The ‘unresolved issues’ hanging over fine wine

As a positive year for the secondary fine wine market comes to an end, there are still “unresolved issues” that will have a major bearing on pricing in 2018 says Liv-ex.

As reported last week, it has been a successful year for Burgundy and the market has broadened immensely while Bordeaux’s share has shrunk.

Liv-ex’s end of year report gave one little prediction for 2018 – that the market will continue to get broader and more diverse – but focused rather more on three key points that could have a huge bearing on prices.

The first “known unknown” is the state of wine criticism at present. For decades now the touchstone of the critical world has been The Wine Advocate.

Now, with founder Robert Parker in retirement, ‘heir’ Jeb Dunnuck off doing his own thing again and new Bordeaux maven Neal Martin off to Vinous in February the question is; who will continue to have the greater influence, the publication or the critic?

Liv-ex wonders if market prices (principally for Bordeaux) will continue to be influenced by his scores alone or if the door is now well and truly open to a greater number of voices.

The issue is going to be particularly interesting playing out as it will against the backdrop of a tricky vintage like 2017.

The second problem is the on-going volatility of the pound sterling as ‘Brexit’ negotiations continue. The weakness of the pound has been a boon to the market on-and-off since the referendum vote in 2016 but its softening and then hardening against a similarly yo-yoing euro has had the market going in fits and starts (burst of growth then slowing) since the spring.

As Liv-ex continued, currency volatility: will influence the levels of demand from dollar/euro buyers and ultimately impact on price growth. Currency volatility is less of an issue for regions where demand sees no signs of slowing down, such as Burgundy. Already market participants are starting to wonder if a bubble is forming here, as it did in Bordeaux earlier in the decade. Piedmont, a region undergoing rapid price discovery in the secondary market, will be another area to watch closely.

Finally, the en primeur campaign for the 2017 Bordeaux wines. Long a bell-weather of the market, the annual primeur campaign showed signs of some stability in 2017 with an excellent set of 2016 wines to work with – prices were high but the real problem was the lack of stock being released by the estates.

Looking ahead to next spring, the emerging picture seems to be of a much smaller vintage across the region in general – less so in top Médoc AOC but mightily in St Emilion and Pomerol – and one that might be very good in places but very poor in others.

Prices should therefore dip a little or at least remain steady but will the châteaux continue with their recent tendency to withhold greater levels of stock and if so what will that do to pricing?

Liv-ex warned: “An overpriced campaign with suppressed volumes could turn sentiment in a market that has made steady progress in 2017. On the other hand, a sensibly priced campaign that releases the wines in decent volumes at an attractive discount relative to the secondary market will boost confidence.”