A Nightmare before Christmas! Take comfort from fine wine

A ‘medicinal glass’ maybe needed following a ‘night-marish’ week before Christmas with a series of economic and political events that have had the usual media commentators in overdrive. Despite these challenges, fine wine is delivering Festive Cheer to investors.

With the Prime Minister’s electoral grip being challenged by Party-Gate and Shewsbury turning yellow this week, there have been a number of significant developments for investors. Firstly, inflation hit 5.1%, at least a month earlier than most predictions, shocking the markets. In response Governor Bailey put on the Grinch costume and raised interest rates, for the first time in three years, to 0.25%. All would agree a necessary first move to control ‘runaway’ inflation, but the Bank of England has had to act earlier than previous forecasts.

Omicron – the true Nightmare before Christmas – has taken hold. With numbers rising from single figures to 95,000 cases per day in two weeks (17.12.2021). The latest variant is now a major cause for concern and is decimating the Festive party bookings the hospitality sector was relying on. Borders are being closed to UK residents with France taking the lead and we may see more stringent restrictions over the Festive season.

Fine wine investments seeing strong demand week before Christmas

Despite all this, investment wines are maintaining strong levels of growth and in this week before Christmas blue-chip Bordeaux and Burgundy are dominating the secondary market. Top trading Burgundies by value on Liv-ex in the week 10 – 16 December 2021 included Domaine Leroy Richebourg 1996 at £62,000 (12 x 75cl), DRC St Vivant 2018 and DRC Grands Echezaux 2018 both at £40,000. However, also seeing significant demand was the very affordable Bordeaux; Chateau Pape Clement 2016 at just £738 (12 x 75cl).

Bordeaux’s First Growths are continuing to be some of the most traded wines by value and volume this year. Lafite Rothschild has had its best trading year on Liv-ex ever and its 2017 vintage has risen 31.3% in the year to 15th December 2021.

Average growth in prices for Bordeaux First Growths in 2021:

Lafite Rothschild        25%

Mouton Rothschild    12.6%

Margaux                     10%

Haut Brion                  10%

Latour                         7%

Source: Liv-ex.com – 2009 to 2017 vintages      

The iconic celebratory toast, Champagne continues to have an excellent year as the regional top performer. Salon and Taittinger labels were the most traded wines from the region this week.

Certainly, the political, economic and pandemic developments this week are going to continue to play out in the first half of 2022. Wine investments throughout the pandemic today have maintained robust growth and resisted recessionary pressures as equities and other commodities have experienced volatility and loss. Investors looking for stability and growth whilst we continue to live with this uncertainty could benefit significantly from investing in fine wine.

Get the latest wine investment performance data from our December Market Update and it’s not too late to get that Christmas gift that could be a future ‘nest-egg’. Contact our team on 0203 384 2262 for more details.