Geoffrey DeanOlivier Bernard, the President of the Union de Grands Crus de Bordeaux, has revealed that the severe spring frosts in France this year will reduce yield in the region by as much as 40% from the bumper 2016 crop. The late April frosts hit Bordeaux and other parts of France particularly hard, although much of Burgundy escaped unscathed (with the exception of Chablis, which was hammered).

The 2015 vintage, though, showed as well as had been widely expected at the UGCB tastings of that year in London this week. “The 2015 has lovely balance,” purred Bernard, whose family own Domaine de Chevalier in Pessac-Leognan. “It really shows what Bordeaux can do in a great vintage. The balance of the wines is better than ten years ago in terms of extraction, density and alcohol. ’16 is more masculine and a wine to keep for a few years. ’17 is another story: some properties have made some wonderful wines; some have made very little because of the frost.”

Vines

Bernard revealed that the frost was “everywhere in Bordeaux” but that there was much variation in the sites it affected. Those near the river were not hit because of the warming effect of water. Pichon-Baron was one such, losing only 10% of their fruit according to Christian Seely, their managing director, who added that he rates his 2015 in his top five of all time. It was hard to disagree on tasting.

Another top property largely to escape the frost was Troplong-Mondot on the Right Bank. Myriam Ruer, their marketing manager, said that only one of their plots had been hit, or about 5% of their area under vine. “Our yield is actually the same as in 2015,” she declared. “We were very, very lucky.” The estate’s 2015 was one of the stars of St-Emilion, being fabulously rich and long with beautifully integrated tannins. While powerful and opulent, this wine still exhibited delightful softness and freshness. Investors should give it serious consideration.

Chateau Troplong MondotOther leading chateaux were not so fortunate. Ludovic David, supremo at Marquis de Terme in Margaux, said he lost 25% of his fruit. Domaine de Chevalier’s loss was slightly less (20%) but others, according to Bernard, were facing between 30 and 50%. 

Bernard added that this year’s expected yield will be around 3.3m h/l, while in 2016, it was 5.8m. As a result, Anne Le Naour, head winemaker at Grand-Puy-Lacoste in Pauillac, thinks that technical considerations will be very important. “Wineries will have to decide if they want to produce volume or quality,” she said.

Careful selection will, therefore, be of paramount importance for those aiming to buy the 2017s en primeur next spring. Given the reconfirmation of the excellence of 2015, they may want to invest further in that vintage or in the 2016s. 

Peter ShakeshaftInformation is key to investors, no matter what sector you are investing in and one of our top priorities is collating and providing market data essential for optimising the performance of our clients’ wine investment portfolios.

The asset performance of fine wine is nothing new, the communication of it is. Historically, you previously had to be in the trade, or a keen collector, of fine wine to appreciate that it is one of the best performing asset classes.  High profile fine wine investors include Sir Alex Ferguson who, amidst much press interest, realised over £5million from his fine wine portfolio in 2014.

Alex Ferguson WineLiv-ex has been instrumental in opening up the fine wine market to investors by delivering services similar to those found in financial markets. A stock exchange function for trade members and equivalent pricing information of wines traded on the market has created much greater transparency and market liquidity. The 400 plus global trade members of Liv-ex now benefit from analysis on individual wines, market trends and performance comparisons to other commodities and financial markets.

The fine wine market trade press recognises the very real interest investors have in the asset performance of fine wine and are now providing relevant commentary, helping to further educate and inform.

Specialist publications, such as Knight Frank’s Annual Wealth report features fine wine in its Luxury Investments Index, the KFLII, and the wealth managers it polls around the world endorse the fact that there is growing global interest in investing in fine wine. Knight Frank are, of course, property investment specialists, but they recognise the value of understanding investor interest in other asset classes. They report that fine wine is the top performing luxury asset in their KFLII in the last year and excellent long-term performance. We have commented on this previously but, in case you missed it, you can read their latest comparison with classic cars and jewellery at the links below.

BarrelsWe established Vin-X to make investing in fine wine straightforward and accessible to anyone interested in owning a fine wine portfolio. Key to this is understanding the market and where the opportunities lie. We publish an easy to consume, round up on the key news and events in the fine wine market every month to help keep investors informed and make them aware of factors which may influence the performance of existing fine wine portfolios or point them to where future value may lie. This along with our blogs and weekly newsletters all aim to grow knowledge, engagement and value.

To download your free copy of our October report please visit this link now

Please see the links to reports prepared by Knight Frank on Luxury Investments below: 

  1. Fine wine performance outstrips diamonds, classic cars and fine art:
    http://www.knightfrank.co.uk/blog/2017/09/19/knight-frank-luxury-investment-index-q2-2017-launches
  1. Fine wine compared with classic cars:
    https://kfcontent.blob.core.windows.net/research/540/documents/en/knight-frank-luxury-investment-index-q1-2017-4749.pdf
  1. Fine wine compared with Jewellery:
    https://kfcontent.blob.core.windows.net/research/540/documents/en/knight-frank-luxury-investment-index-q2-2017-4949.pdf

BarrelThe awful scenes of fire devastation in California’s prime wine-making areas of Napa and Sonoma have featured in trade and mainstream press over the past couple of days. The full impact of the devastation, wreaked by fires fuelled with strong winds, is not yet known, but at least 17 people have been killed so far.

Various news sources report on the “unprecedented” scale of the fires, with about 115,000 acres of land affected, 2,000 structures burned and about 20,000 people evacuated.

California has suffered years of drought followed by a very wet 2016 – 17 winter season, resulting in much thicker vegetation, which has fueled the seasonal Autumn fires to catastrophic levels.

California WildfiresThe impact on the US’ most important wine growing region has been significant but the full impact is yet to be calculated. Napa Valley Vintners released a statement today saying that four of their members have “suffered total or very significant losses” but are waiting to hear the accounts from the most vulnerable areas of the Silverado Trail, in Calistoga and in the Mt. Veeder/Partrick Road/Henry Road areas.

The 2017 harvest was nearly completed but vines and vineyard buildings storing this year’s crop have been burned and smoke damage across the region is significant. Sadly there will be an impact on the 2017 vintage, as said the full impact of which is yet to be understood.

Read more detail: https://www.thedrinksbusiness.com/2017/10/death-toll-rises-as-wildfires-devastate-napa-and-sonoma-wine-country/

https://www.washingtonpost.com/news/post-nation/wp/2017/10/09/these-images-show-the-devastation-caused-by-californias-deadly-wine-country-fires/

The latest publication of one of the key guides on the performance of luxury assets in September shows wine up 25% to the end of Q2 2017, out-classing the the Knight Frank Luxury Investments Index (KFLII) average, which saw 5% growth across all assets under review. 

The KFLII is the only published benchmark which tracks and compares the price performance of the top ten alternative, luxury asset classes, which includes fine wine, classic cars, jewellery, fine art, vintage watches, coins, stamps, coloured diamonds, chinese ceramics and antique furniture. 

Lafite Barrels

The index analyses investment data provided from wealth managers around the world and acquisition information is compared to key benchmark indicators; the AMR (Art Market Research) which provides data on Art, Watches, Antique Furniture, Jewellery and Chinese Ceramics  and the HAGI™ (Historic Automobile Group International), monitors the rare classic motorcar sector. The KFLII wine data is sourced from Wine Owners rather than our usual benchmark, Liv-ex.com.

The report published in September sets out performance information to the end of Q2 and showed that Fine Art’s ranking as second in the 12 months measure at 7% growth is a long way behind fine wine’s 25%. Classic cars was ranked as 6th with 2% growth and the poorest performer, Chinese Ceramics, saw -12% decline on 12 months performance.

Classic CarsOver 5 years and 10 year terms to the end of Q2 2017, fine wine grew 61% and 231% respectively, a consistent second over both periods to classic cars which saw 117% and 362% rise.

Auction house, Bonhams, Global Chief Executive, Matthew Girling, sees the KFLII as “a fascinating insight into the top areas of collecting” and that “Bonhams certainly bears out the report’s conclusions with wine, art, watches and jewellery all performing strongly over the past year.”

The report’s author, Andrew Shirley, stated that  “no other asset class delivered double-digit growth across the past 12 months” and the wine trade press has commented on the report, see a link to Decanter’s feature on it here: http://www.decanter.com/wine-news/wine-prices-diamonds-fine-art-classic-cars-377577/

Understanding the liquidity of a stock, i.e. the ease of acquisition and exit in a timeframe in line with investment goals, is vitally important to investors whatever the sector you are looking at. The fact is ‘liquidity’ itself can add a premium value to an investment, as increased liquidity reduces risk and can lower the cost of acquisition.

Liv Ex LogoLiv-ex, the fine wine market’s equivalent ‘stock exchange’, has, since its inception in the late 1990’s, played a vital role in introducing tools, services and information to its trade members which has helped evolve the functionality of the fine wine market. This has delivered market efficiencies, price transparency and analysis, which has played a significant role in validating fine wine’s proposition as an investment.

The latest market KPI from Liv-ex for its trade members is its ‘Liquidity Ranking’ which will be published quarterly. The measure is based on a 12-month moving average of trade values at the end of each quarter.

The Liquidity Ranking reported at the end of Q3 2017 reflects the importance of the Bordeaux First Growths in the secondary market, accounting for half of the top 50 ‘most liquid’ wines sold in the period. Chateau Lafite Rothschild demonstrated its dominance with fourteen vintages ranked, eleven of which have enjoyed increasing levels of trade in Q3 and moved up the ranking. Bordeaux wines represented over 80% of the most liquid wines traded on the market – which comes as no surprise.

Chateau Lafite BottlesLarge liquidity movements reflected in the ranking are often due to sizeable releases, for example as the 2014 vintage went physical for some wines. This was illustrated in the figures shown for Haut Brion 2014, which rose 263 places to 95th and Sassicaia 2014, up 191 to 10th in the Q3 ranking.

The Liquidity measure also provides a view on en primeur trading activity and Q3 saw Carruades Lafite 2015 up 42 places to the 94th most liquid wine.

Wines of a higher unit price may actually distort the true liquidity picture, in that the average value is weighted to unit price rather than volume of trade, but it is still an indicator as the benchmark does record actual trades.

Liquidity is a key factor for consideration when managing a wine investment portfolio and we will provide further detail on this in our Market Report later this month. You can download a copy of our current report via the following link: https://www.vin-x.com/monthly-market-review and call us for further information on 0203 384 2262.

An update by Knight Frank on its Annual Wealth Report reviews its Luxury Investment Index (KFLII) at the end of Q2 2017 and sees Fine Wine continue to hold top place in its ranking of the assets most invested in by the world’s wealthy. 

Lafite 2004At the end of June 2017 the fine wine measure employed by the KFLII reported 25% growth over the preceding 12 months with Fine Art ranked second at 7%, Classic Cars third at 5% and rare watches 4% up over the year.

The report also measures the luxury assets’ 10 year price volatility against alternative asset, Gold, and equities using the FTSE100 as a comparative indicator. Gold is the most volatile investment (interesting re its ‘safe haven’ reputation) at a 20% rating, FTSE second at about 13% and fine wine seventh, less volatile than cars, stamps, art, and coins at 6%.

Fine wine has the additional benefit of being the most ‘liquid’, excuse the pun again, of the luxury assets, with a recognized exchange (Liv-ex.com), and an established, proactive, secondary market.

The Knight FJewelleryrank report focuses in detail on the Jewellery sector and looks at performance and record-breaking transactions quoting the sales of the 18.04 carat ‘Rockefeller’ emerald by auction at Christies NY in June for US$5.5M. and in April the sale of the Pink Star (59.6 carat pink diamond) for $71.2M in HK.

In the summer KF put the microscope on the classic car sector and featured further attention-grabbing automotive sales but in the last 12 months there is no comparison in terms of return on investment – Fine Wine is ‘top of the class’! To read the report in full please view at this link: https://kfcontent.blob.core.windows.net/research/540/documents/en/knight-frank-luxury-investment-index-q2-2017-4949.pdf

For further information on the fine wine market, the 2017 harvest, factors affecting prices and our tip of the month, download our latest report here:

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

Peter Shakeshaft

The FTAdviser (4th September 2017) has reported on the increased demand for ‘safe haven’ asset, gold, in light of the increasingly antagonistic actions of the North Korean regime and response, in particular, from the Trump administration.

Gold BarsTrade in gold has increased to levels last seen at the time of the UK Referendum vote. Josh Saul, CEO of the Physical Gold Company, states that they have “seen an 89% increase in financial professionals purchasing physical gold. They cite the same geopolitical fears and are buying to protect themselves from the systemic financial consequences of increased volatility and uncertainty.”

Tangible assets such as gold and fine wine do have a track record of stable growth during periods of economic and political uncertainty and there is a very strong argument now to adding breadth and reslience to investment portfolios with fine wine.

To read the article, please see the link below:

https://www.ftadviser.com/equities/2017/09/04/gold-prices-near-one-year-high-on-north-korea-test/

Peter ShakeshaftLiv-ex has recently issued details on the price performance of fine wine brands year to date based on the trade of the component wines of the Bordeaux 500 index which measures the chateaux’s last ten physical vintages (2005 to 2014 inclusive) with the following results:

TOP 10 BEST PERFORMING BORDEAUX WINES 2017 YTD:
Gruaud Larose 15%
Carruades Lafite 15%
Vieux Chateau Certan 14%
Coutet (Barsac) 13%
Petit Mouton 11%
Yquem 10%
Pavillon Rouge 10%
Calon Segur 9%
Rieussec 9%
Clarence Haut Brion 9%

Interestingly, the First Growths’ second wines have commanded market attention and enjoyed strong price growth this year so far with four of the top ten wines (Carruades Lafite, Petit Mouton, Pavillon Rouge and Clarence Haut Brion), all enjoying more than 9% growth. Latour’s Forts Latour did not make the top ten but still achieved 6.3% growth, a strong YTD performance.

The First Growths themselves are definitely back in favour but have enjoyed more sedate growth between 2% (Haut Brion, Latour and Mouton), Margaux at 3% and Lafite Rothschid at 5.7%. That said, Lafite 2014 has been the most traded wine by value on Liv-ex 2017 to date seeing 2.3% of trade. Other Lafite vintages commanding high levels of trade are the superlative 2010 and 2009 vintages, along with 2011 and 2012. 

Montrose 2010 was the second most highly traded wine by value at 1.3% of Liv-ex trade, this in part due to critics’ attention and its rescore, albeit down to 99. Mouton Rothschild 2005 and Cheval Blanc 2014 were also ranked in the top ten most highly traded wines with 0.68% and 0.60% respectively, Mouton’s rescore up to 98 definitely having an effect.

Sauternes has seen a strong regional performance in 2017 with three of the top ten wines from that appellation; Coutet seeing a 13% increase, Yquem 10% and Rieussec 9% .

The lower end of the performance measurement is still, with the exception of Chateaux Climens (-6%) and Eglise Clinet (-1%), in positive territory.

Chateau Troplong MondotFinally, as the summer break draws to a close a key trade appointment has been announced with the movement of Aymeric de Gironde, MD of St Estephe’s Cos d”Estournel to Chateau Troplong Mondot when Xavier Pariente departs in October. A Vin-X favourite, the St Emilion estate, whose close neighbours include Chateaux Pavie and Angelus, was recently sold to insurance company, Scor, for an undisclosed sum. Michel Reybier, the owner of Cos d’Estournel has stated that he will personally oversee the management of Cos going forward.

Peter ShakeshaftMid-August and we hear that Super Tuscan, Ornellaia, has commenced harvest of its 2017 crop. Granted, it is their Sauvignon Blanc and Viognier grapes, but the recent European heat wave has moved things along.

Ornellaia’s Director and wine-maker, Axel Heinz, reports on 2017, stating that they are currently enjoying “optimal day-night temperature differentials, and we expect an excellent harvest.”

Ornellaia Bottles

The 2017 vintage in Italy, France and Spain, has experienced exceptional temperature extremes this year with some areas of Europe experience 40 Celsius plus and drought conditions recently, this in stark contrast to the devastating April frosts and hailstorms. Reports in the Spring already predicted crop losses seeing supply down significantly year on year, in some cases a devastating 50 per cent reduction.

Of course, supply is a significant factor to the wine investor, as long as the quality is good, reduced supply is a positive influence on price performance, assuming you don’t pay too much for it in the first place.

The industry may still be in relative holiday mode but the 2017 harvest is seemingly just around the corner and the wine makers will be monitoring conditions very closely on the results of a highly turbulent climatic year. We will update you with all the latest news as it comes through.

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

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