Liv-Ex forecasts clearer skies ahead

With trading levels returning to normal after the summer break Liv-Ex sees reasons to be cheerful.

Haut Brion Liv-Ex

Liv-Ex reckons there may be “clearing skies ahead” for wine investors in its latest market update. Quoting the recent US$80 billion growth stimulus by the People’s Bank of China, and a record high on the Dow, the report said it “should provide a sunny backdrop to the world’s worst performing asset class – fine wine.”

Compared to all-time highs for equities, bonds and property, wine’s performance has been dismal. It was even outshone by gold whose price is up 35% in five years compared to the Livex-100 on just 4% according to Livex director, Justin Gibbs.

Garry Boom, MD of Bordeaux Index, has talked of strong export growth from his clients – up 61% in Asia and 305% in the US on H1 2013. It is true the company only opened its first American office last March, though it had been trading there for some time, selling over £2.5m of wine in 2011, the year the Bordeaux bubble burst.

“As far as I can tell Asia’s still struggling, but demand from America is definitely growing,” said Gibbs. “The biggest market – Europe, is treading water, but it’s running out of selling steam. People are beginning to think; ‘at 30% down in three years, I’m not going to sell unless I need cash’.”

Boom cites Château Haut Brion 2006 as an example of why it’s “arguably the best time in five years to buy top Bordeaux,” and Gibbs doesn’t disagree. “It’s effectively £200 a bottle which is what people are paying for Opus 1. This is a First Growth with eight years in bottle and 95 points from Parker, so yes it’s cheap. We’re getting to a point where, at a price, a lot more people can understand Bordeaux.”