Liv-ex 100’s 5.4% growth in 2020 points investors to fine wine’s value in 2021

The leading fine wine indicator, the Liv-ex 100, closed 2020 up 5.4% – great news for fine wine investors who may have seen their equity investments tumble and ricochet last year and a promising indicator for investment strategies in 2021.

There was nothing ‘normal’ about the final month of 2020, a very subdued Festive season was overshadowed by increasingly grim Covid numbers, dithering over Festive lockdowns and sadly as a nation we are now paying the price for Christmas gatherings with an even more virulent strain of Covid-19 engulfing the country.

Despite this, December 2020, with a shorter trading period, still saw trade on Liv-ex hit all-time highs for the month – an indicator that demand for fine wine remains robust as we entered January 2021.

The Liv-ex 100 rose 0.75% in the month, taking the year total to 5.4%, and the broader Liv-ex 1000 rose 0.71%, taking its overall performance to 2.02% across the year.

Regional trends for 2020 saw Italy and Champagne as the areas with wines that enjoyed the most growth, largely due to the exemption from US tariffs and investors seeking value and portfolio diversification. The Liv-ex Italy 100 rose 6.65% and Champagne 50 6.24% across 2020 with individual wines seeing significantly more growth in value, with leading wines over 20%. See our earlier blog which records the top performing wines of 2020.

Bordeaux delivered a solid performance in 2020 – the Liv-ex Bordeaux 500 was up 3.50% and Chateau L’Eglise Clinet 2010 was the leading price performer in 2020 on Liv-ex with 37% growth.

Trade in Burgundy as a region drifted in 2020, partly due to the US Tariffs and investor focus on Champagne and Italian wines in particular, but also some recognition that the prices driven to in 2019 were not sustainable for some brands in the short term.

Rhone quietly delivered 3.92% growth and the top wines of the region consistently deliver on quality but are yet to really achieve the interest on the secondary market they deserve.

Brexit concerns over a ‘no-deal’ scenario were allayed with a deal struck in the final hours of Christmas Eve, providing relief in terms of the threat of EU tariffs, however the cost implications of additional paperwork are yet to be fully understood by the trade.

The US Tariffs put in place by Trump may well be addressed by the Biden administration in due course, however they are still an influencing factor of Q1 2021, in fact from the 12th January additional tariffs will apply. Where previously the 25% levy was applied only to European wines over 14% ABV, they will also now apply to those under 14%, however Italian and sparkling (Champagne) wines will remain exempt.

Finally, Covid-19 and the UK and global statistics are, depressingly, even more worrying than at the peak of the first wave of the pandemic in April 2020. Vaccine roll-out is now a critical focus and logistical challenge for all governments to treat as many people as possible ahead of further virus mutations. With lockdown in the UK currently planned for the first two months of the year, there is no guarantee they won’t need to be extended, which will create a significant impact on the economy, employment and investments.

The factors that influenced markets in 2020 are still with us and evolving. Economic conditions are likely to remain challenging and unpredictable throughout much of 2021. Fine wine, meanwhile, continues to offer stability and growth and a safe haven for investors’ capital. For more information contact us on 0203 384 2262.