Burgundy and broader market rule in 2017

Burgundy in the secondary market enjoyed its best year in a decade and Bordeaux’s share overall continued to decline as the “cautiously optimistic” market sees out 2017.

Liv-ex’s end of year report for 2017 highlights the on-going strength of the fine wine market – which once again out-performed the FTSE and Gold – the success of Burgundy and an increasingly broader and more diverse trading scene and the impact currency fluctuations have had throughout the year.

All of the Liv-ex indices have risen in 2017. The weakest was the Fine Wine 100 (which tracks the 100 most commonly traded labels) which rose 5.3% – however, in April it fell for the first time in 16 months and despite inching upwards since then is still a solid 15% off its June 2011 peak.

The best-performing label by far is the Fine Wine 1000 which rose 11.3% and is sitting at an all-time high.

Among the sub-indices it is clear it was Burgundy’s year, the Burgundy 150 rising 23.9%, with a large chunk of the price growth coming in the latter part of the year as reports of how small the coming 2016 is began to circulate more widely.

As well as a barnstorming 2017 the Burgundy index is up over 70% across a five year span.

Another top-performing group of wines was the Rest of the World 50, which rose 12.8% on the year-to-date and is up 54% over the last five years – the best-performing sub-index after Burgundy. The Italy 100 is also up 13.2%.

Yet more evidence of an ever-stronger, broader market is the increasing number of wines being traded. In the last year over 4,500 different wines from 769 estates were traded compared to 2016 when just over 4,000 wines from 670 domaines were.

The number of brands being traded on the Liv-ex Exchange has risen 90% since 2015.

Another significant aspect of the market this year has been Bordeaux’s declining share. Admittedly on the decline since it peaked in 2010, Bordeaux’s share of trade fell to 68.5% this year, below the 70% mark for the first time, while Burgundy’s share rose to 12.5% which is above the 10% line and up from 7.7% in 2016.

An important factor affecting the market this year was currency fluctuations, especially in the pound because of the on-going ‘Brexit’ negotiations.

Although the vote to leave the European Union took place last year, Liv-ex said the repercussions of the weaker pound had such a positive effect on the market that its momentum was maintained all the way through to April when the Fine Wine 100 suffered a minor downturn that was swiftly corrected.

As well as a slightly stronger pound from April, buying “eased off” as the 2016 en primeur campaign approached.

Fluttering up and down as the pound then euro weaken and strengthen like the irregular beatings of a bad heart, a stronger dollar in more recent months has apparently led to greater activity from Asian buyers – presumably with one eye on the coming Chinese New Year.