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Fine wine prices in retreat, says Bordeaux Index

Published:  27 October, 2011

Fine wine prices retreated 7.5% in the third quarter of the year, pointing to a "market correction" according to Bordeaux Index.

The London fine wine merchant is advising investors that even though there's not an immediate likelihood of a strong rebound in prices - it will come back round.

Among the biggest victims of the slumping market have been many of the prestigious First Growth wines from 'blue chip' vintages that have shed up to a third of their price - along with selected 2008 wines that were inflated during a series of well-publicized auctions last November.

Founder and managing director, Gary Boom, said: "There's definitely a market correction going on - the numbers don't lie.

"However, despite the fall in headline prices, Bordeaux Index is confident the fundamentals of fine wine as a medium to long-term investment remain solid.

"Compared to other asset classes aside from gold, fine wine still continues to outperform its rivals."

Boom said investors only need worry if they're looking at their positions as a short-term bet.

While the fall in prices has come as a surprise to many recent market newcomers, Boom says investors should draw strength from recent history and take a more measured and cautious approach for the near term.

"There was a noticeable dip three years ago in 2008, but the market recovered surprisingly quickly," he said.

"The rebound was fuelled by Chinese demand - primarily in Lafite - which then knocked onto other First Growths."

While Chinese interest in wine remains robust, the diversity in demand is presenting investors with new challenges - and the potential for healthy rewards.

The rising popularity of investing in wine has seen the commodity become increasingly tied to volatility in the wider financial markets. As a result, participants need to be realistic about their investment horizons.

Despite a weaker market, Bordeaux Index said it remains on track for another record year, with turnover for the year close to £100 m.