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Fine wine prices drop due to summer break, says Bordeaux Index

Published:  08 September, 2011

Fine wine prices ended the month 4% lower after traders and chateaux took their traditional summer break, according to Bordeaux Index.

Fine wine prices ended the month 4% lower after traders and chateaux took their traditional summer break, according to Bordeaux Index.

Gary Boom founder and managing director said strategically, the softer prices had little to do with changes in the wine market per se - and were more a reflection of the pressures investors were under to reduce risks in all markets.

"However it isn't all doom and gloom," he added. "Demand remains encouragingly robust, with turnover 20% higher than a year ago."

Boom said there have been some positive stories - especially among some of the 'Super Seconds' - but not nearly enough to keep the market in positive territory.

He claims investors are definitely more risk adverse, as shown by the price of gold.

"But in the year to date fine wine is still doing well, presenting investors with a 10% return."

The impact of this year's much discussed en primeur release remains more difficult to gauge, he claims.

Since their release in July, they've been sporadically traded and headline prices have held ground - but Boom believes that the lack of trade may be masking some gloomy news.

"Fundamentally, they are some of the most expensive wines in the market - and traditionally this is the time of year buyers tend to focus on physically deliverable stock."

"It's likely that if you were forces to sell the 2010 en primeur now, you wouldn't be overjoyed with the prices."

With the summer break now finished and stock provisions being revised, all eyes will be concentrated on prices and volumes, but with no end in sight to the uncertainty in financial markets, it's likely that prices will remain soft throughout September.

Boom expects turnover will increase at the sharp end as investors look to crystalise profits and / or take advantage of softening prices to open new positions.