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Wine and whisky investment bounce back in China

Published:  15 April, 2020

Global trader BI Fine Wine & Spirits has reported that its volume sales of high-end wine and rare whisky to Asia jumped 25% in March as Chinese buyers returned to the market.

The company added that fine wine prices have remained “largely unchanged” in recent months, describing the bounce back as “a strong sign that confidence is returning to the region” as China and some neighbours begin to ease pandemic restrictions.

BI’s global sales figures for March reveal that while overall like-for-like sales in 2020 were “similar to 2019”, there was a geographical flip with Asia accounting for 60% of the company’s total sales, and Europe – as lockdowns tightened their grip – accounting for 40%, reversing the typical sales spread seen in 2019.

In wine terms, winners so far in 2020 have included top end Burgundy, Tuscany and (to a degree) top California estates, according to BI’s Q1 trading report, with Champagne remaining “neutral” and young Bordeaux a “loser”.

The report goes on to suggest, however, with China as a key market for young Bordeaux traded via Hong Kong, that the downward pressure on price and sales of Bordeaux wines is clearly linked to a period when 90% of the HK-China border was closed due to coronavirus restrictions.

With businesses also reducing holdings of fine wines, young Bordeaux remains one of the easiest categories to sell on.

Sales of rare whiskies, one of BI’s fastest growing categories, also increased, with demand from Asia for both Scotch and American whiskies.

“We certainly saw a softening in demand from Asia at the start of the year, but there has been an exceptional bounce back in recent weeks, which is a hugely encouraging sign that consumer confidence is returning to China,” said BI MD Gary Boom.

“At the same time, fine wine has been exhibiting its trait of having little correlation with other asset classes during challenging market periods. We are now seeing this stability driving renewed interest in wine investment, with more transactions also happening via our LiveTrade platform.”

The Q1 report said that it “is particularly noteworthy” that Asian demand for investment grade wine has bounced back quickly, following the pattern of an ongoing trend for ultra-high net worth individuals to be insulated from macro-shocks to the economy.

However, it concluded that “the European picture may be more complicated”, though with the caveat that similar “high net worth insulation” would drive a return to close to normal sales as European countries work their way through and out of coronavirus lockdowns.