we do have many instances of overlap, some of which differ quite markedly. This is going to help us measure the relative importance of all these views, obviously, and already we have some juicy differences of opinion, Canon being a case in point.

We wrote about Chateau Canon last June and it continues to intrigue. In his report, Neal Martin gives only 2 maximums, to Haut Brion and to Canon. As we pointed out in last year’s note, Canon has been making strides since it was purchased by the Chanel family, but it has never before even so much as sniffed a 100 pointer. It now finds itself in very elevated company.

It has also been a wonderful investment. En primeur buyers of the 2015 paid £625 per case, but within 6 months the price had doubled to over £1,250. We highlighted last week that the current price is a considerable premium to the 2005, 2009 and 2010, which might be justified by a score of 100 points. All well and good, but the Wine Advocate score is only 96.

As such, Canon 2015 represents a very good test case. Galloni, Suckling, and now Neal Martin have given it 100 points, Lisa Perotti-Brown only 96. We will watch the market with great interest because as reasonable as the current price might be at 100 points, at 96 points it is some 40% over-priced. We do think, however, that there will be headwinds with prices around the £2,000 mark, and are of the view that the way to play it is through the 2016, if you can get hold of any.

From an investment perspective the 2014 also has its merits. It costs a mere £640 a case, and scores 94 with Neal Martin (when he was at the Wine Advocate). In his tasting notes he says: “Though surely destined to be overshadowed by the extraordinary 2015, this Canon deserves a berth in your cellar”. We would suggest in your investment portfolio too!

If Canon 2015 is a shootout between Martin and Perotti-Brown, James Suckling’s abundance of 100 pointers means he’s picking fights all over the place. In Pomerol his maximums for le Pin and L’Evangile compete with 96s from Neal Martin, as with Pavie, over in St Emilion. Conversely the trio of 100 pointers for Haut Brion from Martin, Perotti-Brown and Jeb Dunnuck face up against 98s from Suckling and Galloni.

What is interesting about this is that it was Dunnuck who got the ball rolling for Haut Brion, which was trading around £4,500 until early February. His 100 point score pre-dated Perotti-Browns by a month and Martin’s by 6 weeks, by which time the price had moved up to well over £5,000 and currently stands around £5,700, a healthy kick even if still a 10-15% discount to the 100 pointers from 2005, 2009 and 2010.

It may be worth remembering that Dunnuck was Parker’s heir apparent before Neal Martin, so is he the one to watch? Liv-ex has recently credited him with price and market-moving capacity in respect of wines from the Rhone. There should be plenty of opportunity going forward to see whose influence is greatest. It will form a vital part of the fine wine investment jigsaw in the post-Parker era, and we at Amphora intend to be right up to speed with it.