Tag: Liv-ex

Burgundy’s Rising Prices Drive Liv-ex 1000 Index In January

 

  • The Liv-ex 1000 continued its bull run into the new year, rising 3.5%.
  • The Burgundy 150 was its best-performing sub-index, up 6.4%.
  • Champagne 50 and Rest of the World 60 followed, both rising 5.6%.

The broadest measure of the market, the Liv-ex Fine Wine 1000 index, rose 3.5% in January to close the month at 439.3.

The index is up 22.3% over one year versus 25.2% for the industry benchmark, the Liv-ex 100. All of the Liv-ex 1000 sub-indices increased last month.

Burgundy outperforms the broader market

The Burgundy 150 index was the best performer, up 6.4%. Prices for the region’s wines continue to soar, driven by looming shortages. Meanwhile, the 2020 En Primeur campaign stimulated demand for back vintages and the region took 24.6% of the market by value last month.

Both the Champagne 50 and the Rest of the World 60 sub-indices rose 5.6%.

Louis Roederer Cristal 2008 – the most traded wine by value in January – was also the top price performer in the Champagne 50, up 19.2%.

The biggest mover within the Rest of the World 60 was Dominus 2015, up 17.7%.

The Bordeaux 500 index has continued to lag behind the other sub-indices, rising just 1.0% in January. The performance of its sub-regions has been mixed, with some of the best-performers coming from Pomerol and rising between 14% to 18%.

Source Liv-Ex

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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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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