Liv-Ex Market Report
by Liv-ex.com, March 2008
Despite the financial markets’ continuing pains, March saw the strong trading we have witnessed since the start of the year continuing at pace. Trade was up 62% on last year — despite the Easter break removing two trading days from the calendar — with strong demand from a variety of market sectors: investment funds and brokers were active, as were European buyers. The Liv-ex 100 also continued its recent run, increasing 2.8% to 254. The massive gains of this time last year may now be well in the past, but a fourth consecutive month of growth still saw the index record its highest ever level, passing the previous record set last July at the height of the bull market. The index’s movement reflected heavy bidding on the top wines from good vintages, which tightened spreads and nudged up prices (see www.liv-ex.com for details.
The Bordeaux vintages of 1996 (31% of trade) and 2004 (18%) dominated the market, although for different reasons. The excellent 1996s, particularly the first growths, continue to be picked up by investment buyers when they become available on the exchange, while the 2004s — which are winning increasing favour — are being actively sought as wellpriced, solid wines with the potential for relatively early drinking. The 2000 and 2005 vintages were also well-traded although both suffered from a lack of available stock of the top wines. Elsewhere, Champagne held firm, whereas trade in Burgundy continues to drop from its January peak of 7.4%. Other areas saw minimal trading activity.
(more analysis in the full report)
The story among major movers was a repeat of February, with the 2005s again making strong gains. Those that didn’t move last month caught up with those that did, posting some of the largest single month gains we have seen on the exchange this year. With Parker’s final 2005 scores expected at the end of the month (or in June, if not) many of the 2005s are looking priced for the top of their score ranges. The perfect-scored Pavie 2000 also had a good month. With critical support for the estate growing (even Jancis Robinson has talked up its 2007) is Pavie perhaps starting to look undervalued compared to its Right Bank peers? Among the fallers, we saw the recent pattern of small decreases in price among some of the most popular wines from the strong vintages of the 1990s and early 2000s. This is presumably due to investors and collectors taking profit and clearing space for more recent vintages.
(analysed in detail in full report)
The end of the month saw James Suckling — traditionally the first major critic to pronounce — release his 2007 Bordeaux scores. His early reports following tasting of the Left Bank were relatively negative — ‘instead of generating excitement, this year the process has felt monotonous' - and although his stance softened as he went on to taste the Right Bank, whites and sweet wines — ‘[some of] the wines are much better than anticipated considering the bad weather during the growing season’ — he was still less complementary than many of his contemporaries. ‘The 2007 vintage will never be remembered as a serious vintage, or even a good year,’ he says, ‘it's average quality at best, producing aromatic, lightly fruity and finely tannic wines. They will be quickly drunk and forgotten.' Overall he is slightly more enthusiastic about the Right Bank (84-87 points, 'Pomerol was good') than the Left (84-87 points, 'a bit of a minefield'), although he highlights Pessac Leognan as the most consistent performer
(more analysis in full report)
Last September, when we last took a look at the Champagne market, we highlighted that the evidence suggested the top marques of Champagne (primarily Krug, Dom Perignon and Cristal) were looking undervalued compared to the overall market. Since then, aside from the very highest levels of cru classe Bordeaux, no other wines have risen in price as far and as fast. As the graph below shows, the Liv-ex Champagne 25 Index (rebased at 100 in January 2006) continues to reach all-time highs, reaching 236 at the end of March. Significantly, prices didn’t stutter during the slow-down that affected the market from August onwards — in contrast, they accelerated.
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