Following recent speculation that the market has either hit the bottom, or is indeed very close to the bottom, we decided to take a look further into this.
Lots of charts, graphs, data etc – and if you are interested to find out why now is the time to buy, and exactly what you should be buying, please read on, because the results below are very positive.
Until recently, wine was considered, like most investments, as a mid to long term investment. It is only now following some of the crazy gains that were realised by the Far East’s brilliant buying, that many have entered the market expecting immediate returns.
What has happened as a result, is that those who were buying for immediate returns have been pushed to sell during the market low, for fear of losing yet more on their investment, often only made 12 months ago – this leaves us with some very good pricing in the current market, and if you are going to take a mid- long term view on your purchases, please read on.
The Liv-Ex Fine Wine 100
The Liv-Ex 100 above shows that since this time last year, prices have been seeing a dramatic fall – which reflects completely the feeling within the industry. It has been a slow year, not helped by a dreadful en primeur campaign in the spring. The positive thing to note here however, is that the Liv-ex 100 is now below the level that it was at 4 years ago. This means that the inflation, largely driven by mass buying that came from Hong Kong and China (as well as U.K speculators) over the last four years is over, and now the situation is a lot more stable.
The Liv-Ex Fine Wine 50 below shows that over the past month, the market has started to level out.
The market is now poised to start behaving in the fashion that it did before China became involved, but with the extra impetus of this additional market. Put plainly, China will buy as much, if not more fine wine than it ever has, but it is now buying at a much steadier rate. However, the traditional capital growth rate of fine wine – in the region of perhaps 15-30% a year depending on Label and vintage – should increase as the extra demand from the Chinese market reduces a supply of wine that will remain constant.
Based on the above, and the price drops we've been seeing, this does indeed seem the time to be buying – so what should you be buying?
After many weeks of painstaking work for our customers, we have compiled a list of what we consider to currently hold claim to the most investable wines on the market right now. In order to produce this data we have:
- Taken an average (Parker) score over the last 11 years of Red Bordeaux, and chosen only those in the top 50.
- Compiled data on the average market price for all of these wines, from only the very best vintages from and including 1982 vintages.
- This market price is then divided by the score to give a £/ point per bottle value.
We believe we have covered the following considerations:
- Great/ legend vintage
- High Parker Score
- Lower comparable price or status to similar vintages
- Legend Wines
- Low £/ point values
It is impossible to think that some of the “legends” out there, like the Beausejour Duffau Lagarrosse 1990 (trading around £8,500), will fall lower than the current pricing, which has seen an increase on last year’s market high point. Although this is not high on our list of selected wines, it bodes well for the 2009 (trading around £2,500), which scored perfectly, and if held on to for many years, should well see the sort of demand, and value that the 1990 sees today, plus inflation.
Based on these criteria we have created a thorough spread sheet of data, highlighting those wines that look way and above hundreds of others as absolutely brilliant buys. Below we have taken a snap shot of some of this data for you, to show the sort of results that have been produced:
Things for you to consider:
- 1982 – The all-time most sought after and in demand vintage – still with many years ahead of it. Availability is constantly decreasing, while demand is always there.
- 100 Pointers – before the 2009 re-ratings which created 19 100 pointers, the market low for a red Bordeaux 100 point wine was Pavie 2000 at £4,000/ case.
- Prices are currently much lower than last year’s high, and we are starting to see a slow increase in demand.
- After En Primeur 2005, prices saw some levelling out as the market didn’t immediately take to the price increases, before the market climbed dramatically – these release prices now look cheap.
- Bargains are becoming increasingly difficult to get hold of.
Just a few of our highlighted wines are shown below
(Prices, in bold show current price; Prices in green show market high 12 months ago; red shows how much the wine has moved down in price since last year)
1982 – La Mission – 100 RP - £8,500 (£11,000) -£2,500 (in stock)
1996 - Latour – 99 RP - £5,900 (£8,000) -£2,100 (in stock)
2005 - Ausone – 100 RP - £6,700 (cs/6) (£9,000) -£2,300 (in stock)
Part of the spread-sheet used to collate data:
|Wine||1986 £||1986 RP||1986 £/ Point/ bottle||2003 £||2003 RP||2003 £/ Point/ bottle|
Top £/ Point (per bottle) value
|Leoville Las Cases||3,000||99||2.53|
This data, when used in full, should prove invaluable to anyone seriously considering a mid to long term investment. If this is you, and you would like to discuss the options, please do get in touch with us. We are more than happy to call at a time convenient to you, or alternatively, send us an email with any questions you may have. Please also see our fine wine market update for more information.