Merchants underestimate fine wine’s resurgence

Fine wine merchants were caught out by the surge in the secondary market last year, with 98% underestimating its eventual close.

Liv-ex asks its members at the start of every year what they think (roughly) the closing level of the Fine Wine 100 index will be.

For the first time since 2013 the index outperformed the merchants’ expectations. After several years of disappointment, one can see from the graph that in 2015 Liv-ex members were clearly bullish about the market’s prospects only to be let down when the Fine Wine 100 stumbled at the last and finished flat.

Caught out, they were rather more bearish in 2016 only for the market to take off, quite spectacularly, in the wake of the ‘Brexit’ vote thanks to dollar and euro buyers swooping into capitalise on the weak pound.

Last year the index closed on 297.33 points, 24.8% above where it was at the end of 2015. Merchants had expected it to gain just 5.4% on average.

As such, 98.9% of members thought the index would perform worse than it did, with one particularly pessimistic soul estimating it would close around 215 points.

On the other hand, one enthusiastic merchant thought the index would close above 300, which was just a few points short in the end.

However, one member correctly guessed the index would close between 290-299 points and has been rewarded with a magnum of Louis Roederer 1990.