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Fine wine more stable than gold as Burgundy drives record high for investment market

Published:  13 December, 2018

Burgundy thrived, Bordeaux consolidated and wine investment proved more stable than gold, according to the Liv-ex annual summary of the 2018 market, described as “a record breaking year”.

The report, based on the fine wine trading platform company’s market indices, revealed that Bordeaux – the majority of the Liv-ex 100 top traded investment wines – has been “steady, consolidating after two years of strong gains”, with Burgundy the star performer.

The Liv-ex Fine Wine 1000 index, described by the company as “the broadest measure of fine wine market”, rose 10.2% over 2018, with Burgundy being a major driver of this growth, gaining 35.5%.

The top 10 price risers in the Liv-Ex 1000 were all Burgundy, suggesting that demand for Burgundy’s small production, highest end wines will continue to drive prices that have already been spiralling upwards in recent years.

And while record-breaking prices paid at auction for two bottle of Romanee Conti 1945 in October, at US$558,000 and US$496,000 respectively, generated most column inches, the market for Burgundy is broadening out, with collectors increasing buying into estates such as Rousseau, Leroy, Leflaive and Roumier.

The annual summary of the market also highlighted a trend for investors to broaden their approach, increasingly looking beyond Bordeaux and Burgundy to regions such as Champagne, Italy’s big hitting DOs, the Rhone, California and elsewhere, with such wines making strong gains, albeit from a smaller base.

Illustrating this trend, Bordeaux’s market share on the trading platform fell from 68% in 2017 to 59% in 2018.

The Liv-ex 100, taking in only the most sought after and expensive wines, gained a more modest 0.22% in value, but with a key takeaway that this index traded within a narrow 2% range, “making it even more stable than gold” over the course of the year.

The annual market summary put some of this stability down to Liv-ex 100 being denominated in Sterling, with the pound having been relatively stable against the Euro.

Looking ahead to 2019, the summary described the fine wine market as being in “good health, offering steady returns and low volatility compared with other mainstream assets”, predicting that the Bordeaux En Primeur campaign for the well-received 2018 vintage would be a success.

On Brexit uncertainty, the summary added: “The outcome of Brexit negotiations will likely affect the price of fine wine because currency volatility influences the levels of interest from non-Sterling buyers. However, this might be less of an issue for regions with high demand and relative scarcity such as Burgundy and Piedmont.”

It also cautioned, “the relentless rise of Burgundy might be curtailed”, with the upward march of prices potentially slowing a little in the near future on the back of a voluminous 2017 vintage.