Category: Burgundy

The 2021 Fine Wine Market Report [Liv-ex] 

2021 has been an exciting year….

All previous records set in 2020 have been broken and surpassed in 2021, marking the most successful year ever for the secondary fine wine market.

Fine wine trading continually broke new ground in terms of the value of wine traded and the sheer breadth of wines now active in the market. Liv-ex Fine Wine 100 index, the industry benchmark (tracks the price performance of 100 most-traded wines in the secondary market), reclaimed and then exceeded its decade-old former peak, while the Liv-ex Fine Wine 1000 rose for 18 consecutive months.

Fine wine collectors returned in force to both classic labels and regions, even as the market base continued to broaden and diversify.

The recent publication of the 2021 Liv-ex Power 100 report explains many of the reasons behind this year’s results. After a challenging start to 2020, the impetus from the latter half of last year continued, unabated, throughout this year.

Key findings in the report:

  • 2021 sets new records for secondary market trade.
  • Fine Wine outperforms FTSE100 and gold.
  • Champagne is the top-performing region.
  • Burgundy’s share of trade hits a new high.
  • Bordeaux trade dips but First Growth share rises.
  • Blue-chip labels rule the roost though the market continues to diversify.

Link to the full report with charts:

https://www.liv-ex.com/2021/12/new-report-fine-wine-market-2021/

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Fine Wine’s Benchmark Index Sets a New Record

Fine wine prices have risen consistently over the past 17 months, the market’s most bullish period to date.

 The Liv-ex Fine Wine 100 index, which tracks the price performance of the 100 most sought-after fine wines on the secondary market, rose 2.2% in October to close at 372.44 – an all-time high.

This is according to a recent article from Liv-ex (the London International Vintners Exchange) titled ‘Fine wine’s benchmark index sets a new record’, which explores how and why the index has set a brand-new record in October.

The article looks at the history of the Liv-ex Fine Wine 100 index, which can be found on Bloomberg terminals. It was officially launched in December 2003 but backdated to July 2001, in its first two decades, it has increased 272.4%, survived three global financial crisis and returned more than the S&P 500.

With fine wine prices consistently rising over the last 17 months, the longest bullish period in the fine wine market to date, it indicates high investor confidence and a healthy market.

Liv-ex is the London-based global marketplace for the wine trade, where 550 fine wine businesses from around the world buy and sell wine. What happens on the exchange is a reliable indicator of the health of the secondary wine market.

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161st Hospices de Beaune Charity Wine Auction – November 21st, 2021

On the occasion of the 161st edition, the profits from the sale of the charity auction “Pièce des Présidents” will be donated to two associations that work to support women’s causes:

  1. The National Federation for Women’s Solidarity, sponsored by French actress Jeanne Balibar, works to combat violence against women; and
  2. The Curie Institute, sponsored by French actor Pio Marmaï (seen in the movie Back to Burgundy), supports medical research against breast cancer.

In addition to supporting charitable causes (established in 1978), the Hospices de Beaune Wine Auction also enables investments to be made to meet the health needs of the region, namely the improvement of medical equipment and the modernization of infrastructures. The completion of the reconstruction of the Philippe le Bon Hospital represents an investment of 70 million euros spread over the next 6 years.

This is the first time the Hospices de Beaune has partnered with Sotheby’s and will be presenting 349 barrels for sale:

293 barrels and 2 half-barrels of red wine

56 barrels and 3 half-barrels of white wine

The 148th Fête des Grands Vins de Bourgogne brings together some 700 estates, producers and cooperatives, who will be offering their latest vintage for tasting. In total around 3,000 wines will be on offer.

Auction Details
Date: Sunday 21st November
Time 2.30pm – 161st Hospices de Beaune Charity Wine Sale
Location:  Halles de Beaune, Place de l’Hôtel Dieu, Entrance B for journalists and others – (invitation only)

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iDealwine, France’s Top Wine Auctioneer for 6 Consecutive Years

The CVV has confirmed, for the sixth year running, that IWA (International Wine Auction, a subsidiary of iDealwine), is the leading wine auctioneer in France (for the sixth consecutive year), now boasting a 42% market share.
iDealwine has held 41 auction sales in 2020 (one auction every 9 days) with over 175,000 bottles auctioned for a total of €23.4 million including tax – meaning over 40% of all wine sold at auction in France (up from 37% in 2019). Auctions aside, iDealwine’s fixed price sales, which include wine sourced directly from partner properties at cellar door prices, have increased by 46% to reach €10m.  In total, iDealwine generated €33 million in sales in 2020 (+15%).

Despite the tumultuous year, the fine wine auctions market has remained comparatively stable, with iDealwine itself widening the gap in terms of market leaders. In France, wine auctions generated €47 million excluding commission (2019: €47m, 2018: €46m), which represents just 4% of the entire art and collectors’ items category. The art and collectors’ items category itself recorded a significant 22.4% drop in sales. IWA (and therefore iDealwine) has risen to rank as the eighth most important auction house in France in the art and collectors’ item category. Of course, much of this movement was accelerated by the pandemic. As a purely digital player in wine auctions, iDealwine was well placed to deal with the unique situation.
Cyrille Jomand, CEO of iDealwine, said: “We are delighted by this announcement. iDealwine recently welcomed new investment from entrepreneurial fund Capital Croissance. With this, we look forward to increasing iDealwine’s footprint not only in the fine wine world, but also in spirits via our new platform Fine Spirits Auction platform, which sees whiskies, cognacs, rums, and other fine spirits go under the hammer in partnership with La Maison du Whisky. iDealwine is also focused on its new bespoke cellar consultation and management service, offered to wine lovers, collectors, and investors.”
iDealwine has been named the number one wine auctioneer in France for the sixth consecutive year by the regulatory body for auctions in the country.
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Liv-ex 1000 shows that interest in wines from Burgundy, Champagne, the Rhône, Italy, and US has grown rapidly and unexpectedly

New categories of wine are entering the secondary wine market for the first time, with trading up by 70% from 2019.

Bordeaux, which once dominated the secondary market, now has a share of trade less than half of what it was a decade ago. But it hasn’t fallen out of favour – rather, its share has shrunk as the overall market has surged and interest in wines from Burgundy, Champagne, the Rhône, Italy and the US has grown rapidly.

“Last year was a positive year for the wine market, with all major Liv-ex indices showing gains,” said Liv-ex Director and Co-Founder, Justin Gibbs.

Liv-ex (the London International Vintners Exchange) is the London-based global marketplace for the wine trade, where fine wine merchants from around the world buy and sell wine. What happens on the exchange is a reliable indicator of the health of the secondary wine market.

And what it shows is that the secondary wine market is not just booming, it’s broadening.

Fast Market Growth

The number of distinct wine brands traded on Liv-ex last year was up 70%, from 996 in 2019 to 1,420. The total number of wines – including different vintages of the same wine brands – was 8,735, up 72% from the 2019’s 6,367.

The surge has continued into 2021, with March 2021 closing on the biggest month of trade in Liv-ex’s 21-year history – 1,250 distinct wine brands were traded, of which 130 were newcomers to the secondary market. More than £80 million ($109 million) of live bids and offers, are currently available on the market.

The Liv-ex 1000 index was established in 2014 to capture this broadening. As with all Liv-ex indices, it reflects the activity of e Liv-ex membership – a pool of over 500 of the world’s leading wine merchants, who between them represent the biggest and deepest pool of liquidity anywhere in the world.

Most importantly, as a trading and data resource, it is completely independent. And it shows stark changes in the fine wine market, as new wines enter the secondary market.

One Index Alone Is Up 87%

The most striking example of the changing dynamics of the market is the Burgundy 150. It has risen 87% over the last five years, the beneficiary of collectors putting their capital into a new category.

The Champagne 50 has risen 58% over the last five years, driven by the brand power and prestige of the grandes marques Champagnes, widely available stock, global distribution and accessible price points.

The Italy 100 has risen 45% over the past five years, as merchants and collectors discover the relative value to be found in the great wines of Piedmont and Tuscany.

The Rest of the World 60 – which includes the top wines of California, as well as Australian, Spanish and Portuguese wines – has risen 31% over five years. US wines, in particular, are attracting attention; in 2019, US wines represented just 2% of trade by value on the market. That shot up to 7% of total trade last year.

What’s Driving the Trading?

As elsewhere in the economy, technological innovations have swept through the wine industry, transforming the behaviour of both wine businesses and buyers. This past year has seen the launch of new wine tech start-ups, digital wine apps, soaring online sales and virtual tastings, ensuring that people are no longer anxious about buying or trading online.

“These innovations in technology have had a significant impact on buying patterns,” said Gibbs. “As more of the wine trade go digital – with many enabling their customers to access the market using our Automation services – we are seeing increasing diversity in what is traded as collectors are put in the driving seat.”

As a result, the wines brought through Liv-ex in 2020 not only came from the more traditional fine wine regions like Bordeaux and Burgundy, but also from China, Hungary, Switzerland, Austria, Germany, Chile, Argentina and more. Prices per bottle also ranged from £4 to £21,000. As the wine world becomes increasingly digital, this broadening trend is likely continue.

The Market Set to Expand Further

Since 2019, US collectors and merchants have been constrained by the US government’s tariffs on the wines of France, including Bordeaux and Burgundy.

“The tariffs have had a singular effect on the fine wine market over the last 18 months, not least for Italy and Champagne whose wines were excluded from the extra 25% levy,” said Gibbs.

But the recent lifting of the tariffs has had a marked effect on activity – leading to a strong kick in demand for wines of all regions.

There are also other reasons to believe the fine wine market will both grow and diversify further.

“The combination of low interest rates and massive fiscal spending suggests that asset inflation will not be confined to equity, commodity and property markets,” said Gibbs. “The fundamentals of fine wine will also be an attractive option to those with cash to spare.”

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