News

Investment wine – The Big Picture

3rd September 2019


All has been rather quiet on the fine wine front in recent months. 

Even the 2018 Bordeaux en primeur campaign, with its steady release of first-rate wines from the world’s most renowned winemaking region, fell pretty much flat on its face. 

There is no doubt that 2018 was an excellent vintage that will show appreciation in years to come – but the better quality wines were released at full prices, leaving little room for excitement. 

Whining about the wine market? 

Let’s consider a statement recently made by a speaker at a presentation on global investments: 

“Who looks at what is going on in the world stock markets every day? Well, do yourselves a favour. Don’t!”

His point is that there is a great deal of short term noise in the global stock markets which, when considering the big picture, is fairly irrelevant. 

The truth is that after a period of exponential rise in prices, all marketplaces go through a time of rest. During these periods news is thin on the ground – and it’s easy to forget how well we’ve been doing in the fine wine market since the end of 2015. 

Let’s take a look at the Liv-ex 100 and 1000 charts to illustrate our point.

A broadening fine wine sector 

Another point, and this one’s specific to fine wine investment, is that the market is evolving rapidly. Wines which were barely mentioned 10 years ago are now occupying centre stage. 

Napa Valley is a great example – we’ve seen tremendous interest in names like Opus One and Dominus amongst buyers, and Liv-ex has now created a California sub-index to acknowledge the importance of this emerging region. 

Have a look at its performance relative to other indices since 2014.

Then there’s Burgundy – having trailed behind Bordeaux for about a decade up until the 2011 correction, the region has been delighting buyers by climbing steadily ever since. Although the focus has been mainly on DRC, it is well worth exploring the wider reaches of this blossoming sector. 

Even Burgundy is prone to a pause every now and again, as you can see from the tail end of the green line below.

The fact that we present fine wine as a long term investment should mean that collectors are used to, and come to expect, these occasional periods of quiet. 

This doesn’t mean that you can’t catch a bargain – in fact, it’s when consolidations set in that the volume of trades goes down, and at these moments vendors looking for a quick sale are known to take what’s on offer. 

Capital Vintners is always on the lookout for these opportunities, because we know that paying attention during the quiet periods often leads to greater returns in the future.