The Financial Times ran a feature on Saturday 16th December with an attention -grabbing title “Corking Year for Investors in Fine Wine”. The article commenced with the statement that: “Fine wine investors will be raising their glasses as their returns for the year are set to outperform UK blue-chip shares and gold.”
The article compared the performance of fine wine, utilising the Liv-ex 1000 benchmark with Gold and the FTSE 100. The Liv-ex 1000, which charts the movements of 1,000 leading wines on the secondary market, had risen 11.3 per cent (in GBP) for the year ending 30th November 2017. In comparison Gold rose 1.4 per cent and the FTSE 100 6.6 per cent, including re-investment of dividends in the same currency measure.
The article also stated that US dollar buyers will have seen a 21.8 per cent rise in the Liv-ex 1000, which remarkably would beat the S&P500’s total return of 20.5 per cent for the same period.
The FT touches on the broadening of the fine wine market with Burgundy a particular target due to the much lower production levels of the region and the values set on these much rarer wines. The Chinese have broadened their focus beyond Bordeaux into Burgundy and other areas of France and the trade agreement between China and Australia has led to further demand from the Far East for Penfolds Grange.
Liv-ex’s expectations for 2018 were quoted; “The broadening of the market is expected to continue into next year with more wine merchants trading an increasing number of wines.” The Exchange warned that volatility in Sterling, now down 3 per cent on the euro since the start of the year, could have an affect in terms of new French stocks coming into the Sterling market, and further geo-political uncertainty with Brexit could play either way on currency and market performance as negotiations develop over 2018.
We have to question the commentary on the movement of wine critic, Neal Martin, from the Wine Advocate (WA) to Vinous, which was also raised as a potential influencing factor on the market. Ultimately, Martin will still provide his critical view on a wine, whether it is published by the WA or Vinous is probably not that important. What is probably more in question is the future of the WA.
Meanwhile, the good news emanating from the world’s top auction houses keeps on coming; the latest from probably North America’s leading fine wine auctioneer, Chicago-based Hart Davis Hart. Joining recent similar reports from Christie’s and Sotheby’s, HDH is celebrating its sale of over 3,000 lots between 14 – 16 December raising a record-breaking US$9.1million, exceeding the pre-auction estimate total of $8.5million comfortably.
The auction was 100% sold and a record was set for a case of 1982 Le Pin at $155,350. There was strong bidding throughout the 3 day sale, with top lots including Domaine de la Romanée Conti, Armand Rousseau and an Imperial of 2005 Petrus.