Below is just a brief extract from the latest Market Report. For the full report and to access Liv-Ex's services, sign-up with them at www.liv-ex.com
Liv-Ex Market Report
by Liv-ex.com, March 2007
March was a robust month in terms of both turnover and price appreciation. Turnover was up 18.3% month on month and 29.6% year on year. The 1Q 2007 saw an increase in turnover of 59%. While these numbers are solid, it was the price move that really stood out. The Liv-ex 100 (see www.liv-ex.com for details) set yet another new all time high with a 5.5% rise for the month, leaving the twelvemonth gain at 55.8%. The 1Q alone has seen the Liv-ex 100 rise 10.8% (to find Liv-ex 100 on Bloomberg: see index code LIVX100 or to have a spread bet on the index go to www.spreadfair.com and then specials).
Breaking down March's trade by region, Bordeaux hit back from its recent dip with a vengeance. Having dipped to 81% in February (with Burgundy 2005 occupying traders minds), Bordeaux took 91% of the market in March. In terms of Bordeaux vintages, 2004 took a good slice of the action with 14.7% of the total. As mentioned in last month’s report, the prospect of upgrades in Robert Parker’s next review has brought the buyers out in force. Other vintages to feature were 2000 (11.4%) and 2003 (11.0%) as traders/investors bet that the 2006 release prices would make the top wine from these vintages look comparatively cheap.
(more analysis and charts by region in the full report)
The table below highlights some of the price movers for the month of March. Not surprisingly, given the surge in the Liv-ex 100, two of the biggest risers were the 1986 trophy wines - Lafite and Mouton. But even the trophies can fall- Petrus 2000 paused for breath, as did Las Cases 1996. Both have been big performers over twelve months.
(all featured wines are analysed in detail in full report)
Mark Twain was supposed to have said that "history does not repeat itself, it rhymes". There is certainly a sense of déjà vu on reading this passage from “The Successful Investor” by Robin Duthy published in 1988. "The vintage claret index – made up of twenty five top wines of the Bordeaux region – now stands 710% above its 1975 level. To the annoyance of wine buffs, news of their remarkable performance as investments has spread and much of the buying is now done by people who have no intention of drinking the wines they acquire. The rapid rate of growth has recently attracted publicity though as the table shows, claret prices have been climbing fast for some time."
Indeed, it is remarkable just how consistent fine wine returns have been over the last 60 years. By combining the results of Duthy’s “Vintage Claret Index”, the “Fine Wine 50 Index”(taken from Mahesh Kumar’s recent book Wine Investment for Portfolio Diversification) and the Liv-ex 100 Index, we can piece together a price series that has generated doubledigit growth on average since 1950. After a lean seven years between 1998 and the start of 2004, with an average return of just 2.2%, a 95% return since then has put fine wine as an investment back on the map.
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