by Wine Owners
Posted on 2019-08-20
The wine market continues to hold its breath. Boris fulfils (what somehow now feels like) his destiny and moves into Number 10 and the pound plummets. It has since recovered a bit but even so, the wine market didn't flinch. As we know, a weaker pound generally leads to increased demand in the sterling denominated secondary fine wine market, especially from U.S.$ based buyers, but maybe not during the hot days of summer? Certainly not when the U.S./China trade wars rumble on, the rhetoric becoming ever stronger, and most definitely not when Hong Kong explodes into the most violent scenes of pro-democracy protest in its modern history. The Brexit backdrop adds to the confusion, so no wonder little happens.
The largest market within wine will always be Bordeaux and it is business in the wines of Bordeaux that is suffering the most from this continued malaise. Many of the other top wine regions are less affected by these global events and market conditions as the wines are more scarce, with the supply and demand ratio is in a different place. Bordeaux has been looking cheap versus its peers for some time now, but the stars need to start aligning. This can and will happen, but when is the big question!
Despite these almost stagnant overtones, trade has never been brisker with July setting a record level of turnover. Numbers of users, bids and offers forever grow. Collectors looking to trim positions have been well accommodated by others adding and reorganising their cellars, something we are seeing a lot more of.
Burgundy continues to look for its feet, Champagne and Super Tuscans gently hum along nicely, and we’ve seen a little demand for some of the new world too.
Here at Wine Owners, Barolo dominated trading in July. Many vintages of Bartolo Mascarello changed hands, also many Bruno Giacosas, Riservas and otherwise. Fratelli Alessandria becomes ever more popular, as does Luciano Sandrone. And there were some big-ticket trades in Monfortino and Ca d’Morissio.
Miles Davis, 20th August 2019
by Wine Owners
Posted on 2019-07-08
The highlight in June for the wine world was clearly the Daily Telegraph event ‘Wine; for profit or pleasure?’. A sell out crowd witnessed excellent talks from four leading experts from the wine world, including two of us from Wine Owners (Miles and Nick). Please contact us for a copy of the presentation.
Otherwise June was again tranquil with trade bobbing along just fine but with no particular surges or dips anywhere. Global stock markets enjoyed a rise after Messrs. Trump and Xi found some accord but this doesn’t seem to have inspired the wine market as yet! Wine stock levels are healthy amongst Asian traders so not even a continuing depressed sterling is bringing about much marginal demand from that corner although most indices are in positive territory in June.
The Bordeaux en primeur campaign came to an end with an almighty whimper. En primeur gets under the skin of the wine trade and all involved spend far too much time talking, writing and moaning about it…yet even so, I shall continue! Within the wine market(s) it has represented very poor relative value for a decade, prices are just too high, yet merchants don’t dare turn their back on this once great provider. It was a great system for all involved, including the man on the street. Now only a very few wines ‘work’ each year (whereby they make sense to the supply chain and the end buyer). And now, to compound the problems of high prices, the Chateaux have decided to retain more and more of their own stock. How this comes to market, when and at what price will fuel debate but based on the evidence of the mighty Chateau Latour, the market may just turn its back. The feeling of stock overhang may easily outweigh the feeling of short supply and it’s not as if the world is going to go thirsty, there will always be alternative choices.
If only our Italian friends came together with a synchronised offering, we could have a proper old school primeur market again. All the market players would have to be involved at the same time, jostling for position, scrapping over every six pack and would still be able to sell at a price that would make everyone happy. The hype that the merchants used to create in Bordeaux primeur markets, that we are still hungover from, could be regenerated. We all miss the hype and the excitement which created such fear amongst the white-faced, panic-stricken collectors and consumers who couldn’t possibly stand even the faintest whiff of FOMO (fear of missing out).
As it is, Italian releases come to market in no organised way and importers and merchants release when they feel like it. It’s all very Italian really but it does make buying easier. We have been acquiring some 2015 Barolo new releases from Fratelli Alessandria, whose reputation is markedly on the up. Prices are very reasonable for these high scoring wines, ranging from c.£35 per bottle for their basic Barolo (94 Wine Advocate points) to nearer £60 for their top cru, Monvigliero (96+). Outside of the very top group, Luciano Sandrone is another producer worth mentioning - consistently high scores at affordable prices. Their equivalents in quality in either Bordeaux or Burgundy would be far more expensive.
Piedmont is easily our favourite region at the moment, due to the demand/supply equation and the blue chips remain well bid. Whilst Bordeaux and Burgundy remain lacklustre, Champagne and Rhone have attracted some attention. There is no question we would recommend the brilliant 2008 vintage in Champagne and the recently released Sir Winston Churchill looks a good bet with the ’96 being double the price.
Please see the Blog for more articles about the wine investment market.
Also, any enquiries about my Professional Portfolio Management services are most welcome.
8th July 2019
by Wine Owners
Posted on 2019-06-07
The wine market in May was completely dominated by Bordeaux en primeur. Overall the market is steady but lacklustre, ongoing concerns over U.S. and China trade wars and boring old Brexit rumble on and even a weaker GBP hasn’t managed to inspire substantially more marginal demand from USD based buyers. The secondary blue chip Bordeaux market is solid but a little stodgy. The bids are there but nothing much is moving north. As a result it is little surprise that merchants’ 2018 Bordeaux offers, backed by some exuberant critic’s reports and scores, have been flooding the inbox.
For our Bordeaux 2018 ‘in a nutshell’ report on the 2018 vintage, please click here.
Obviously the more exuberant critic reports and scores, of which there are (too?) many, have been the ones used by merchants and their sales teams. Julia Harding MW, of JancisRobinson.com, provided the reviews most in common with our own team’s appraisal and her scores are more subdued than others. She lends perspective to a vintage that we do not regard as highly as 2016 and one that may turn out to be overblown in some quarters. Antonio Galloni of Vinous Media is another commentator in the less exuberant camp and we look forward to his colleague Neal Martin’s commentary when it arrives (Neal did not taste en primeur this year due to ill health – we wish him a full and speedy recovery).
A very important point regarding the ’18 vintage, largely ignored by the salesmen and one I would like to repeat, is that whilst certain wines are very impressive, incredibly concentrated yet well balanced, they are really, really BIG. Nearly all of the alcohol numbers are between 14 and 15%. The poor unsuspecting punters may get quite a shock when they sit down, sometime from now, to enjoy their excellent claret only to discover they have something they weren’t quite expecting in their glass!
It'll be fascinating to see how the wines from 2018 develop as wines, but also from a market perspective. The Chateaux are holding back more and more wine every year and in some cases, releases are up to 50% lower than last year. Will this drive some scarcity seekers to market or will it have the opposite effect of creating a nervy overhang? It is fair to say that so far, Latour has not exactly flourished since retreating from the age old system. En primeur to my mind, apart from a certain few every year, has not made clear financial sense for years and few releases have come close to our ‘proto-prices’ (where the price needs to be to make clear financial sense to buyers), more here on JancisRobinson.com.
Successful releases so far include: Calon Segur, Canon, Carmes Haut Brion, Lafleur, La Mission Haut Brion, Leoville Las Cases, Pichon Lalande, Pontet Canet and Rauzan Segla. The majority of releases have not sold through.
In other areas there is still plenty of demand for high end Burgundy, it’s just that the prices that are being achieved by sellers are well below advertised levels. Piedmont is in good health but in low supply, a good thing for holders! Champagne holds firm, so do Super Tuscans.
by Wine Owners
Posted on 2019-05-13
This time of year in the wine trade is always dominated by the Bordeaux en primeur circus. Please see our 2018 ‘In a nutshell' report here. It’s strange really, as en primeur has not made commercial sense for the legions of the swirling and spitting wine trade, let alone the man on the street, for very nearly a decade. En primeur business has shrivelled like a drought savaged grape over the years and there are only a handful of opportunities each year that really make sense. At the time of writing only a few releases have made sense according to our ‘proto-pricing’ (please see jancisrobinson.com), Branaire Ducru, Duhart Milon and Quinault L’Enclos. Palmer sold out quickly (at 2,880 per 12), partly due its rarity (see blog), but also because they have built their brand so brilliantly under the guidance of Thomas Duroux. As a result, Palmer has a strong en primeur following.
In general, the Chateaux are releasing less than ever this year which makes this game ever more senseless. According to one highly experienced trade legend EP is all about building the client base for merchants and clearly the avalanche of similarly persuasive e-mails work to some extent. Experienced wine players are highly selective in the EP arena and returns in the short to medium term are very far and few between. Real scarcity is where it’s at, if you’re hoping for rising prices, and that doesn’t come from en primeur.
| || Level || Month || YTD || 1 Year || 5 Year || 10 Year |
| WO 150 Index || 303 || -0.6% || -2.0% || 6.4% || 57.4% || 83.3% |
| WO Champagne 60 Index || 462.61 || 0.9% || -1.3% || 5.0% || 68.4% || 154.9% |
| WO Burgundy 80 Index || 691.36 || 3.7% || -2.0% || 25.7% || 142.1% || 233.2% |
| WO First Growth Index 75 Index || 276.71 || -0.5% || -2.0% || 2.6% || 45.5% || 71.2% |
| WO Bordeaux 750 Index || 340.71 || 1.0% || 1.7% || 6.3% || 57.5% || 100.3% |
| WO California 85 index || 669.86 || -0.1% || -0.4% || 15.4% || 106.4% || 309.9% |
| WO Piedmont 60 Index || 318.83 || -0.3% || 0.9% || 9.2% || 75.6% || 126.4% |
There were no new themes detected over the month and scarcity is still the biggest driver. Interest in Piedmont is still firm although the monthly movement of the index would suggest otherwise. The same can be said of Burgundy, which is still active but is trading below advertised offer levels, with buyers negotiating harder.
Brexit concerns seem to have been put on hold for now, more through ennui than anything else, which led to some increased activity from U.K. private clients but overall the market trundles along rather than powering up. It’s a time for gentle accumulation on the bid side of the market.
As an aside; several collectors have approached us about reviewing their cellars, mainly to consider what holdings are investment grade and which are not. This has led to most people making the realisation their collections lack structure. The combination of our expertise and the technological support from the platform is proving to be very valuable.
by Wine Owners
Posted on 2019-04-30
Research does not come any easier than looking at Krug 2004. Vintage Krug is an investment stalwart and the long-term numbers tell us it is a consistent performer. So, you key in the various available vintages into Wine Owners ‘Relative Value Analysis’ and ’04 comes out as THE pick of the bunch:
Then you read the tasting note from Antoni Galloni:
Krug's 2004 Vintage is absolutely mesmerizing. Layers of bright, chiseled fruit open up effortlessly as the wine fleshes out with time in the glass. Persistent and beautifully focused, with a translucent sense of energy, the 2004 captures all the best qualities of the year. Moreover, the 2004 is clearly superior to the consistently underwhelming 2002 and the best Krug Vintage since 1996. Readers who can find it should not hesitate, as it is a magical bottle. 97+
Simples! But, as ever, it is not quite as simple as that; if we compare the returns over the last twelve months, performance across the vintages is far from consistent:
It is difficult to explain the variances, especially the ‘98 but I take heart that the 2004 is yet to perform positively. It was a decent size crop and clearly there are plenty of merchants still holding their allocation but this means there is still time to accumulate before it starts appreciating – and it most certainly will! This is a buy on a long term basis.
by Wine Owners
Posted on 2019-03-07
February was a relatively quiet month for the wine market. The month started with the Chinese New Year celebrations which meant Asia was quiet and it also contained a European half term break. Sentiment towards Brexit turned, meaning GBP strengthened towards the end of the month, which is never good for the wine market as US$ based bids (U.S. and Asia) automatically adjust downwards. The broad base WO 150 index fell by 2.4%, as did our Blue Chip Burgundy index. In fact, all the indices for the major wine producing regions came off by c.3%.
If recent discussions with the finance and new venture folk surrounding wine as an alternative asset class were anything to go by, this is beginning to look like a good time to buy. Following the Brexit inspired rise of USD and Euro against GBP in 2016, the Bordeaux market has done nothing for almost a decade. ‘Bordeaux bashing’ peaked years ago too - just resentful shrugging goes on these days! En primeur looms but is largely a dead duck, so that is unlikely to provide stimulus to the market but a wall of money certainly might do the trick… watch this space!
We were busy trading 2009 red Bordeaux following various reports published after ‘ten year on tastings’. We blogged about these in general and focussed on one wine separately, Cos d’Estournel. We concluded that, as it continues to split opinion, and received some pretty low scores (93 from Jane Anson of Decanter for example), coupled with challenging price levels why take the risk when there are so many less controversial and comparatively cheaper wines available? There are many names still available on the exchange, from the excellent Cantemerle at c.£300 to Haut Brion and Mouton Rothschild at the cheapest in the market prices.
If you’re looking for decent ‘drinking’ claret buying en primeur made very little sense even back in 2009 which blew apart every previous record ever held for wine sales, anywhere on the planet. Factoring in the cost of storage and capital and the effect of inflation, the very respectable names of Cantemerle, Capbern Gasqueton, Haut Bergey, Lafon Rochet, Ormes de Pez and Potensac are all better value today than they were then! All these names are available on the platform today.
Sassicaia was in focus with the release of the much admired 2016 vintage, Monica Larner of the Wine Advocate awarding the full 100 points and meaning Armit, the UK agent sold out in seconds.
Screaming Eagle ’16 was released and is now offered at £7,250 per 3 bottles in the U.K. market. Not altogether surprisingly, this is making some older vintages looking relatively cheap! The ’17 will not be sold under the usual label due to smoke taint from the Californian wildfires.
And finally, we learnt the sad news that Gianfranco Soldera passed away in the middle of the month. We are planning to honour the magician of Montalcino with a memorial dinner later in the year, possibly in May.
by Wine Owners
Posted on 2019-02-07
The broad-based WO 150 Index was flat for the month, as were nearly all the indices. The only real note of interest was the Burgundy Index, dropping by 0.7%. As you can see from the graph below it has been the stellar performer amongst the great wine producing regions of the world. It’s far too early to start calling a general cooling off period but as I have been arguing here it feels right to top slice some of the better performing names and start looking for some laggards.
The numbers in the box below are performance numbers over a five-year period, so all very respectable but nothing comes close to Burgundy. The consistency and lack of volatility must surely be a thing of beauty to the investor and connoisseur alike?
January is a busy month in the wine world when the latest Burgundy vintage is sold ‘en primeur’. 2017 was a decent vintage (See WO Blog) and has sold through pretty well given another year of testing prices.
The ‘Southwold group’ met in January to review the now in bottle Bordeaux 2015 vintage and there are two excellent reports on the three day session to be found on Vinolent.net and FarrVintners.com. In brief summary, ’15 is maybe not quite the excellent vintage that was first pronounced, certainly when judged by ‘English’ palates but still pretty damn good with some show stoppers therein. At the end of the Farr report there is an interesting table of recent vintages in order of perceived quality.
Here at Wine Owners we are betting more heavily on the ’16 vintage (not yet included in the Farr report) which we believe will move very close to the top of the leader board. Messrs Martin and Galloni of Vinous Media have recently reviewed the 16s in bottle and are waxing lyrical. Our very own meteorology and Bordeaux expert called the ’16 vintage some time back - pre the en primeur tastings even! All subsequent tastings and encounters of the vintage have confirmed our views and we are confident enough to shout BUY. What and when is a much more interesting question - so please get in touch to hear our thoughts.
by Wine Owners
Posted on 2019-01-11
In a year, and particularly the last quarter, of great uncertainty the wine market has proved to be a place of great refuge - the WO 150 increased by 10.3%. The wine market performance during the fourth quarter of 2018 was flat, having been gently on the rise until December when indices, including the red-hot WO Burgundy Index, came off a little, in line with a noticeable drop off in turnover throughout the market. In the context of all asset classes, this is another demonstration of the low correlation with more conventional investments the wine market enjoys. Ongoing trade wars between China and the U.S. continued to damage confidence across the board, hitting stock markets, both developed and emerging and depreciating the Yuan – a significant factor as we estimate 40% of fine wine by value lands there. As global markets faltered the wine traders of London, the epicentre of the fine wine trading world, were and still are, gripped in the throes of Mrs. May’s desperate attempts to pass her Brexit bill.
The main story of 2018, like 2017, was Burgundy, the index posting a gain of 33%. A combination of Asian-led demand and real scarcity is a powerful dynamic. The biggest names amongst the producers and the grandest crus still dominate; the usual suspects of DRC and Rousseau are still out in front and may always stay that way but Coche-Dury, Dujac, Leroy, Mugnier, Roumier, and Rouget, are some of the names that are hot on their heels and we suspect there are plenty more sitting in behind. Prices of some wines have skyrocketed and are, some may argue, fast becoming the preserve of the insane (or very brave) as they rush headlong into unknown territory! A lot of serious collectors we know have been taking profit in these sorts of examples and are looking for value elsewhere.
The WO Champagne index rose by 8.8% on a feeling of increased interest from investors. Italy and the Rhone both performed respectably. More for reference, as it is so difficulty to source efficiently in the U.K., but the California index was more than respectable with +17.2%
Wine Owners Indices
by Wine Owners
Posted on 2018-03-23
The KFFWII is up 9.6% over the year to March 2018, with a 2% gain in the last quarter.
Consolidation of the market at current valuation levels is on the back of the 24 months to December 2017, seeing gains of 38%.
The top of the market is significantly influenced by Asian demand, where a weak dollar is causing bid prices to fall. Changes within secondary market wine distribution into China may create a degree of uncertainty not seen since 2014.
The outlook for the rest of 2018 is one of subdued growth, with the Sterling-denominated index at risk of downward pressure as the currency appreciates against the US Dollar and Euro.
First Growths are up just 3.8% over the last 12 months, half of which can be accounted for by the last 3 months. This broadly reflects the rest of the Bordeaux fine wine market (classified growths and equivalents). However, this subdued performance ought not to detract from 3-year performance (43% price growth) in First Growths, and 55% appreciation in the classified growths and equivalents over the same period.
Risers substantially outnumber fallers in Bordeaux, reflecting the market's continued overall growth. Less new wine is being released from chateaux than ever before, and quality is increasingly consistent. These factors point to continued growth during 2018, although it will remain in single figures, as orderly trading patterns continue.
Burgundy values continue to appreciate, with increases of 21% to March 2018, and 4.6% over the last quarter. To date there are no signs of a let-up in the upward trajectory of top producers' Burgundy prices. We’re about to see Burgundy price appreciation break through the 100% mark over the last 5 years, and reach 257% over 10 years.
Northern Italy (represented in the KFFWII exclusively by Piedmont and Tuscany), is up 9.5% over the last 12 months, of which 2.7% is within the last quarter. The leaderboard is dominated by Monfortino, the standout Italian performer of the last 4 years which is consolidating its position as one of the most investible wines in the world.
Expectations for Northern Italy - Barolo in particular - are that prices will continue to increase into double digits over the remainder of 2018.
Vintage champagne has performed well over the year, up a full 10%, and has kicked up 3% in the last quarter.
The best performers are rarer cuvees from such stalwarts as Selosse, Bollinger, Krug and Pol Roger. Over 10 years Champagne has performed even better than Burgundy, up 283%: demonstrating the liquidity that volume can drive, brand values and early consumption patterns.
California’s moderated growth continues, with annual performance to March 2018 of 6.3%, and is up 2% within the last quarter. After years of bewilderingly strong growth (385% over 10 years), fallers are as numerous as risers within the California index, implying further downsides or a relatively flat outlook.
Top Spanish wines dominated by iconic and traditional large estates in Rioja and Ribero del Douro still represent good value, have good ageing potential, and are produced in large volumes.
These positive trading fundamentals support a market up 8.25% in the last year, and a healthy 3% in the last quarter.
A related effect is that Spanish blue-chips (particularly Vega Sicilia's top wines) are increasingly being traded on exchanges, and markets are being made for these wines through the usual offer and bid mechanisms used by market-makers.
The Spanish index is up 155% in the last 10 years. 45% of that growth has taken place in the last 3 years. The timing of that resurgence coincides with the inflection point in Bordeaux markets in the winter of 2015, when they rebounded from cyclical lows.
by Wine Owners
Posted on 2017-12-21
2017 was a fascinating year for the wine market: a year of solid growth, consolidation and even a flash of speculation!
It was also a year of broader consumer interest reignited.
Knight Frank’s global Wealth Report includes analysis of the fine wine market provided by Wine Owners. Wine was by far the best-performing collectible asset of 2016,
up 24%. As a result, lots of positive press in 2017 brought plenty of new interest into the market.
After the sharp price increases of 2016, when the Bordeaux market leapt as it rebounded off its 2014 lows following a couple of years of ticking up, 2017 was always going to be a less dramatic year for the classified and blue chip Bordeaux market.
It was encouraging to see a successful 2016 en primeur campaign that saw generally modest increases over 2015 in Euros, even if increases were more substantial for UK buyers due to the weakened currency. Overall gains in 2017 were low single-digit for
First Growths (after the 30% readjustment seen in the previous year). Other Classified growths and Right Banks rose an average of 7%.
Such moderation was less evident in the primary or secondary Burgundy market, the latter up 14.5%. What happens next is anyone’s guess, but the top of the market is holding onto 5-year gains of 100%, thanks in part to enduring Asian interest.
Hard luck stories
Burgundy was really hard hit by frosts in 2016. It’s a super vintage, but with many producer cellars that are 2/3rds empty. Only Vosne-Romanée and parts of Morey-St.-Denis and Gevrey-Chambertin escaped the April ‘gel’. Pretty much everywhere else was
heavily hit. The night-time freeze hit the Grand Crus and vineyards high up, the morning sun burned the buds of other premier crus and villages plots.
That big reduction in volume does add something to the intensity of the reds most noticeably. They are balanced, intensely redcurrant or blackcurrant in character, saline and fresh, with a vein of blood orange pulsing through them. The whites are fine
but don’t quite have the extraordinary rich, bright core of the 2014s, although in their favour the whites show more site specific character at this very early stage.
In 2017 Burgundy narrowly missed a second successive year of April misery, with an abundant vintage of good quality. Instead, Bordeaux was badly affected by freezing night-time temperatures in the last week of April, after a warm spring had encouraged
early growth. Some areas on the Right Bank, Graves and parts of the Medoc away from the warming waters of the Gironde were devastated. Chateaux de Fieuzel in Pessac isn’t making any wine in 2017.
What that will do to en primeur pricing next year remains to be seen, but widespread rises are on the cards, probably even those properties who emerged unscathed.
Notable winning regions
Champagne extended its run with top back vintages (where relative scarcity starts to play) racing ahead, up 13% in 2017. The world’s appetite for Champagne remains insatiable.
It was gratifying to see Northern Italy in rude health, with interest for Barolo Crus broadening significantly and prices of the best producers very sharply up this year on the back of a string of good vintages culminating in the highly sought after 2013s.
Talking of that flash of speculation, Margaux 2015 announced in November that Margaux would release their 2015 as a special edition in honour of Paul Pontallier, the managing director of the estate who died in March 2016.
We saw the first release from the chateau, offered in individual single wooden cases, at a significant premium to the release price.
Based on the Chateau’s announcement, we saw speculative trading in the wine between EP club members rise and rise, with bids climbing from under £6,000 to £12,000, representing more than a 130% increase compared to the release price to UK consumers of
The limited edition black bottles with a variation on the classic Margaux label in gold invited comparison with the 2000 Mouton Rothschild, which attracts a significant market following based on collectability, despite not being in the top flight of Mouton
vintages or even one of the best wines of the vintage.
Looking ahead to 2018
If you're interested to learn more about the health of the fine wine market and are interested in our predictions for 2018, you can now download our Fine Wine Predictions 2018 report, a must-read for collectors, wine lovers looking for value, and investors searching for opportunities.
DOWNLOAD PREDICTIONS 2018 REPORT
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We wish you all a very enjoyable festive season, and much vinous pleasure as you open great wine bottles to celebrate and see in 2018.
Best wishes for health and happiness from the Wine Owners team!