Geoffrey DeanAlthough many investors are away on holiday, it still seems pertinent to report on market movements in the summer lull. The good news is that, despite relatively low trading, the Liv-ex Fine Wine 50 continues to head north. Although it nudged upwards by a mere 0.1% in what was a quiet July, the graph has risen more steeply in the first half of August, with the index finishing at 347.98 at close of business on the 14th.

Liv-Ex 50 growth March to mid-August

The Liv-ex Fine Wine 100 index resembled a sleepy, fireside labrador in July, effectively doing nothing (up 0.04%). But the broadest measure of the market, the Liv-ex 1000, actually rose 0.9% over the same period, with Bordeaux and Italy doing the front-running. The Bordeaux Legends 50, which includes quite a few older wines, spearheaded the advance, being up 2%, while the Italy 100 increased by 1.5%. The only sub-index to go down was the Rhone 100, which fell by half a per cent.

Bordeaux’s share of the market in July (76.4%) was its highest in any month in what has been a sluggish year for it. Burgundy fell slightly to 8.5%, while the United States increased to 2.3% thanks largely to trades in the 2012 vintage of Sine Que Non and Harlan Estate, as well as several Opus One vintages.

Lafite recorded more trades in July than anyone else - fifteen vintages of it being exchanged - with less heralded vintages like 2008, 2011 and 2014 the most numerous. Interestingly, the first growth’s second wine, Carruades Lafite, was the fifth most traded. Other big-hitters’ wines to be traded were Mouton Rothschild and Pontet Canet on the Left Bank, and Petrus and Pavie on the Right.

Petrus BottlesInterestingly, two St-Emilion estates, Canon and Figeac, along with Rauzan Segla in the Medoc, were the big climbers in Liv-ex’s league table of most-searched-for wines. The Champions League and Europa Cup spots - the top five in other words- were still occupied by the first growths, although there was some geographical variation among punters. 

The first growths were comfortably the most checked-out wines in both Britain and Asia (China notably), while the Americans tended to favour lower classed growths such as Pontet Canet, Cos d’Estournel and Lynch Bages.

Peter ShakeshaftAchieving one of the highest fine wine sales prices ever in Australia, a single, rare bottle of 1951 Penfolds Grange Hermitage was sold at auction in Melbourne on the 21st July 2017 for $51,750 by a private collector.

Termed ‘Australia’s most celebrated wine’ the 1951 Grange Hermitage was a special project of the chief winemaker, Max Schubert, who apparently produced three Grange vintages in secret. Schubert reputedly gave the 1951 away to friends and it is highly likely that the seller never paid for the bottle, pocketing a sizeable boon from Max. In 2004 another 1951 bottle sold for $50,200.

Penfolds Grange 1951 bottleThe auctioneer, Nick Stamford, MD of MW Wines, described the sale as historic: “I would imagine this one’s going to be part of history rather than being drunk. It’s an investment. ” The Penfold tasters confirmed that this bottle is in excellent condition, which is a rare exception. There are believed to be less than 20 of the original 1800 bottles still in existence and rarity is an enormous part of the appeal with a direct impact on price.

With scarcity in mind we receive the latest market news on the 2017 vintage. France’s Ministry of Agriculture has stated that the country’s wine productivity may fall 17 per cent to 37-38.2million hectoliters (4.9bn bottles) this year, compared to 45.5million in 2016. The April frosts and hail are the main causes, but these numbers are deemed to be a historic low, 16 per cent lower than the five year average and lower even than 1991, the previous worst year on record.

Frost on VinesBordeaux 2017 may see a 50 per cent cut in production compared to 2016 with the Right Bank seeing the worst effect. Many of the top estates do have the resources to battle such challenges and some flew helicopters over the vines to create air circulation.

Champagne is expected to be 9 per cent below the 2012 – 2016 average. Burgundy suffered a small 2016 crop, a good flowering actually indicates a larger 2017 crop here than last year. Hot early summer weather in France has advanced the growing season, which is currently running 10 to 20 days ahead of normal. Certainly, the 2017 vintage will be testing the skill of the winemakers, and rarity will be a factor when it comes to pricing.

For more information call us on 0203 284 2262

Chateau Impney Hill Climb 2017

Watch vintage Ferraris and Bentleys race the Chateau Impney track with near-miss spins and tips at the 2017 Hill Climb event this month via this You Tube video:

The annual classic car race event, sponsored this year by Vin-X, had over 200 classic cars entered in a number of races with over 14,000 spectators in attendance.

The 2017 Hill Climb will feature on Channel 4 on Saturday 5th August at 6.40am and then on Motors TV on the following dates at the times below:

DateTimes
Friday 4th August 05.38 am and 20.00pm
Saturday 5th August 04.11 am and 09.12 pm
Sunday 6th August 01.42 am and 07.00 pm
Monday 7th August 02.43 am and 22.03 pm
Tuesday 8th August 22.03pm
Friday 11th August 01.42pm

Market Report CoverClassic cars and fine wine are the top performing alternative assets termed as “Treasure Assets” (see Knight Frank Luxury Investments review: https://kfcontent.blob.core.windows.net/research/540/documents/en/knight-frank-luxury-investment-index-q1-2017-4749.pdf. This year’s Hill Climb event brought together over £1bn of classic car value with sponsor’s Vin-X, who hosted wine tastings for car owners and guests over the weekend.

You can read more in our July Market report, which also includes the latest fine wine market performance data, a review of property versus comparable tangible assets; fine wine and gold, a look at Champagne as a portfolio diversifier and ‘Vin-X Pick of the Month’ – to download your copy please use this link:

https://www.vin-x.com/monthly-market-review

If you have any questions - call us now on 0203 284 2262

 

Vin-X has released its July Market report today providing an update on fine wine performance and special focus on how the sector performs against property, regional market share and our pick of the month. Vin-X sponsored the Chateau Impney Hill Climb 2017, we touch briefly on that and our pick of the month. You can download the report at:
https://www.vin-x.com/monthly-market-review

Vin-X Market Report July 2017Bernard Magrez’s Chateau Pape Clement and First Growth Latour have also been in the news with the former’s positive 2016 news and a more disconcerting retrospective from Latour.

Augustin Deschamps, Director of Development of Grands Crus Classes for the Bernard Magrez group informed the market this week that Pape Clement sold out its EP 2016 position in half a day. “We maintained our En Primeur release price since 2011 around the same price point, whatever the quality of the vintage. That is what the market is waiting for. Bordeaux Grand Crus are open-market wines, so if we want Bordeaux wines to be still in the merchants’ (and negociatns’) portfolios tomorrow we have to give them fresh air and margins” explained Deschamps.

Chateau Pape Clement

Chateau Pape Clemente

Meanwhile, First Growth Latour is experiencing a different market response and one has to question whether the Chateau’s decision to exit the en primeur process. The response to their recent strategy to release wines ex-cellar in-bottle twice a year has resulted has been relatively luke-warm. There is a view that the pricing strategy on these releases has been out of line with the market. Even the prime vintage 2005 released this Spring was a slow sell.

Trade in Latour on the secondary market has also seen a sharp decline, down from 8.9% of trade by value down from 8.9 in 2012 to 2.8% 2017 year to date. Liv-ex reports that the ratio  of trades in Lafite to Latour had been 2:1 five years ago, and is currently sat at 4:1. The Latour index has increased by only 2% since 2012, in comparison the other four First Growths have seen growth between 10-25%.

Chateau Latour

Chateau Latour

Has Latour’s exit from from the annual Bordeaux jamboree resulted in a decline in trade interest in Latour or is it simply a rejection of the pricing strategy the chateau has adopted – time will tell and we will keep you posted.

For more information contact us now on 0203 384 2262

Geoffrey DeanInvestors ought to know about a new ‘recreation’ by Liv-ex of the 1855 classification in Bordeaux. That was, of course, restricted to Medoc wines only but Lix-ex have enterprisingly added leading wines from other parts of Bordeaux and France, as well as five other countries. How have they done it? By price - just as the French did 162 years ago.

Exposition 1855

The extended list of 'first growth' wines jumps accordingly from five to 31. Six of these are from DRC in Burgundy, and while the majority are French (Rhone as well as Burgundy), three countries get one selection each - Italy (Masseto), Spain (Pingus) and the USA (Screaming Eagle). Australia do even better with two (Penfold’s Grange and Henschke’s Hill of Grace).

DRCAverage price bands for each ‘growth’ are worked out by totting up actual trades of 12x75cl cases on LIv-ex between 30 April 2016 and 1 May 2017. To gain a classification, a minimum of five vintages of a wine must have been traded in that year-long timespan. The bands are as follows:

1er Cru – £2,500 or more

2eme – £688 - 2,499

3eme – £438 - 687

4eme – £313 - 437

5eme – £250 - 312

Top average price for the so-called first growths went, you’ve guessed it, to DRC, Domaine de la Romanee-Conti (£98,732). DRC, La Tache came in second some way behind (on £23,340) with Screaming Eagle in hot pursuit (£20,610). Petrus lay fourth (18,961) with Le Pin fifth (16,415). Hill of Grace fetched a mean of £3,455 while La Mission Haut-Brion in Graves just made it into the top tier, averaging exactly £2500.

Chateau Petrus BottlesChasing hard for promotion at the top of the ‘second growth’ league table was Burgundy’s Mommessin, Clos Tart (£2,432). Opus One (£2,259) was also pressing, as was Gaja’s Sori San Lorenzo (£2,005). Vega Sicilia’s Unico was flying the flag for Spain on £1,772, while Rothschild & Concha y Toro’s Almaviva was doing the same for Chile (£743).

The Super Tuscan, Tignanello, sat atop the third growth classification on £582, while another Chilean, Lapostelle’s Clos Apalta (£430) was pushing hard for promotion from the fourth growth listings. The one non-Medoc estate to make it into the fifth growth was Henri Gouges, NSG Clos Porrets (£287).

To read the full list, please visit:

http://www.insights.liv-ex.com/liv-ex-classification-2017

The Vin-X team enjoyed a fantastic weekend at Chateau Impney where we were proud to sponsor the third Hill Climb on the 8-9 July 2017. Guy Spollon and his son, Rod, are avid classic car enthusiasts and the architects behind one of the most important UK events in the automobile lover’s calendar. A Goodwood ‘in the making’, the Hill Climb’s profile is ‘climbing’ speedily in its own right with Channel 4 and other media in attendance.

Chateau Impney

Over 200 cars competed with Bugatti, Ferrari, Bentley, Mercedez, RR, Jaguar, Aston, Cobra, Porsche and many more, classics and supercars; they were all there. The Bugatti Chiron current estimated value of £3.5M was a massive spectator draw and Vin-X’s Katie was thrilled to get inside the Jaguar C-X75 (the actual car featured racing Bond’s Aston through the streets of Rome in Spectre), and I was privileged to do a lap in the Ferrari Enzo – see featured on our event gallery page: https://www.vin-x.com/category/10-chateau-impney-hill-climb-2017

Bugatti Chiron

More than 14,000 spectators enjoyed an unforgettable weekend, which also saw aerial highlights from an RAF spitfire, Lancaster Bomber and the Red Arrows. The Vin-X team hosted wine tastings during the two days and I was delighted to present awards to event winners.

As you talk to the car owners, their drivers and mechanics – the enormous passion for the cars is evident and uniformly they all convey a great sense of pride and privilege to be involved with these great assets. There is recognition of the value involved, a rough estimate by two well-known collectors of the total automobile value on the Chateau Impney estate at the event was about £1bn. With only one ‘doughnut’ on the day the insurers slept easy on Sunday evening!

Vintage Racing Cars

The classic car market has also had its ups and downs and Knight Frank’s recent report comparing the performance of luxury assets ranks them as the top performing asset apart from fine wine in the last 12 months – you can read the report in full here:

https://kfcontent.blob.core.windows.net/research/540/documents/en/knight-frank-luxury-investment-index-q1-2017-4749.pdf

Peter ShakeshaftThe Telegraph ran an article in its Money and Investment supplement on the 3rd July on fine wine investment with the focus on performance, leading with the fact that fine wine values have risen by 20% over the last year.

Written by James Connington, the article recognizes that the market has matured and that there are now sophisticated platforms and tools to help investors looking at fine wine as an investment asset.

With data sourced from Liv-ex, the top ten performing wines in the five years to the end of May 2017 are listed, led by Petit Mouton 2011 which, albeit not normally viewed as an investment-grade wine, saw prices grow 165% from £690 in 2012 (at en primeur) to £1,831 in May this year.

Grande EcheveauxThe Burgundy region, unsurprisingly, saw the greatest representation in the listing, with four out of the top ten, DRC Grands Echezeaux 2006 seeing a 152% price rise from £6,960 per case to £17,532. The Bordeaux region generally would not have shown normal trends in this particular period of time as the First Growths and other top Bordeaux brands were the hardest hit by the sector downturn between 2011 – 2014.

Currency dynamics have influenced market since the UK Referendum vote in June 2016, but fine wine has a track record of strong, stable, growth over the long term and no direct correlation with the performance of more volatile financial markets.

The article provides a general introduction to investing in fine wine and the benefits it offers to investors to diversify their portfolios and asset exemption from CGT. As a member of the WIA, the Vin-X team provides a specialist service that has been developed specifically for investors in fine wine, for more information and guidance on the current best opportunities in the market, contact us now on 0203 384 2262.

You can read the Telegraph article in full via the link:

http://www.telegraph.co.uk/investing/news/top-10-investment-wines-returned-150pc-five-years/

Lloyds Bank has published research on the housing market and it’s not all plain sailing! House sales dropped 7% in England and Wales last year and are still down 30% on levels a decade ago.

Not surprisingly Greater London has seen the sharpest decline in the period 2015 to 2016 with 18% fall in sales, this has rippled out across the South East region where they report levels down 10%. In fact all regions in England and Wales went into negative territory in this period. The strongest performing regions in 2016 were the East and West Midlands but they were still reporting losses at -1%, followed by the North West (-2%).

Investors may also be surprised to learn that London was also the worst performer over the five year period, with only 2% growth in the period 2011 to 2016, whereas other regions saw significantly better performance (see the table Property % changes by region, 2006 - 2016), with the North West leading at 46%.

Houses for SaleIn the longer term (ten years 2006 – 2016) house sales in all regions were again in negative territory with greater London seeing a decline of -44%, and the North at -42% at the highest levels, East Midlands and Wales the least effected regions at an equal -28%.

The report comments on a ‘potential’ property market north / south divide with 80% of the towns reporting increases in home sales in 2016 located in the north, however this may well be because they offer significant value post the declines endured over the preceding ten year period.

Property % changes by region, 2006 - 2016

Region% change 2006 - 2016% change 2011 - 2016% change 2015 - 2016
North -42% 24% -8%
Yorkshire & Humber -38% 39% -3%
North West -36% 46% -2%
East Midlands -28% 43% -1%
West Midlands -30% 43% -1%
East Anglia -30% 23% -5%
Wales -28% 37% -3%
South West -29% 30% -8%
South East -33% 23% -10%
Greater London -44% 2% -18%
ENGLAND & WALES AVERAGE -34% 29% -7%

Source: Lloyds Bank

Low interest rates and schemes such as ‘Help to Buy’ have engaged first-time buyers; this element of the market showing an increase in activity which represented 49% of house sales financed by mortgages, more than a third up on 2006 and the highest level for more than two decades. But even with this backdrop sales currently remain significantly below levels at the peak of the last housing boom. The lack-lustre sector performance is put down to a shortage of housing stock, the high costs of moving and insufficient equity or inability to provide large enough deposits.

There is no expectation that these trends are going to change any time soon and in fact property sales could fall further in the near future, particularly in London and the South East. Confidence issues and concerns over potential future interest rate rises are also leaving many property speculators sat on their hands.

We would of course want to draw parallels to the fine wine market and in the period reviewed by Lloyds Bank we are looking at data to the end of December 2016 and remember that this period included the three-year slump in the fine wine market between 2011 – 2014:

Asset12 months to December 20165 years: 2011 - 201610 years: 2006 - 2016
Property: England & Wales -34% 29% -7%
Fine Wine: Liv-ex 100 24.8% 3.8% 151.38%
Fine Wine: Liv-ex 1000 22.3% 18.3% 160.76%
Gold 29.5% -7.6% 109.56%

Source: Property: Lloyds Bank, Wine and Gold: Liv-ex

In terms of more current data, fine wine continues to perform well and improve on the five-year performance measurement, as set out in Vin-X’s June Market Report:

Asset12 months to 31st May 20175 years to May 2017
Liv-ex 100 19.5% 9.2%
Liv-ex 1000 21.4% 23.8%
Gold 17.8% -2.8%

Source: Liv-ex at 31st May 2017

For more information read the Vin-X June Market report in full here: https://www.vin-x.com/documents/VinxWineMarketReportJune2017.pdf

The Knight Frank Luxury Investment report published last week compared the performance of luxury assets such as classic cars, vintage watches, jewellery and fine wine. Their measure saw fine wine top the league table at 24% growth over one year, 55% growth over 5 years and 256% growth over ten, only beaten by classic cars at 404% in the ten-year period. In comparison, property offers nothing like these returns to investors. To read the Knight Frank report in full, see the following link:

https://kfcontent.blob.core.windows.net/research/540/documents/en/knight-frank-luxury-investment-index-q1-2017-4749.pdf

Vin-X’s Treasure Asset report, published earlier this year, looked into the performance of luxury investments in more detail, comparing their performance with financial markets. You can download this special market report via this link: https://www.vin-x.com/treasure-asset-landing

With the entry levels for investment-grade wine considerably lower than most other luxury investments, and certainly nothing like acquiring a property, investors can access this rewarding market much more easily and with no capital gains tax applicable on profits made. For more information contact us now on 0203 384 2262

Geoffrey DeanHere’s some news to cheer the wine investor. A posse of new world auction records were set at the end of last week at Christie’s in New York to underline the continuing strength of fine wine investment. Some mature Burgundies and a pair of ancient Madeiras were many of the record-setting wines in question. And some pretty mouthwatering sums were paid for them.

The two Madeiras were so old that, out of deference, they merit first mention. Both were from the 1795 vintage - just six years after the French Revolution. A cheque for $18,375 was written for a Barbeito, Terrantez Garrafeira Particular, while $11,638 was forked out for a Companhia Vinicola da Madeira, Terrantez.

Maderia

In Burgundy, a case of 1996 Domaine Leroy, Corton-Charlemagne went for as much as $34,300. Six magnums of De Vogüé, Musigny Vieilles Vignes 1993 were bought for $23,275. And going back a few decades, a Jeroboam of DRC, La Tache made $22,050. Completing a half-dozen of world records was a half-case of Jacques Selosse, Grand Cru Blanc de Blancs Brut 1990, which went under the hammer for $15,925.

There were other ‘notable’ sales, as Christie’s put it. Some Domaine de la Romanée-Conti, Romanée-Conti from 2009 and 2012 (both two-bottle lots) fetched $29,400 and $24,500 respectively. A case of Petrus 1947 flew the flag for Bordeaux, bringing in a whopping $49,000, while some Mouton Rothschild 1961 also fared well, attracting a final bid of $34,300.

Whisky lovers also delved deep, with one buyer splashing out $46,550 for a bottle of Macallan, Lalique 55-year old. That helped lift the final sales total to $5,283,278. The logical conclusion seems to be that there is a very large lake of cash swilling about out there, waiting to be pumped into the acquisition of rare fine wines. And it does not look like draining. 

Peter ShakeshaftKnight Frank have just published a report which puts the magnifying glass on their Knight Frank Luxury Investment Index, and in particular at the top performers. In the 12 months, ending 31st March 2017, fine wine heads the table and has won a dramatic take-over of previous luxury assets top- performer, classic cars.

FerrariThe value of the Knight Frank Fine Wine Icons rose by 24% in the 12 months to 31st March 2017, leaving classic cars, the next best performer at 6% looking decidedly sluggish compared to previous years. Over the longer terms of 5 and 10 years the pendulum swings back to the automobile assets but wine’s unprecedented 3-year down-turn 2011 – 2014 has a significant impact and over the longer term we expect this measure to swing wine’s way.

All markets have their cycles and whilst classic cars have seen a decrease in the volume and value of sales in the last 12 months, those in the sector would argue that this is beneficial for the long-term health of the market and its ability to attract new market entrants. Certainly, fine wine buyers have seen value recovery for those that bought at the 2011 market heights and, for those that invested in the last 3 years, a healthy return on investment.

Fine wine suffered its own equivalent period in the doldrums, between 2011 and 2014, but a steady recovery from Autumn 2015 saw a marked hike in performance with the UK Brexit vote mid-2016. Liv-ex tracked sustained growth across all its indices to April this year (14 months of consecutive growth in the case of the Liv-ex 1000), when the 2016 en primeurs campaign took off. May saw an uplift again and the view is there is still more value in the market, particularly in Bordeaux stocks which were hardest hit during the downturn.

The Knight Frank report compares asset performance across their luxury index classes over 1, 5 and 10 years and can be read in full here https://kfcontent.blob.core.windows.net/research/540/documents/en/knight-frank-luxury-investment-index-q1-2017-4749.pdf. It is a fascinating reminder of the fact that alternative assets can enhance portfolio performance as well as being the most interesting investments you could possibly own. In particular the strength of fine wine as an asset, which provides lower market entry price and certainly more liquidity.

For more information on the current best opportunities in the fine wine market call us now on 0203 384 2262

Peter ShakeshaftTwelve months on from the UK Referendum vote and we are back at the centre of another political maelstrom. The Brexit affect has of course been sat firmly on the dashboard since June 2016, whether driving a political agenda, a business plan or a household budget. But who would have thought even a month ago that we would find ourselves with a hung parliament with Jeremy Corbyn centre stage.

The Remainers amongst us may very well have said that Theresa May’s ‘Snap Election’ was the obvious opportunity to grab a lifeline back to Europe, but, for sure, many voters want change from ‘austerity politics’. A renewed political energy in the nation’s youth, the demographic feeling the greatest burden for the future, has led to the “precarious political position” (quote BBC’s Political Editor, John Pienar) we find ourselves in on Friday June 9th 2017.

Theresa May has returned from Buckingham Palace lunch time today and held the necessary press conference in Downing Street and rallied for ‘Certainty’ as we approach the start date of the Brexit negotiations, with the DUP at her shoulder. And one thing is very certain: there is probably more uncertainty now than in any time in the UK political history post WWII.

Pontet Canet BarrelsSo where does that leave us, seeking safe havens; shoring up against the storm to come? Parallels in terms of financial markets and currency dynamics can be drawn to the period immediately following last year’s Referendum vote. Sterling fell, FTSE shares in multinational corporations with international currency-based reporting saw shares rise in value as a result and investors sought safe havens with gold and wine seeing extraordinary growth in the following six months.

In fine wine, 2016 saw over 25% growth, 16% of that was post the Brexit vote. The market saw an unprecedented 16 months consecutive rise from December 2015 to April 2017. There is heightened demand for tangible assets which protect wealth in times of economic uncertainty and inflation and we can expect to see that demand hit the fine wine market anew.

Comparing Wine With Other Assets From 2016

Comparing Wine With Other Assets Dec 15- May 17

Martin PruszynskiThere has been speculation about the recent frosts in Bordeaux and their likely impact on En Primeur 2016, a delayed campaign, perhaps with a smaller volume of stocks being released at higher prices.

Our prediction has come to pass, the release yesterday of Montrose 2016 is the perfect example of the strangeness of the 2016 En Primeur campaign. As it turned out the release price was very attractive indeed, but with our sources telling us that the volume released was between 60% and 20% down on 2015.

As Jane Anson of decanter magazine put it:

Chateau MontroseIf you were lucky enough to secure any then congratulations, you have yourself a bargain, but with availability so significantly restricted there are a great many upset consumers (and professionals!) quietly cursing under their breath!

It seems that the trend of Chateaux holding more stock for later distribution is continuing, the long run ramifications of which are an unknown. Reduced volumes SHOULD entail higher prices, but there is always the risk that buyers will look to back vintages instead, or, however unlikely it seems, other wine regions.

Vin-X stand by our assertion that the 2017 frosts might just make the best buys of the 2016 en primeur campaign wines from the 2015 vintage!

Watch this space for more information.

Geoffrey DeanIt had to happen at some point, and finally it has. After 17 consecutive months of increases, the longest period of sustained upward movement, the Liv-ex Fine Wine 100 index was down 0.5% on the previous month at the end of April, sitting at 302.69. 

Just to remind investors, this index is not calculated on a daily basis but on the final day of each month, and represents the hundred most traded fine wines on the secondary market. As such, it is the benchmark. Liv-ex’s Fine Wine 50 index, which only tracks the Bordeaux First Growths from the first ten vintages of the new millennium, also fell in April, by 0.4%. Perhaps, the surprise is that fine wine’s ‘bull’ run has gone on for so long. And it will certainly be interesting to see if the index bounces back in May.

Over the last twelve months, it should be noted, the Liv-ex Fine Wine 100 has outperformed UK & American stock markets by 5%, and Gold by a whopping 22%. Both the Footsie and S&P 500 were up 15% in that time, while the FW100 rose 20%. Crude Oil was up 7%, although it has fallen sharply in the first week of May, while Gold was actually 2% lower in value.

Chart Comparing Wine with other assets 2016

“We have reached an interesting point in the cycle,” Justin Gibbs, the Liv-ex co founder, said. “After a sustained period of recovery from the end of 2015, boosted by Sterling’s decline against the Dollar and Euro, the market is facing some resistance. It comes on the eve of the Bordeaux 2016 release – a vintage of both quality and quantity. There are some interesting parallels to the 2010 release – in terms of both the quality of the vintage, and the shape of the market into which it is sold. Just like that release, getting the price right will be crucial to determining the broader market’s future direction.” 

Sauternes GrapesLatest news on the 2016 campaign from our Bordeaux Director, Renaud Ruer, is that the major chateaux have suspended their releases to wait until the final assessments of the damage caused by the frost last week of April is completely understood. The expectation being that 2016 releases will be significantly reduced from the original quotas, as a large number of the chateaux are facing destruction of sizeable percentages of the 2017 crop. This will no doubt have an impact on pricing. The Vin-X team will be monitoring this closely to establish the best buying opportunities for their clients.

To stay up to date on En Primeur 2016 register here: https://www.vin-x.com/enprimeur2016newsandallocations

Renaud RuerThe wine growing regions of Europe, including the UK have been battling late season frosts in the last week. Earlier victims included Champagne, Burgundy and the Rhone but in the last two nights the Bordeaux chateaux have been battling to save their vines.

Driving through Pessac Leognan, Graves, Suaternes and St Emilion this morning we are faced with brown, frost scorched vines which a few days ago were lush green from a balmy, early Spring warmth, where temperatures hit mid 20s degrees C only a week ago.

Twenty to one hundred percent of all appellations have been affected – Bordeaux is devastated and truly there are tears. NO doubt this will affect the current 2016 en primeur campaign.

Troplong Mondot in the snowAs a rule the chateaux wait normally until mid-May before releasing the latest vintage (2016) en primeur prices to see what loss, if any, is suffered through early year frosts. The future 2017 supply has suffered a massive impact this week and as a consequence I believe the Chateaux will readjust their 2016 strategy and reduce their planned release of 2016 by at least 30 – 40%.

Those few estates, such as Cos d’Estournel, who have already released supply to the market will hopefully not regret this early launch and buyers may have struck very lucky securing stock at what may turn out to be good value in light of expected reduced supply. Simply put this week’s dreadful events will certainly affect Bordeaux supply and prices for the 2016 and 17 vintages.

Keep informed on Bordeaux 2016 En Primeur at : https://www.vin-x.com/enprimeur2016newsandallocations

For more information on Bordeaux frosts see:

http://www.decanter.com/wine-news/devastating-frost-hits-bordeaux-vineyards-367741/

Geoffrey DeanInvestors will have shortly to decide whether to buy the superlative 2016 Bordeaux vintage en primeur, and if so, how much stock. That will naturally depend on pricing, with the Bordelais predicted to make hikes of between 10-20% in Euros (or 20-30% in sterling following its post-Brexit fall). That will undoubtedly put many people off, but buying opportunities should still present themselves.

UK merchants are united in their praise for the vintage. “2016 is very unique and exciting,” Max Lalondrelle, Berry Brothers’ buyer, said. “Across the 56 châteaux we visited the elegance, purity and energy in the wines shines through. This a return for Bordeaux to a very fine style of winemaking.”

Giles Cooper, marketing manager of BI Wines in London, cheerfully seconded Lalondrelle’s motion. “At the peak we think 2016 includes some of the finest young wines we have ever tasted from the region,” he purred. “In some cases the wines appear to be a modern-day combination of 1982, 1985 and 1989, albeit with winemaking know-how light years ahead of these great historic examples.”

Significantly, alcohol levels for the 2016s are down on previous years: on average a degree lower than 2015 and two degrees lower than 2010. “Because of the low levels of alcohol, even the big wines we all know have been tuned down to very fine and elegant specimens,” Lalondrelle mused.

Chateau Pichon Lalande

Investors may want to lean towards the Left Bank, even though some brilliant examples were made on the Right. “Definitely a Cabernet year,” Nicolas Glumineau, the Pichon Lalande winemaker, announced, adding that although yield was higher than any other year in the last decade, some producers actually made a little less than in 2015. James Suckling, the American critic, agreed that it was “a Left Bank year.”

Corney & Barrow’s Will Hargrove opined that “the reds in general steal the show. I think the vintage is of such quality that people should want these wines, but are they going to look like bargains against other vintages? Probably not, but do they taste like any other vintages? Not to me. If people want these wines to drink later at the best prices then they should buy them assuming things are not bonkers.”

Cooper was no less effusive in his praise. “Pauillac and St-Julien are right at the top of their game with the quality of Cabernet Sauvignon almost unparalleled,” he said. “Margaux is making a good fist of following up a stunning 2015; St-Estephe is considerably better than 2015 but perhaps doesn’t reach the heights of 2014 where it won most of the major vintage plaudits.”

Left Bank estates to be picked out for special commendation include Lafite, Haut-Brion, Pichon Lalande, Montrose and La Mission Haut-Brion. Among the favoured Right Bank chateaux are Vieux Château Certan, Cheval Blanc and Ausone.

Chateau Cheval BlancLalondrelle concludes that “It is hard to generalize, but to give some pointers, 2015 was very good but only 25% of the properties have sold out and we can still find a lot of stock on the négociants’ books. Those properties which have sold out would naturally be inclined to increase their prices and I think the UK market could sustain a moderate increase despite the difference in the exchange rate.” Time will tell if he is right.

Meanwhile, from Bordeaux Vin-X Founder, Peter Shakeshaft has joined the company’s Bordeaux Director, Renaud Ruer, for further tastings at a time when the region’s winemakers and owners have more time to discuss their own views and experiences of the vintage and how the market is receiving it.

Right Bank Troplong Mondot’s 2016 was a St Emilion highlight. On the Left Bank St Julien’s Gruaud Larose was outstanding along with Lynch-Bages and Pontet-Canet, whose wine-maker, Jean-Michel Comme, shared the fact that the 2016 harvest was so good that no second wine was made, all of it being used in the Grand Vin, with owner Alfred Tesseron claiming it to be one of his best vintages.

Chateau Pontet Canet BarrelsThere is a feeling in Bordeaux, that the trusted critical weathervane is missing post Parker. Questions are being asked about some of the scores published to date and whether they are truly reflective of the quality of the wines as they were when Parker’s view prevailed. Of course, Neal Martin is still to publish his scores and final opinions on hold until then.

Prices are now being released with Cos d’Estournel the first target chateau to market. Currency will be a key factor right now, the Euro : Sterling rate may well be affected by French and UK elections in the coming weeks and this may well be a positive or negative influence on short term strategy.

For up to date information on En Primeur 2016 follow our blog, Twitter and register for latest news at https://www.vin-x.com/enprimeur2016newsandallocations

Peter Shakeshaft

M&S, perhaps the UK’s favourite retailer, has announced that their wine buyers are introducing their first annual en primeur offer this May. Marks & Spencer’s resident Master of Wine, Emma Dawson, explains that they will be stocking their shelves with 2014 vintage wines acquired en primeur in 2015, early next month.

In this first campaign, launched in London on the 24th April, they have 32 wines from the 2014 vintage, which will be sold in 80 of their stores and online with buyers having the choice to buy in cases of six bottles or singly.

Pontet Canet BarrelsThe M&S Bordeaux 2014 range spans from a £26 bottle of Chateau Potensac to First Growth Lafite at £420 per bottle and includes other top brands such as Palmer, Pontet-Canet and Leoville Las Cases.

Dawson advised that 3,000 six-bottle cases had been acquired en primeur and that the team had even considered making the wines available for customers to acquire en primeur, but instead decided to wait until they became physical. The strategy of en primeur wine sales would not be an uncomplicated sell for a high street supermarket.

M&S confirmed that they acquired 2015 en primeur last year and will be buying from the 2016 vintage releases. The wines will change every year with their current strategy to keep their en primeur focus to about 30 wines with a price tag choice between £20 per bottle to First Growth, making them available for sale when they are in bottle.

The following wines are in their 2014 range:

Château Potensac Château Langoa Barton
Château Poujeaux Château Croix de Labrie
Chasse Spleen Château Grand-Puy-Lacoste
Château Angludet Château Cos d’Estournel
Connétable de Talbot Château Calon Ségur
Chevalier de Lascombes Château Lynch-Bages
Château Plince Château Pontet-Canet
Château Chauvin Château Lafleur-Pétrus
St Georges Côtes Pavie Château Bélair-Monange
Marquis de Calon Ségur Château Léoville Las Cases
Château Marquis de Terme Château Palmer
Château La Dominique Château Lafite
La Croix de Ducru Beaucaillou Château Gloria
Les Pagodes de Cos Château Gruaud-Larose

No doubt this strategy will broaden the audience some of these top wines are exposed to and increase demand for wines still held in bond. What cannot be increased is supply. Only a finite supply of wine is made every vintage. Bordeaux growers cannot increase their production by any other means than acquiring neighbouring vineyards and even then terroir will not be quite the same. The overall vine footprint is fixed, supply cannot be increased by artificial means or even irrigation under strict AOC controls. Increased consumer demand over time, as a result of the introduction to new buyers, can only be good for fine wine owners, with rising demand positively affecting price growth.

Chateau Cos d'EstournelMeanwhile, Cos d’Estournel (Scores: Suckling 97 - 98 and Jancis Robinson 18/20) is the first big Bordeaux brand to release its 2016 prices. Currency has an impact with Euro prices the same as last year’s release but in Sterling this represents a 10.1% increase. Smart selections will be essential for Sterling buyers of the 2016 vintage.

For more information on 2016 price releases and allocations please register: https://www.vin-x.com/enprimeur2016newsandallocations

Peter ShakeshaftGold’s month on month performance has dropped off for the first time this year following first quarter sustained demand, most likely as a response to the falling US dollar, concerns over rising inflation and an increasingly tense geopolitical scene.

Gold’s spot price today stands at $1,288, up 8.5% year to date in Sterling. ETF Securities reported today that Gold ETFs stand at £433M year to date, more than the equity ETFs. Source, a competitor provider, has seen its $4bn Physical Gold ETF take in more than $500M this year so far.

Marcus Brookes from Schroders expects US inflation to rise further along with political uncertainty and that gold positions “make an awful lot of sense”. He claims to have increased his gold position to 6% of their £895M Diversity fund. He also observes the inverse correlation of gold performance this year linked to the decline in the US dollar value.

Gold bars

Following a similar theme Architas investment manager, Nicholas Sweeny calls gold a “prudent” diversifier and has increased their position this year so far. Whilst more cautious Ben Seager-Scott, Tinley’s Director of Investment Strategy, states that he is “incredibly wary” of gold but that the asset is included in the firm’s portfolios.

Seager-Scott is quoted “I’m not holding it specifically against inflation risks, rather it’s for diversification versus bonds and equities, which look expensive after years of excess liquidity from central banks,” he said.“Even though history has shown it shouldn’t be thought of as a ‘safe haven’, it could nevertheless be an attractive store of wealth if there is a market correction.”

Robin Kyle, an investment manager at Tcam, said that he could understand the current demand case; “There is potential for safe-haven assets to do well, especially if you’re worried about bonds and bond proxies.”

Lafite Rothschild

Fine wine, another “safe haven, tangible asset, is less volatile than gold and Liv-ex performance data at the end of March 2017 compares FTSE 100, S&P 500 and gold. We can see the strong performance of gold year to date and the drop off in March, and fine wine’s stronger one-year performance and the five year view reflecting the well-publicised market trend in fine wine with gold’s comparatively weaker performance.

INDEX LEVEL
31.03.17
M.O.M (%) YTD (%) 1 year (%) 5 year (%)
Liv-ex 50 343 1.2 2.3 22.4 -0.4
Liv-ex 100 304 0.7 2.3 21.7 3.7
Liv-ex 500 299 1.2 2.1 20.2 13.6
Liv-ex 1000 307 1.2 2.3 20.9 19.5
Liv-ex Investables 331 1.0 2.3 21.5 8.6
FTSE 100 7,323 0.8 2.5 18.6 27.0
S&P 500 2,363 0.0 5.5 14.7 67.8
Gold 995 -1.3 6.9 16.0 -4.7

Source: Liv-ex.com

Gold is generally thought to be a solid, portfolio component to manage risk, the data consistently shows that an element of this strategy should also be deployed in fine wine.

For more information download our latest fine wine market report at https://www.vin-x.com/monthly-market-review or speak to a member of the Vin-X team 0203 384 2262.

Peter ShakeshaftSome of the most aspirational investments in the world are super rare and command extraordinary price tags. Sotheby’s hit the press again this week with two up and coming sales. They have featured the sale of a 90-year old Mercedez-Benz 68OS Torpedo Roadster (only three were made) to take place at their classic car auction near Lake Como, Italy in May 2017. The super care hand-crafted Roadster with lizard-skin seats has a price estimate of £7million.

Roadster

Even more “off the scale” is Sotheby’s sale of two one-off tear-shaped diamonds; The Apollo Blue (14.54 carats) and Artemis Pink. 16 carats). The diamonds are being sold seperately and currently on display in Dubai, prior to being shipped to Geneva for auction. David Bennett, worldwide Chairman of Sotheby’s International Jewellery Division said: “The Apollo and Artemis are exquisite coloured diamonds that are enormously rare, and each is a wonderful stone in its own right. Together as a pair of earrings they are breathtaking.”

The Knight Frank 2017 Wealth Report recently illustrated the increasing percentage of high net worth investors using luxury investments such as classic cars, jewellery, fine art and fine wine to create capital growth, and to protect and transfer wealth. This strategy seems ever more potent with both economic and political uncertainty on the rise and in a zero-interest rate world. The 2017 report showed that Fine Wine topped the performance of the top ten asset classes featured.

Knight Frank Report

Renaud RuerYesterday on the Right Bank was a LONG day in St Emilion and Pomerol. 80 wines tasted, making that about 200 in the last two days and I am now officially resting the palate over the weekend! I was accompanied by a great friend who owns a vineyard in the region and it was valuable to have his technical input as well.

I purposely did not want to be influenced by any of the opinions of the published critics so far and to be open-minded to the overall vintage experience. I have to say I am surprised by 2016. I am not sure it fully deserves the levels of enthusiasm already expressed in the media by certain critics. As usual the good vineyards produce really good wines, they have the resources to do so year on year no matter what the vintage conditions.

Renaud Wine Tasting

This was however a technically demanding vintage, it was so warm and dry at the end of the summer and particularly tough for Merlot, the first grape to ripen. In St Emilion and Pomerol the Merlot this year is very strong and powerful and challenging for the winemakers. Remembering how much I had enjoyed the 2015 vintage tastings, 2016 didn’t quite hit the same mark – maybe I am being a little severe in my judgement.

Of course, Troplong Mondot and Clos Fourtet have produced something amazing. Jean-Luc Thunevin’s Chateau Valandraud is also outstanding, Thunevin is a pioneer of the “vin de garage” movement and Parker scored the 1995 vintage higher than Chateau Petrus, certainly a Grand Cru to watch. Silvio Denz’s Chateau Pauby Faugere was perhaps my “hit of the day”. With only 1200 cases produced per annum getting hold of this wine is not easy but this is definitely a “chateau to watch” for the future.

Chateau Troplong Mondot The regions’ Grand Crus have done really well but they always do, from an overall vintage quality point of view – it’s not so straightforward.

We will be doing further tastings over the coming weeks and will keep you posted via Twitter (Renaud RUER‏ @VinXBordeaux ) blog and email. For our En Primeur news as it happens and Allocations when they become available please register here https://www.vin-x.com/enprimeur2016newsandallocations or speak to a member of the team on 0203 384 2262.

It’s a tough job – someone has to do it and believe me at the end of day 2 my palate is exhausted and only a glass of excellent Champagne can revive it! So half way through the trade tastings and Bordeaux is alive with the fruit of last year’s labour on show for the world’s merchants, critics and professional collectors to taste, savour, judge and in, due course, own. It’s a vitally important time for the region and I love being a part of it.

I started my 2016 tastings in Pessac-Leognan where the consistently excellent Haut-Brion and La Mission, as usual, show-cased great wines. Pessac’s star of the vintage for me was Pape-Clement, a fantastic wine; strong yet elegant with smoky overtones and Domaine de Chevalier’s white was superb.

Sauternes is a “mixed bag” this year, not as good as 2013 and ’14 which were great ‘sweet vintages’. As usual Chateau d’Yquem is outstanding and consistently brilliant. Chateau de Fargues was also up there. I was also very impressed with Lafaurie-Peyraguey owned by Silvio Denz, owner of Lalique Crystal. They are creating a special bottle for the 2016 vintage with Lalique detail on it demonstrating their commitment to the wine. Sigalas Rabaud was also brilliant.

Saint-Julien was a little disappointing. As the smallest appellation the focus is so great on getting the quality right but 2016 is definitely not an homogenous vintage here with notable variance in quality. Still there are some stars: Leoville Poyferré is brilliant and my pick of the appellation with Talbot and Gruaud Larose also splendid.

In the Margaux appellation Brane-Cantenac, Giscours and Malescot-Exupéry are my tipped leaders.

So, glass in hand, I rest and repair in readiness for the Right Bank and another great day ahead.

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