Why has confidence in fine wine increased in 2020?

Despite the headwinds of 2020 – tariffs, Brexit uncertainty and the global pandemic – the wine market has remained robust. Today’s post examines what has changed and offers an explanation as to why we are seeing greater confidence in the market during these exceptional times.

Increased liquidity

One of the key changes this year is an increase in market liquidity, which is reflected in the rising value of bids and offers on the Liv-ex marketplace. The total exposure (total value of bids and offers) reached a new record high of £81 million last week – a £30 million increase this time last year.

In recent months, both bids and offers have been on the rise. The bid to offer ratio (i.e. the total value of bids divided by the total value of offers) currently stands at 0.6. Traditionally, a bid-offer ratio of 0.5 or higher suggests positive sentiment.

A broadening market

Another noticeable difference is that more wines than ever are attracting buying interest, taking market share from the traditional strongholds of Bordeaux and Burgundy. As the chart below shows, the wine market has undergone considerable broadening in the past decade. Bordeaux’s share has halved from its peak in 2010 when it accounted for 95.7% of secondary market trade by value. As its share declined, others shined. Burgundy was the first and main benefactor; its trade share rising from 0.6% in 2010, to a record high of 19.7% in 2019. It has dipped slightly this year to 17.4%.

This year, Italy has been the big winner. Having reached an annual average of 8.8% in 2019, Italy now accounts for 15.3% of fine wine trade. As recently highlighted, the US wine market is also developing at unprecedented rate. USA accounted for just 0.1% of trade in 2010. Year-to-date, it stands at 7%.

And then, there is the Rest of the World – an increasingly diverse category. Up from 0.8% in 2010 to 5.9% in 2020, RoW trade so far in 2020 has been led by trade for Australia (1.8%), Spain (1.4%) and Germany (1%), though wines from Argentina, Austria, Chile, and Portugal to name but a few are seeing more and more activity.

What has changed?

So, why are we seeing such increased confidence in the wine market? One well-documented explanation is that investors are seeking to put their money into safer assets in these uncertain times. Historically, fine wine has offered steady returns and low volatility.  Another explanation is that there are simply more market participants than ever before. The number of wine businesses trading on Liv-ex has increased 15% in 2020 alone. This increase in members reflects a growing trend since the Covid-19 pandemic took hold – businesses are looking for web-based solutions to grow their sales.

One such solution is trading automation. Trading automation makes it easier for merchants to list stock for sale, exposing their diverse inventory to an ever-growing marketplace. Regions that once struggled to find a secondary market have been benefitting from the shift to online sales, particularly as lockdowns have closed much of the physical retail. Through APIs, stockholders have been able to list and advertise various wines to a far greater audience, as merchants have connected their customers to this ever-broadening market. Subsequently, wine merchants and private collectors have been able to find less well-known wines from a greater range of wine regions.

Despite an early swoon as the first lockdown took place, the fine wine market would seem to be in a relatively healthy place today. As a tangible, finite asset, it offers stability in a volatile world. It also of course offers a great deal of pleasure for imbibers who are locked down and deprived of their usual wining and dining! And importantly technology, as in so many sectors, has helped merchants from across the globe, to adapt, making wine more accessible and more exciting to all with an interest in it. Combined, these three things have put the wine market on a firm footing in 2020.

Source: Liv-ex

 

 

2020 Burgundy Harvest Historically Early and “Unforgettable” Vintage

 

The global pandemic and high temperatures provided new challenges for Burgundy’s growers in the 2020 harvest which ended up being the earliest on record.

The eastern French region, having already experienced a mild autumn and winter in 2019, with only seven days in six months registering below 0°C, then enjoyed beautiful weather from March to September, which led to bud break three weeks earlier than average and one of the fastest starts in 25 years.

Ludivine Griveau, director and winemaker at the Hospices de Beaune, noted in her report that April saw an additional 42 hours of sunshine with temperatures up over 23°C on certain days the vines were soon “bursting with vegetation” and growers were forced to both de-bud and ‘dédoublage’ (remove shoots to reduce foliage and yield) at the same time.

This up-tempo pace in the vineyards throughout the year was further complicated, it must be remembered, by the Covid-related restrictions put in place in France, with those winemakers with young children also having to deal with home-schooling at the same time.

It would be interesting to see which aspect of the year winegrowers ultimately found more challenging.

By April 21 the 2020 cycle was already 24 days ahead of where it had been in 2019, again only the sixth time in 80 years that one vintage had been so far ahead of its predecessor.

Flowering began towards the end of April and was extremely successful. As the summer went on high temperatures and steady winds kept the crop in a largely pristine state but the lack of rainfall posed its own issues.

Luckily, despite being so mild, the end of 2019 had been wetter than normal which would prove helpful as, from March onwards, rain showers were infrequent and tended to be localized. There were instances of water deficits and resulting vine stress as well as some sunburn on bunches.

Interestingly, Griveau said that: “Wind is now an important climatic component, not only of this vintage, but also of previous vintages. In recent years, it has been quite ‘new’ to Burgundy to have this wind every day and almost all day long. If it is our ally in maintaining the perfect sanitary state of 2020, it nevertheless gives us less respite and fewer weather ‘windows’ for the application of our treatments.

“The wind also has the consequence of drying out the land, at least on the surface, making it sometimes difficult to work because it hardens [the topsoil].”

Different appellations, sometimes areas within appellations, saw staggered rates of maturity, which then meant vigneron had to be on their toes to harvest what was needed at the right time as the time approached.

Griveau said that: “We saw a noticeable variation of stages within a plot, and sometimes in Chardonnay, the phenomenon of coulure was marked, the structures of the bunches were long and airy, and the millerandage was at times not negligible. The pre-flowering conditions having been more favourable to Pinot Noir, meant it had better passed the bud burst and its berries were more regular in size. The Pinot was slightly ahead of the Chardonnay at precisely this point in the vegetative cycle.”

With the vines so far advanced (and the wasps beginning to notice) the first crop began to be gathered in on 12 August in the southern region of the Mâconnais – one of the earliest harvest starts on record and one echoed elsewhere in France as well.

Griveau authorized the harvesting of white grapes for the Hospices on 18 August and the estate’s entire crop was gathered in by August 29 – the first time in its history harvesting was finished inside of August.

The Bourgogne Interprofession (BIVB) said in a statement that the overarching tendency among the white wines was “beautiful aromatic complexity”, intense fruit but also “very good acidity” in spite of the high summer temperatures.

The reds meanwhile have very deep colour and concentration but, like the whites, “they have kept their freshness” and have a distinctly black fruit profile.

Griveau concluded: “The vinification process went perfectly for both white and red wines, and the balances that have emerged in our wines are extraordinary, and, let’s admit it, quite unexpected. The sunny side of the vintage is there, but the wines reveal an impressive aromatic freshness. Acidities are very present, and the densities are already felt. The whites have substance, without too high an alcohol content. The tannins of the reds are supple but powerful.

“The ingredients of a great vintage, which, for many reasons, is unforgettable, are all present.”

Sources:
BIVB
Drinks Business

Perrier-Jouët launches eco-friendly gift box for the holiday season

After two years in development, Champagne house Perrier-Jouët just launched a new range of fully recyclable, eco-friendly gift boxes in perfect timing for the festive period.

The boxes will now be used to house its classic, non-vintage Champagnes, including Perrier-Jouët Grand Brut, Perrier-Jouët Blason Rosé and Perrier-Jouët Blanc de Blancs.

The project follows two years of research and development in order to deliver packaging that merges “a minimalist aesthetic with a focus on sustainability”.

The white boxes are made from natural fibre, sourced from certified sustainable forests in northern Europe, and are embossed with water-based ink, which is free from mineral oils.

The eco gift box collection is available globally through various retailers, including, in the UK, through Fortnum & Mason (RRP: £47.50).

Perrier-Jouët is aiming to make its entire gifting offer fully sustainable by 2022. It has already introduced recyclable shipping cases that are made from grass paper.

Séverine Frerson, cellar master at Maison Perrier-Jouët, said: “For more than two centuries, Maison Perrier-Jouët has maintained a symbiotic relationship with nature which we are incredibly proud of.

“Our founders, Pierre-Nicolas Perrier and Rose-Adélaïde Jouët, were renowned for their keen interest in botany and for their progressive ideas on natural viticulture. Today, nature remains at the very heart of the House, and has provided the inspiration for this exquisite gift-box collection.”

Pouilly-Fuissé officially has its Premier Cru!

After a 12-year application process, the French National Institute of Origin and Quality (INAO) approved the classification making PouillyFuissé the first appellation within Burgundy’s Mâconnais sub-region to benefit from premier cru vineyards.

It’s a new era for Pouilly-Fuissé and probably for Mâconnais, joining now the prestigious classification established a long time ago in the Côte de Beaune and Côte de Nuits. The 22 “Premier Cru” represent a total of 194 ha under vine, accounting for 24 % of Pouilly-Fuissé’s total vineyard area (800 ha exclusively located on the four villages of Chaintré, Fuissé, Solutré-Pouilly and Vergisson).

The conditions of production of the Premier Cru are:

Maximum yield 56 hl/ha

Minimum soil’s rest of 3 years before replantation

No chemical herbicides

Minimum time of aging until July 1st

 

 

 

 

 

 

Moët & Chandon launches ‘Specially Yours’ personalized Christmas gift boxes

The gift boxes will be exclusively available in Selfridges, London in-store and online, priced at £49.99 for the Impérial and £58.99 for the Rosé Impérial.

The packaging can be personalized with a name or a message using up to fourteen characters. Gift boxes can be ordered by taking a bottle to a Selfridges personalization station in-store or selecting the relevant option online.

The gift box unveiling coincides with the launch of Moët & Chandon’s ‘London Calling’ campaign at the high-end department store. This will feature a Champagne bar and “concept space” featuring photographs of famous moments of celebration in London’s history.

The concept space is inspired by the design of the classic red telephone box, with space for guests to sip Champagne at a bar alongside the photographic exhibition.

Customers can choose from a range of Moët cuvées as well as Champagne cocktails, created in partnership with London bars Mr Fogg’s, Heads & Tails, Coupette and Disrepute.

A calendar of cocktail masterclasses will be held from 6 October to 25 November at Selfridges, co-hosted by Moët & Chandon’s Champagne Ambassador. These can be booked in advance https://www.eventbrite.co.uk/o/selfridges-oxford-street-london-6395244523