“It is also worth noting that the quality of second wines is especially high (in 2022).”
– William Kelley, The Wine Advocate
Second Wines have been a not-too-well-kept secret in Bordeaux in recent years, representing some of the most compelling buys for two principal reasons:
- More accessible entry points for what are usually excellent quality wines from some of the biggest brand names in all of fine wine.
- Second Wines have produced some of the most lucrative investments in recent years.
Before delving into the market outlook, it is important to refresh the definition of Second Wines, recently explained in depth in our newsletter Cult Insider. In short, wines made by Bordeaux’s classified growths that come from the same terroir as the Grand Vin and made in the same facility by the same winemaking teams fall under the Second Wine category. Sometimes estates dedicate separate vineyard parcels or, occasionally, separate winemaking facilities for their Second Wines. These often get referred to as Second Label wines. However, for the analysis in this article, we will group these two categories together under the ‘Second Wines’ umbrella term.
Second Wines – why the hype?
Second Wines have a strong recent history in terms of good-valued EP purchases that go on to outperform the wider Bordeaux market. Going back five years, Second Wine performance jumped due to a strong post-release rally following the EP campaign for the 2016 vintage. The category has since maintained its edge versus both Grand Vins and the larger Bordeaux base.
Figure 1 – Post-EP bounce in 2018 drives Second Wines’ outperformance
Second Wines vs Grand Vins and Cult Wines Bordeaux Index (May 2018-May 2023)
Source: Pricing data from Wine-Searcher.com as of 30 Apr 2023. Past performance is not a guarantee of future returns. First Growth and Second Wines indices includes all left bank First Growth and their second wines, respectively. Cult Wines Bordeaux Index based on Cult Wines Indices.
More in the tank
Although the overall performance of Second Wines has been more in line with the Bordeaux market at large in recent years, the Second Wine category has been Cult Wine Investment’s top performer in the past two EP campaigns. Part of this success stems from a selective approach, but it also indicates Second Wines are again becoming one of the most compelling EP buying opportunities as they were back in the 2015 and 2016 vintage campaigns.
Figure 2 – Second Wines back at the top of EP performance
Cult Wine Investment EP CAGR by category – 2015–2021 EP campaigns
Source: Pricing data from Wine-Searcher.com as of 31 Mar 2022. Past performance is not a guarantee of future returns. CAGR = compound annual growth rate of purchases made between 01 April and 30 June (except for EP 2019, which includes purchases made between 01 May and 31 July due to COVID delay) of EP campaigns for 2015-2021 vintages.
We see reasons why this momentum should carry over into the new 2022 EP campaign. A common theme amongst most commentators about the 2022 vintage is that there has been a “partial flattening of the hierarchical pyramid” (Neal Martin, Vinous), with some Second Wines offering Grand Vin-level quality and ageing ability.
In addition to this hype around quality, the Second Wines category could take a greater share of demand this year due to the wider market backdrop. Buyers have shown signs of increased price sensitivity amid the general appreciation of fine wine prices alongside the macroeconomic cost-of-living concerns. Under-the-radar producers will likely be one beneficiary of this trend, but big brands still hold sway. Second Wines represent accessible ways to access the prestige of these iconic names during a year when quality came from all levels of the hierarchy. Added demand could translate to onward performance.
Figure 3 – Average prices of select Grand Vins and Second Wines
Source: Pricing data from Wine-Searcher.com as of 01 May 2023. Prices are averages of vintages 2016-2020.
Still, a selective approach that factors in wine quality and relative value against a producer’s Grand Vin and the wider market can help improve performance potential. Although most wines haven’t yet hit the market, here is a rundown of some of the top Second Wines we are anticipating among the 2022 EP releases.