Peter ShakeshaftEvery year it feels the same, the Festive break seems to go on and on whilst we are in it, but once it’s over, January always makes it seem so far away!  That said, it is worth a look over the shoulder to see what we can learn from the year just gone to perhaps give us a few pointers for the months ahead.

2017 was another positive year for the fine wine market, not quite as racy perhaps as 2016 but a steady continuation of a growth trend that felt like a realistic norm, particularly in light of ongoing economic and political uncertainty. Brexit continued to make itself felt with Sterling fluctuations affecting demand, particularly for the Bordeaux First Growths as UK stocks offered particular value for overseas buyers. Currency is a significant factor as performance in US$ over 2017 saw 15% growth compared to a 2% rise in Euros.

April 2017 saw the first dip in the Liv-ex 100 for 16 months, again partly due to a strengthening GBP at the time, with an overall 12-month growth of 5.2%. The broader Liv-ex 1000 index performed well rising 10.1% across the year, ahead of the FTSE 100’s 7.6%, growth and gold’s 3.8%. The Financial Times covered this performance in its article on the 16th December 2017, where it quoted that “Fine wine investors will be raising a glass as their returns for the year [2017] are set to outperform UK blue-chip shares and gold.” And it did!

The market broadened in 2017 and Liv-ex reported an increase of 90% in the number of brands being traded on Liv-ex since 2015. Over the year more than 4,500 wines were traded, representing 769 brands.

Just before Christmas Liv-ex published its annual Power 100 report in conjunction with The Drinks Business, we will be publishing our thoughts on this in our January 2018 report, and you can see the top ten brands ranked overall in the table.

Liv-ex Power 100 2017TOP 20 WINES ACROSS ALL CRITERIA:

BrandRank 2017Rank 2016Value tradedRankVolume tradedRankAv trade pricePrice growthNo. of wines
Lafite Rothschild 1 1 13.76% 1 6.23% 2 3,832.46 18.65% 50
Margaux 2 3 4.17% 5 2.26% 14 3,205.79 17.24% 52
Mouton Rothschild 3 2 7.38% 2 3.53% 6 3,626.58 15.96% 47
DRC 4 6 2.26% 11 0.18% 125 21,579.82 31.12% 65
Angelus 5 7 2.38% 10 1.60% 25 2,585.83 17.06% 27
Ponsot 6 130 1.66% 17 0.76% 46 3,767.75 18.26% 27
Domaine Leflaive 7 27 0.55% 43 0.45% 65 2,102.76 20.57% 64
Armand Rousseau 8 19 0.87% 30 0.27% 95 5,672.36 16.99% 50
Haut Brion 9 4 4.63% 3 2.46% 12 3,262.79 11.60% 48
Petrus 10 8 3.76% 6 0.30% 89 21,556.01 13.61% 28

Source: Liv-ex Power 100 Report 2017

Bordeaux’s level of market share, which has been steadily falling since 2010, is now felt to have a found its new natural level of sub-70% of trade going forward with the firm establishment of brands and trade in wine from Burgundy, Champagne and Tuscany in particular. In 2017 Burgundy’s share of trade by value rose to 12.7%, from 7.7% in 2016, notably going above 10% for the first time. Champagne and Tuscany also showed stronger regional performance in terms of market share by value both in the region of 6%. This should be borne in mind when portfolio planning.

Top ten price performers in 2017

ProducerVintagePrice December 2017Growth in 2017
Conterno, Barolo Cascina Francia 2004 £2,528 157.4%
Conterno, Barolo Cascina Francia 2003 £1,636 89.4%
Guigal Cote Rotie Mouline 2000 £2,931 84.2%
Armand Rousseau, Chambertin 2007 £13,636 80.7%
Ponsot, Clos Roche Vv 2007 £3,293 72.5%
DRC, Echezeaux 2013 £14,492 66.9%
Conterno, Barolo Cascina Francia 2007 £1,809 65.8%
Armand Rousseau, Chambertin 2008 £12,519 65.6%
DRC Romanee Saint Vivant 2006 £17,508 59.7%
Krug, Vintage Brut 1990 £5,459 59.1%

Source: Liv-ex 31st December 2017

So, what does all this mean for 2018?

Certainly, it will be another interesting year – the political backdrop will continue to be uncertain as will the economic climate. Sterling volatility is therefore expected to continue to influence demand from USdollar and Euro buyers. Burgundy has seen significant growth in the last 24 months and there is a question over the sustainability of the region’s prices.

This Spring’s Bordeaux 2017 en primeur campaign could affect market sentiment early summer; the overall vintage quality is not expected to match the outstanding 2015 and a good 2016. Supply could well be an issue as a number of chateaux reported the devastating effect of frost on their 2017 crop in April last year. Those chateaux that do produce well scored wines will need to bear in mind their pricing strategy, as a sensibly priced campaign could have a very positive affect on market sentiment.

There has been speculation since the withdrawal of critic Robert Parker from the Bordeaux tastings of where the real critical influence will lie in the future. This does not yet seem clear and there is no outstanding voice which has any real influence on market price. Parker’s named successor, Neal Martin, announced his move from the Wine Advocate to join former colleague Antonio Galloni at Vinous.com in December, the industry debates whether this will have an effect? Our view is that it doesn’t really make a difference which publication Martin voices his opinion from, his view is one of a number respected by the market along with Galloni himself, James Suckling, Jancis Robinson, et al – but there is, as yet, no single outstanding critic to fill Parker’s shoes, and we may never have that again.

We go into more detail in our January report on the findings of the Liv-ex Power 100 and our view for the year ahead. In the meantime, as noted by the Financial Times only recently, these are exciting times for fine wine investors.

Call us now for more information on 0203 384 2262.

Peter ShakeshaftThe Financial Times ran a feature on Saturday 16th December with an attention -grabbing title “Corking Year for Investors in Fine Wine”. The article commenced with the statement that: “Fine wine investors will be raising their glasses as their returns for the year are set to outperform UK blue-chip shares and gold.”

The article compared the performance of fine wine, utilising the Liv-ex 1000 benchmark with Gold and the FTSE 100. The Liv-ex 1000, which charts the movements of 1,000 leading wines on the secondary market, had risen 11.3 per cent (in GBP) for the year ending 30th November 2017. In comparison Gold rose 1.4 per cent and the FTSE 100 6.6 per cent, including re-investment of dividends in the same currency measure.

Chateau Lafite BottleThe article also stated that US dollar buyers will have seen a 21.8 per cent rise in the Liv-ex 1000, which remarkably would beat the S&P500’s total return of 20.5 per cent for the same period.

The FT touches on the broadening of the fine wine market with Burgundy a particular target due to the much lower production levels of the region and the values set on these much rarer wines. The Chinese have broadened their focus beyond Bordeaux into Burgundy and other areas of France and the trade agreement between China and Australia has led to further demand from the Far East for Penfolds Grange.

DRC CrossLiv-ex’s expectations for 2018 were quoted; “The broadening of the market is expected to continue into next year with more wine merchants trading an increasing number of wines.” The Exchange warned that volatility in Sterling, now down 3 per cent on the euro since the start of the year, could have an affect in terms of new French stocks coming into the Sterling market, and further geo-political uncertainty with Brexit could play either way on currency and market performance as negotiations develop over 2018.

We have to question the commentary on the movement of wine critic, Neal Martin, from the Wine Advocate (WA) to Vinous, which was also raised as a potential influencing factor on the market. Ultimately, Martin will still provide his critical view on a wine, whether it is published by the WA or Vinous is probably not that important. What is probably more in question is the future of the WA.

AuctionMeanwhile, the good news emanating from the world’s top auction houses keeps on coming; the latest from probably North America’s leading fine wine auctioneer, Chicago-based Hart Davis Hart. Joining recent similar reports from Christie’s and Sotheby’s, HDH is celebrating its sale of over 3,000 lots between 14 – 16 December raising a record-breaking US$9.1million, exceeding the pre-auction estimate total of $8.5million comfortably.

The auction was 100% sold and a record was set for a case of 1982 Le Pin at $155,350. There was strong bidding throughout the 3 day sale, with top lots including Domaine de la Romanée Conti, Armand Rousseau and an Imperial of 2005 Petrus.

For further information on fine wine performance download our latest market report https://www.vin-x.com/monthly-market-review

You can read the article in full here

Peter ShakeshaftChristie’s auction sale on the 7th December saw more records set with a collection of rare fine wine treasures, including 22 lots direct from Chateau Lafite’s cellars.

A rare 12 bottles of Chateau Cheval Blanc 1947 was the top selling lot, realising a record price in London of £168,000. A single, extremely scarce, bottle of 1806 Lafite Rothschild went for £45,600, and the ex-cellar consignment of Lafite, which included 19th Century vintages, raised £103,380.

Cheval Blanc 1947Rare Champagnes were also on offer and included a bottle of 1839 Veuve Clicquot, rescued from a shipwreck off the Aland Islands in 2010, sold for £10,200.

The sale raised a total £3,035,088 and included a record-breaking Scotch whisky sale at Christie’s for the 62-year old The Dalmore, The Kildermorie. One of only 12 bottles created by Richard Paterson, Dalmore master blender from casks of single malt laid down in 1868, 1878, 1926 and 1939, the single bottle raised £114,000.

This latest auction of ‘Treasure Assets’ demonstrated again the growing, and extraordinary, demand for rare collectors’ items and the on-going strength of the fine wine and rare spirits markets. Entry levels are considerably more affordable than other treasure assets, evidenced by the recent sale of Leonardo Da Vinci’s Salvator Mundi for US$450million inc. auctioneer’s fees.

For more information download our special report:

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

INDEXLEVEL 30.11.17M.O.M (%)YTD (%)1 year (%)5 year (%)
Liv-ex 50 354 0.9 5.5 5.7 19.3
Liv-ex 100 313 1.3 5.3 5.7 21.5
Liv-ex 500 315 1.2 7.4 8.5 28.4
Liv-ex 1000 334 2.8 11.3 12.5 36.2
Liv-ex Investables 341 1.0 5.5 5.7 25.1
FTSE 100 7,327 -2.2 2.6 8.0 24.9
S&P 500 2,648 2.8 18.3 20.4 87.0
Gold 943 -1.3 1.3 0.5 -11.6

Source: Liv-ex.com 30th November 2017

Peter ShakeshaftLiv-ex has reported that November was one of the busiest months on record for the fine wine exchange, with the highest number of trades in a month recorded and the most members trading figure exceeded. 

Currency was not a driver of trade in November, as Sterling remained stable, and activity was influenced by continued demand for the most sought after Burgundies, the region seeing its value of trade rise to 15.9 per cent. Steady demand for Bordeaux First Growths held, despite Bordeaux’s lower market share for the month of 61.7 per cent, the lowest measure recorded to date.

Liv Ex Chart 12122017

All the major Liv-ex indices rose in the month in comparison to FTSE and Gold which both saw a marginal decline. The Liv-ex 100’s 5-year performance, which included the negative period 2011 – early 2015, has climbed steadily since early 2017, increasing from 3.7 per cent in January 2017 to 21.5 per cent at the end of November.

Chateau Margaux 2015Chateau Margaux 2015 has seen a lot of interest, since the announcement of the commemorative label for the vintage in remembrance of the late CEO, Paul Pontalier and the estate’s Norman Foster designed winery opened in that year. Following the label launch the price for the wine rose 50 per cent in one week. Its performance has always been strong, scored 98-100 points by the Wine Advocate, it was tipped very early on as wine of the vintage and has seen a previous price growth of nearly 55 per cent between its release in June 2016 to October 2017. Our November Market report comments further on the premium status of rare collectibles and Margaux 2015 will certainly command this status.

FOR MORE INFORMATION DOWNLOAD OUR SPECIAL MARKET REPORT: https://www.vin-x.com/monthly-market-review

Peter ShakeshaftAs we approach the Festive season, and are being notified of office closures for Christmas celebrations, Liv-ex announce that the LX100 is up 32% over a three year period and is now just 14% off its all time high (in Sterling).

The LX100 which monitors the 100 most traded wines on the exchange, is Bordeaux-centric and felt the most impact from Bordeaux’s tough ride during 2011 – 14. Liv-ex Investables and the broader LX1000 have generally reported stronger growth in the last two years and the latter is currently at a record high, up 36% over the period. The LX1000 is strongly influenced by the performance of top Burgundy wines and its sub-index, the Burgundy 150, has grown 55% in the last three years.

Liv-ex 100 November 2017 - 5 years
Liv Ex Chart

Chateau Lafite BottlesAs we approach the year end, the fine wine market continues its positive growth trend and November saw another increase in the value of live bids and offers with a new height of £48M and the highest ever number of transactions and number of cases of wine traded. Liv-ex validates that market liquidity continues to grow, with greater breadth and depth in the wines traded. Much to raise a glass about at this year’s office Christmas Party!

For more information on the market and alternative asset performance, download the latest Vin-X report at https://www.vin-x.com/monthly-market-review.

Peter ShaeshaftSotheby’s launched its ‘Life of Luxury’ series, last weekend with an auction of top Burgundy and Bordeaux wines, raising $2.6million, bringing their total sum raised in fine wine sales in 2017 to $23million. Connor Kriegel, Head of Auction Sales for Sotheby’s Wine New York commented: “We were thrilled to kick off Sotheby’s A Life of Luxury and conclude our 2017 New York wine auctions in grand fashion with a banner one-day auction….bringing our sales total to nearly $23m for 2017.”

Pre-sale estimates were exceeded, the top lot of the day being a parcel of DRC crossing four decades, historic vintages of Rousseau and blue-chip Bordeaux, sold for $619,244, well above its guide range of $383,300 - $537,700.

SothebysThree bottles of DRC’s 2013 Romanée-Conti led the sale achieving $55,350, whilst other attention grabbers included a full dozen case of 1985 Petrus, 1988 Clos de la Roche from Domaine Dujac, two bottles of 1990 Montrachet from DRC, three bottles of 2004 Corton Charlemagne from Coche-Dury and one magnum of 1998 Krug Clos du Mesnil.

With Christies’ recent record-breaking sales of Leonardo Da Vinci’s Salvator Mundi (US450M) and Art of Grisogono (US$35M) and the auction of Paul Newman’s Daytona Rolex (US$17M) luxury investments are in such demand that extraordinary values are being realised. Fine wine is exceeding predictions at auction but there is a greater certainty that prices are justified due to Liv-ex and other information platforms validating pricing information and improving liquidity. Auctions, by their nature, can stimulate higher prices but the market is still continuing its growth trend with market indices up again in November. For more information on alternative asset performance and collector appeal, download our latest report at https://www.vin-x.com/monthly-market-review.

Peter ShakeshaftThe Bordeaux 2010 vintage is regarded as one of the region’s most important years. Having one of the highest vintage average scores and a number of 100 Parker point wines, it is a Prime Vintage year of particular note for investors.

The 2010 wines released en primeur in summer 2011 were sold at the height of the market for astonishing prices, with the average release price at 250 euros a bottle ex-negociant. When the market then subsequently fell away 2010 wines were, as a consequence, dramatic price losers in a way that did not recognise the quality of individual wines.

This extraordinary vintage, along with 2009, has been a sleeping giant, which has started to stir over the last 12 – 18 months and is now marginally ahead of the general market trend since release.

In terms of specific wines, performance is mixed, and this is where a specialist view is valuable, as although 2010 is considered a ‘portfolio banker’ you still need to pick the right stocks. Some wines were so highly priced on release, and Lafite Rothschild is the highest profile, released at 790 euros per bottle (£12,000 per 12 x 75cl ex-negociant), that the wine is still struggling to regain lost ground.

The table shows the best performers of the 2010 vintage as published by Liv-ex in November 2017:

BORDEAUX 2010: BEST PERFORMERS:

WineScore (WA)Release priceMarket priceChange %
Le Pin 100 £18,000 £35,000 94.4
Pape Clement 100 £1,095 £1,780 62.6
Clerc Milon 93 £530 £775 46.2
Gazin (Pomerol) 96 £550 £780 41.8
Petit Mouton 93 £1,350 £1,900 40.7
Pontet Canet 100 £1,180 £1,635 38.6
Smith Haut Lafitte 98 £858 £1,175 36.9
Clos Fourtet 98 £840 £1,140 35.7
Vieux Chateau Certan 99 £2,100 £2,800 33.3
Beausejour Duffau 100 £2,100 £2,800 33.3

Source: Liv-ex.com 27th November 2017

Some of this staggering price growth, particularly in the case of 100 Parker point Le Pin, is down to rarity. With an average production of only 400 – 600 cases per annum, movement is likely to be magnified and 94% growth in Le Pin 2010 since release (£35,000 per 12 x 75cl) tops the performance table.

Three other 100-point wines are in the top ten with Pape Clement 2010 having risen 62.6% commanding more than £35,000 (12 x 75cl). Our tip of the month, featured in the Vin-X November report, Pape Clement 2009, the vintage with the  highest number of 100 Parker point wines, offers great value in comparison – for more information, see our report at https://www.vin-x.com/monthly-market-review   or contact us now on 0203 284 2262

Peter Shakeshaft

Should a painting over 500 years old be worth $400million (plus $50 million fees)? There will never be another Da Vinci created, there are a finite number of his great works of art remaining and should one of those come to market again in the near future who knows what price it will command.

Is the whole dynamic of an auction, the art of the man with the hammer, the whispering encouragement of the brokers on the phones to invisible billionaires with the ability to fork out eye-watering sums driven in part by ego or financial common sense? To many it’s shocking, vulgar in the current social and economic climate. But it’s where we are today, and it’s highly likely that a future sale will generate even more wealth as its notoriety as one of the most valuable works of art ever was firmly assured last week. You can view Christie’s video of the extraordinary sale by clicking on the image.

Collectors can drive market values and rare assets with a unique or very special reason to purchase enjoy a premium. With that in mind Chateau Margaux has cleverly, and quite rightly, launched its 2015 vintage in a commemorative bottle. The striking black label bottle, featuring the First Growth chateau’s Norman Foster designed chai marks the final vintage of the estate’s late great Technical and Managing Director, Paul Pontallier.

Margaux 2015 BottleFollowing Chateau Margaux’s statement issued on Friday 17th November with reference to its 2015 bottle launch: “By means of this unique bottle we wish to immortalise the 2015 vintage which seems to have been created for eternity and which will remain a fantastic vintage for all of us, tinged with very special emotion.” Liv-ex report has reported on the 20th November on an uplift of performance. Referring to an earlier report the market had made that the wine appeared undervalued in en primeur trades at £6,600, Chateau Margaux 2015 is now being bid on the trade exchange at £7,500 (12×75) and merchants are reporting strong demand.

Rated by critics and merchants as the wine of the 2015 vintage at en primeur tastings last year, Margaux 2015 really does have the potential to be a collectors’ item. Like great works of art, a great vintage wine cannot be replicated, it is unique to the climate conditions, viticulture and wine making of that particular year. A vintage has a finite supply and once it starts being drunk that supply becomes rarer and can ultimately become an asset with the potential to deliver strong returns in the future.  Fine wine is, however, considerably more affordable, the market more transparent and you don’t have to buy at auction where the heat of the moment may well inflate the price tag! For more information contact us on 0203 384 2262.

Christie’s auction of Leonardo da Vinci’s Salvator Mundi this week achieved a record sale price of USD$400million, making headline news worldwide

Anne Wetheridge of London Fine Art Studios explained, that the extraordinary value was due to Leonardo da Vinci ‘s status as one of the greatest artists of all time and the rarity of the exquisite Salvator Mundi, reported to be one of only two remaining Da Vinci paintings in private hands, prior to sale.

GrisigonoExtremely rare objects of desire, which are generally the best examples of their specialism, whether fine art, classic cars, vintage watches or fine wine, are coveted by collectors and investors. The sale of the world’s largest diamond ever offered at auction also took place this week in Geneva, also breaking records.

The 163.41-carat flawless D colour diamond, suspended from an emerald and diamond necklace called The Art of Grisogono, sold for 33.5 million Swiss francs ($33.8 million, 28.7 million euros), after taxes and commissions. With a $50million fee for the Salvator Mundi alone it’s not been a bad month for the esteemed auction house.

Fine wine has topped the performance table of ten luxury assets measured by Knight Frank in its luxury index (KFLII) over the last year and it too can point to record sales. But the numbers are more affordable, the market is more transparent as secondary market pricing platforms like Liv-ex report trading values, and the market itself is more liquid.

Data source: HAGI, Stanley Gibbons, Wine Owners, AMR and Fancy Colour Research Foundation.

Fine wine, like fine art, can preserve wealth, but it is also a more manageable and affordable portfolio diversification tool.

Chateau Margaux announced in mid-November that its 2015 vintage will be released in a special commemorative bottle. This comes as no surprise as the famous First Growth has big reasons to mark this special year in its esteemed history.

Chateau MargeauxThe bottle, and by association, the vintage is dedicated to the late, great Paul Pontallier who sadly died in March 2015 having been the chateau’s technical and managing director since 1990. He originally joined owner, Corrine Metzelopolous at Margaux, creating one of the industry’s most famous and influential teams, in 1983.

2015 is also the 200th year anniversary of Margaux’s estate and the striking new bottle label features the Chateau’s new ‘chai’, or winery, designed by Sir Norman Foster, which also opened its doors that year.

Chateau Margaux 2015 was also regarded by many key critics and trade merchants as the wine of the vintage following the en primeur tastings in Spring last year, a fitting result for Pontallier’s final legacy.

There is no doubt, Margaux 2015 will be a highly sought after collector’s item and those lucky enough to have acquired the wine en primeur have a potential treasure in their cellar. For more information visit www.vin-x.com and call us on 0203 384 2262.

Geoffrey DeanA treasure-trove of a live online auction with Bonhams ought to attract serious attention from investors and connoisseurs alike. And it’s not just some great wines that are on offer. Fancy dinner with Jancis Robinson in London, or a visit to her American opposite number, Debra Meiburg MW’s cellar in Hong Kong? Or a night for four at Chateau Pichon Baron in the Medoc? There really are some very special opportunities for anyone willing to dip their hands into their pockets for what is a good cause.

The Institue of Masters of WineWhat cause I hear you ask? The Institute of the Masters of Wine are raising funds to expand their activities globally. No specific details on these have been given, but the fact that so many influential producers and figures in the wine industry have generously donated 105 terrific lots speaks volumes. Jane Masters MW revealed the auction is a one-off that won't be repeated for a decade.

The key time and date you need to know is 23:59 on Tuesday 21 Nov. That is when the auction (only online) will end. But the advice is not to leave it until that day as Bonhams need to get ID checks done asap. The link for that, as well as all the lots, is http://www.bonhams.com/auctions/24520/.

SaisissaitA few of the wines being sold are worth a mention here. The first ever Sassicaia, made in 1968 from 100% Cabernet Sauvignon grapes, is available, as is a half-case of Latour from the great vintage of 2005. Angelus from that year is going begging in Imperial (6l) format, while a double magnum of Lynch-Bages 2005 is also on offer. A case of Guigal’s “Lala” Cote-Rotie from 2011-14 is also up for grabs, but the ‘piece de resistance’, and a real collector’s item, is 88 bottles, one from every classed growth in Medoc and Sauternes, of the 2014 vintage. Estimated cost? £6-8,000.

The dinner with Jancis and her restaurateur husband Nick Lander has already attracted a bid of £3,000. The winner gets six places at one of Lander’s central London restaurants, with all wine included, as well as a selection of their books. The evening with the glamorous Meiburg does not involve dinner but instead a tasting of many of her own wines.

Christie’s have offered a very attractive, silver-service, four-course dinner in their London boardroom for 12, hosted by Anthony Hanson MW. The wine list looks stupendous: vintage Charles Heidsieck champagne from 1995, Grand Cru Chablis Les Clos 2009 from William Fevre, Pichon Baron 1988, Clos des Lambrays 1999, Suiduiraut 2001 and, to end it all, some 1900 Bual Madeira.

If you fancy a trip to Burgundy, lunch and an extended tasting for 6 are on offer from Domaine Remoissenet. A visit to their vineyards in Clos Vougeot and Charmes-Chambertin, as well as barrel tasting of their 2016 Grand and Premier Cru wines, will precede the meal in the 14th century Remoissenet chateau in Beaune, where the successful bidder will drink a bottle from his year of birth.

There are many more wines, trips and activities to appeal to all tastes. So click on the link above and have a look for yourself. And good luck to those who make a bid.

Peter ShaeshaftSenior Portfolio Manager at Justin Urquhart Stewart’s Seven Investment Management, Peter Sleep, is quoted in the FT Adviser this week as saying that gold does have a role in portfolios as a hedge against ‘human stupidity’!

Gold BarsHis argument for this is that gold does hold “its value in times of severe turbulence such as war or geopolitical upheaval”. In Sleep’s view there are enough “stupid events” going on in the world right now for the threat of such upheaval to feel very real.

Adrian Lowcock, Investment Director at Architas states that he would typically “suggest investors hold around 5 per cent of gold in their portfolios as a long term diversifier.”

We would of course point to fine wine’s comparative performance to gold as a stable, portfolio diversifier with a proven track record of investor returns that outstrip gold over the long term. Liv-ex has just published its latest market data comparing fine wine with gold and financial markets, as can be seen in the table below.

IndexYTD1Yr (%)5Yr (%)
Gold 2.6 -8.3 -10.3
Liv-ex Fine Wine 50 4.5 5.6 17.8
Liv-ex Fine Wine 100 3.9 6.0 19.6
Liv-ex Bordeaux 500 6.1 7.6 27.2
Liv-ex Fine Wine 1000 8.2 10.5 33.1
FTSE 100 4.9 7.8 29.6
S&P 500 15.0 21.1 82.4

Source: Liv-ex.com 31st October 2017

Gold is treated as a mainstream portfolio diversifier but it is considerably more volatile than fine wine and does not have the ‘liquid’ asset’s track record of growth and returns to investors over the long term. Fine wine’s historic performance validates its value as an important alternative asset to be used in portfolio planning. For more information call us on 0203 384 2262 or visit our website www.vin-x.com .

Peter ShakeshaftWhen planning the strategic composition of your fine wine portfolio and ongoing acquisition strategy you will most likely consider diversifying your holdings around a core of highly liquid, blue-chip Bordeaux First Growths.

The performance of the Bordeaux First Growths (Lafite Rothschild, Latour, Mouton Rothschild, Margaux and Haut Brion) is tracked by the Liv-ex Fine Wine 50 index, which has risen 250% since data first started being collected in 2003. This provides an average indicator of the increase in the values of First Growth vintages traded, but of course some have enjoyed greater growth than this despite the challenging period between 2011 to 2014.

Chateau Lafite RothschildWhat is perhaps less well understood is the performance of the second wines from Bordeaux’s flagship wine estates and whether they offer the potential for investors to diversify into other wines of this region?

The Second Wine 50 index records the performance of Carruades Lafite, Forts Latour, Petit Mouton, Pavillon Rouge and Bahans. Haut Brion’s second wine has varied between Bahans and Le Clarence de Haut Brion and is now recognised as the latter but Liv-ex records have used the former for a study published this week due to the vintage focus.

The Second Wine 50 has risen an impressive 670% in the same period from 2003, with some wines now trading at higher levels than the en primeur release prices of their chateau’s Grand Vins. Liv-ex points out that the current prices of some second wines would have bought you a First Growth wine 15 years ago.

Liv-ex has published details of those second wines trading above the first release price of their senior stable mates since the 2000 vintage, the details of which can be seen in the table.

First wine / Second wineVintageFirst wine release priceSecond wine last tradeDifference
Lafite / Carruades 2002 £680 £2,200 £1,520
Lafite / Carruades 2000 £1,850 £2,832 £982
Lafite / Carruades 2004 £950 £1,920 £970
Latour / Forts Latour 2002 £680 £1,500 £820
Lafite / Carruades 2001 £900 £1,705 £805
Margaux/ Pavilion Rouge 2001 £900 £1.450 £550
Margaux/ Pavilion Rouge 2002 £730 £1,245 £515
Lafite / Carruades 2008 £1,850 £2,350 £500
Haut Brion / Bahans 2002 £695 £1,136 £441
Lafite / Carruades 2003 £1,795 £2,190 £395
Margaux/ Pavilion Rouge 2004 £950 £1,285 £335
Latour / Forts Latour 2001 £950 £1,160 £200
Margaux/ Pavilion Rouge 2000 £1,595 £1,750 £155
Latour / Forts Latour 2004 £1,200 £1,350 £150
Haut Brion / Bahans 2001 £950 £980 £30
Latour / Forts Latour 2008 £1,590 £1,615 £25
Margaux/ Pavilion Rouge 2008 £1,590 £1,600 £10

Source: Liv-ex.com 24th October 2017

Lafite Rothchild’s second wine, Carruades Lafite, is probably the top performing First Growth second wine. The table shows that the 2002 vintage saw Carruades traded at 200% more than the original release price of Lafite Rothschild 2002 in June this year, and an eye-popping 1,150% more than its own release price.

The performance reported by Liv-ex is impressive but we would caution investors to be careful on the inclusion of Second Wines in their portfolios and to do so strategically over the long term. For more information, speak to a member of our team on 0203 384 2262

Vin-X sponsored the Alternative Assets Planner category of this year’s FT Money Management’s Financial Planners Awards and attended the awards dinner, held at The Avenue in St James on the 19th.

Martin Pruszynski – Vin-X, Chris Wordsworth – Hargreaves Lansdown (Alternative Assets Category winner), Nicola Ellis – Wellington Wealth and Peter Shakeshaft – Vin-X

Candidates this year submitted a piece of work to demonstrate their expertise in their chosen specialism, which included Multi Asset, IHT, Tax Efficient Investment, At-Retirement, Protection, SIPPs and Investment planning.  Those shortlisted from this stage then had to submit a case study and attend an interview with the relevant panel judges where they were grilled thoroughly.

Fellow sponsors included AIC, Schroders, Octopus Investments, BlackRock, the FT Financial Adviser publication, NS&I and CAF and the evening was attended by professionals from the large corporates to privately owned family businesses.

Hayley McQueen, Chris Wordsworth and Martin Pruszynski

The awards ceremony was compered by Sky Sports presenter, Hayley McQueen, and our congratulations go to all of the nominees and prize-winners on the evening, in particular to Chris Wordsworth of Hargreaves Lansdown, who was awarded the Alternative Assets Planner of the Year. The standard of expertise was obviously very high and the process the shortlisted candidates underwent rigorous.

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/

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