Fine Wine Monitor: A look at 2015

After several years of steady decline, last year marked the start of a fine wine recovery. The market remains cautious, however, and much depends on the upcoming Bordeaux en primeur campaign, Liv-ex reports.

2015 saw the fine wine market level off from the declines seen in previous years. The Liv-ex Fine Wine 100 index was flat over the year (-0.1%), but held above the low seen in June 2014. Measured in euros, the market looks in better shape with the Liv-ex Fine Wine 100 index up 13% over the same period.

Several of the sub-indices of the Liv-ex Fine Wine 1000 showed modest gains last year, including the Burgundy 150 Index (+1.3%) and the Rest of the World 50 Index (+3%), which both reached record highs in 2015.

As the table below shows, Bordeaux’s 2015 market share – 74.4% – returned back to levels seen in 2004, before the China-led bull market and the sharp boom, and then bust, in Bordeaux prices.

Elsewhere, Italy, Champagne and the Rest of the World have all seen their percentage of trade share increase. Italy has overtaken Burgundy as the regional group with the second-highest average monthly trade share after Bordeaux, with 6.7% of the market compared with Burgundy’s 5.9% share. Champagne more than doubled its market share from 2.8% in 2014 to 5.8% in 2015.

The US has maintained a high share of the Rest of World market, and with an overall market share of 2.15%, is close to the Rhône’s share of 2.18%. California’s Scarecrow and Screaming Eagle were the two strongest price performers in the Liv-ex Power 100, gaining an average of 19.9% and 15.1%, respectively, over the year. Overall, market share for the Rest of the World was up from 2.3% in 2014 to 5.0% in 2015.

Looking forward

Market participants are now beginning to perceive value in Bordeaux. There has been increased interest over the past few months in some of the vintages that suffered significant price falls, such as 2010. As already mentioned, Bordeaux’s market share has fallen back to pre-China boom levels, suggesting the froth has also now been taken out of the market. This, combined with a relative value argument on the back of Bordeaux’s decline and other regional rises, hints at some cause for optimism for Bordeaux heading into 2016.

While market sentiment remains cautious, the levelling off of the Liv-ex indices has at least broken the downward cycle of previous years.

However, the future direction of Bordeaux prices will be determined in part by the approaching en primeur campaign. Early feedback suggests the 2015 vintage will fall somewhere between the good vintages seen in 2004, 2006 and 2008 and the excellent vintages of 2005, 2009 and 2010.

Yet buying en primeur has been loss-making to the final customer in recent years. Much will depend, therefore, on ex-châteaux release prices – and whether they are attractive relative to wines already in the market.

This article first appeared in the February issue of the drinks business magazine.