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Time for Fine Wine?

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Wine index provider Liv-ex says that all of its fine-wine indexes have gone up so far in 2016.

The Fine Wine 100, for instance, has improved for “an unprecedented 12 consecutive months and outperformed other global [indexes]” and is now at its highest level for the past five years according to the group, which runs an online fine-wine marketplace and tracks prices for about 1,000 wines.

The Fine Wine 50 – which tracks daily prices for the Bordeaux First Growth – is the best-performing index year to date. However, it is trading about 25% below its peak of 2011.

Several sub-indexes of the Fine Wine 1000 hit record highs in 2016, says Liv-ex.

“Bordeaux, Burgundy and Champagne were the standout performers,” the group said in a statement on Monday. “The Rhone, Italy and the ‘Rest of the World’ made moderate gains” relative to their peer sub-indexes.

The fine wine market got a post-Brexit boost, when a weaker British currency encouraged buyers from euro and dollar-based merchants to buy wines, including a large quantity of high-value Bordeaux brands.

2016 Performance

The Bordeaux market recovered in this year after flatlining last year; it had declined for the prior four years.

“Market participants started to perceive value in Bordeaux at the end of 2015 and there was cautious optimism as the market headed into 2016,” Liv-ex explained in a statement, adding that Brexit “proved to be the trigger that pushed prices higher.”

Bordeaux currently captures nearly 75% of the global market share of fine wine. Burgundy accounts for nearly 8% of the market, with Italy representing about 6%.

“The fine wine market has continued to broaden with an increasing number of wines trading in the secondary market,” Liv-ex stated.

Over the past 12 months, more than 4,000 different wines traded from 670 brands vs. 3,000 wines from 265 brands a year earlier.

The market had its first-ever trade in English wine in 2016, when Nyetimber, Classic Cuvee-2010 traded in August. Ao Yun 2013 of China traded for the first time, as well.

Outlook for 2017

Liv-ex reports that the fine wine market “appears robust.”

The British currency has been strengthening over the past two months, and this market remains firm.

However, the group points out that there are “certainly currency-related clouds on the horizon.” Bordeaux’s 2016 vintage “could be another quality” product, it adds.

“While Bordeaux continues to offer value after the fall from its 2011 peak, there is a growing awareness that there is more to the fine wine market than the traditional high-value blue chip Bordeaux brands,” the group said. “2017 looks to be an eventful year.”

— Check out The Collectibles Market: More Than a Labor of Love, Potentially Very Lucrative on ThinkAdvisor.



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