Older wines from Bordeaux are showing value as investors and collectors await release prices for the 2014 vintage, while a recovery in the broader market remains elusive, according to London-based Wine Asset Managers LLP.
Prices on the London-based Liv-ex online exchange showed signs of stability last month as the market sought to recover from a three-year slump, with value traded rising to a two-year high. The Liv-ex Fine Wine 50 Index, tracking 10 vintages of the five Bordeaux left-bank first growths, fell 0.6 per cent in March while holding onto a 0.5 per cent year-to-date gain.
There are signs appetite for top Bordeaux is reviving after a price drop between 2011 and 2014 in the face of cooling Chinese demand and a decline in the quality of vintages coming to market since 2011. Liv-ex reported high levels of activity for wines such as Chateau Cheval Blanc in Saint Emilion and Château Cos d’Estournel in Saint Estephe. Demand also remained strong for Pomerol producer Petrus.
“Merchants are not willing to push Bordeaux until there is a proper gesture of goodwill to consumers from the chateaux through the attractive pricing of a decent vintage (2014),” WAM said in its note to clients.
“Château want to use the weak euro as an excuse to keep euro release prices high, rather than allow the benefit to pass to the non-euro merchant or consumer,” WAM said. “All the value is to be found in the older back vintages, which we own.”
While sterling’s drop against the dollar of more than 10 per cent over the past nine months has left the market looking cheaper to US-based investors and the global economy is showing signs of recovery, wine demand would benefit from resurgence in emerging markets, according to WAM.
“There are many aspects to the current market that should give confidence to long-term investors, and yet the start of a proper recovery remains elusive,” WAM said.
Bloomberg News, edited by ESM