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market report

Liv-ex is an electronic exchange for fine wine used by professional merchants and collectors. Each month Liv-ex publishes a detailed Market Report analysing fine wine prices and trends in the marketplace. The Market Report is part of a package of data and services offered to subscribers of Liv-ex, with subscriptions starting at 39.95 per year.

Below is just a brief extract from the latest Market Report. An extract will be offered on wine-pages as soon as it is published each month, but for the full report and Liv-Ex's extensive services, sign-up with them at www.liv-ex.com

Liv-Ex Market Report
by Liv-ex.com, May 2005

Trading
Activity in May showed a steadiness not seen all year. The market seemed buoyed and confident leading to a 25% up tick in volumes on April and a strong 45% increase year on year. Stock held by the leading UK merchants was flat for the second consecutive month, bringing a halt (for now) to the steady declines of the past twelve months. The Liv-ex 100 rose 0.6%, taking its annual gain to 4.3%.


(more analysis by region in the full report)

Major Movers
The table below shows the major movers, month on month, in May.


(the featured wines are analysed in detail in full report)

Critical Corner
There is no doubt that, when it comes to Bordeaux, Robert Parker has no peers in the world of critics. His scores move markets. But there are others who have built solid reputations and contribute to an increasingly diverse set of opinions, to the benefit of us all. One such person is Stephen Tanzer. In his May/June issue (no 120) of The International Wine Cellar, Tanzer reviews Bordeaux vintages 2002, 2003, 2004. Below are a couple of snippets we thought were of interest:

To buy or not to buy. Vintage 2004 is not likely to be an investment-grade vintage, and thus it would appear to make little sense to purchase 2004s as futures. With relatively few out-and-out exceptional wines, with worldwide demand generally restrained, with a lot of available cash having already been spent on the 2003s, and with the Euro currently strong, there is little reason to believe that any but the very scarcest items will quickly disappear from the marketplace and escalate in value. Obviously, demand for the vintage will depend to a great degree on opening prices, and it is entirely possible that some wines will open at prices lower than the 2002s. Even so, many U.S. importers are reluctant to commit to purchases now with a weak U.S. dollar. They are hopeful that by the time the wines are ready to be shipped, the dollar will have improved.

(more in the full report)

Final Thought
It has become a regular theme in this piece to argue that older claret looks better value than young vintages. We have argued that with few exceptions wines released en primeur since 1995 have not been sufficiently cheap to justify the opportunity cost (let alone the storage cost) of holding the wines. Moreover, we have showed the huge differential in supply between mature claret and younger vintages. For example, the total stock of 2000 claret on offer in the UK, exceeds the total stock of all wines on offer from the eighties. Despite this, wines like Mouton Rothschild 1986 trade at similar prices to its younger 2000 sibling, despite enjoying a higher Parker score and 14 years of extra bottle age. In the wake of the relative failure of the recently completed 2004 campaign, anomalies such as this are becoming even more ridiculous and unsustainable.

Indeed, although prices were mostly significantly down on 2003, wines in 2004 were by and large still priced too high to sell in big volume. It is true that there were some successes, but in the most part prices were frustratingly high relative to the quality of the wines. An update of last month's fair value analysis shows that on average the top wines were 11% overvalued, suggesting that consumers were right to give the vintage a wide berth.


(extensive tables and analysis continue in full report)

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