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Holding Steady
It was a case of as you were over the last three months of 2015, for the Bordeaux market at least. The lack of buyers’ conviction that had frustrated any discernible uptick in prices since the beginning of the year continued to hold the market in check. Though equally there was no further capitulation. Buyers may be reticent but despite there being no stimuli from Parker, en primeur or anywhere else, the allure of well-priced stock proving as irresistible as ever.
The Liv-ex Fine Wine 100: the industry’s leading benchmark, representing the price movement of 100 of the most sought-after fine wines for which there is a strong secondary market. The majority of the index consists of Bordeaux although wines from Burgundy, the Rhone, Champagne and Italy are also included.
This resulted in the Liv-ex 100 closing 2015 at 238.26; having started the year at 238.50, one might conclude it was an unremarkable year! Taken in isolation perhaps so, but it is the long range view that brings this period of calm into sharp relief:
The market may be down but there has been considerably less pain to be bear than previous years.
Away from Bordeaux, the other major indices posted similar results, all closing within a percent or so year on year:
It is interesting to note that the Burgundy, Champagne and Italian indices have all paused for breath. Having seen remarkable returns over a five year period (just as Bordeaux prices suffered), perhaps there is a little buyer fatigue and with disappointing returns on Bordeaux it would not be a surprise if there was some profit being taken elsewhere.
However, with another excellent Burgundy vintage available in the upcoming 2014 primeurs, demand still seemingly high (albeit for a select number of Domaines), not to mention the highly anticipated release of 2002 Krug, one should not write off these regions prematurely. Much like Bordeaux, a period of stability would be well received.
Burgundy 2014
One would be forgiven for imagining the fine wine market revolved exclusively around the fortunes of Bordeaux and whilst it occupies a large sector of the market, one would have had to doggedly ignore reports of Burgundy’s assault on Bordeaux primacy in recent years to be unaware of just how far the Burgundy market has developed. Demand from Hong Kong and mainland China driving prices of some Domaines’ wines to stratospheric levels, though the ripples from this seemingly insatiable demand have been felt across the market, as buyers migrate from one producer to another.
Happily en primeur provides a chance to secure wines that might otherwise not reappear again and in 2014, Burgundy buyers have a wonderful opportunity. Both Chardonnay and Pinot Noir excelled, though perhaps it is the white wines that shade it. Global demand will be high and with reduced yields from the preceding three vintages (across which Burgundian vignerons lost the equivalent of an entire harvest) squeezing supply further, this vintage merits serious consideration. Please refer to David Roberts’ extensive report for more details but as our MW succinctly puts it ‘Burgundy’s star continues to shine brightly’.
There is much to look forward to in 2016: respective Burgundy and Bordeaux en primeur campaigns at the forefront. The latter in particular has the ability to inject some momentum into a market that has stalled for some time, though needless to say, price is paramount. 2015 Bordeaux promises much in terms of quality, if the wines are released at sensible levels (not too high but equally we should not expect too low; unremarkable would be good) it will restore some much needed faith. A healthy Bordeaux market is good for all concerned. If there is a word of caution to be sounded at this early stage in the year it is how the global economies fare, which at the time of writing look parlous, viz. the Shanghai Composite having suspended trading early for the second time this week, this time within thirty minutes of opening. Whilst it has been a number of years since the Chinese led boom in the Bordeaux market, it may be some time into 2016 before we see a significant recovery in prices. Time will tell, but for now all attention rightly turns to Burgundy.