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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, July 2005

Trading
Activity in July saw the usual hangover after a drawn out Bordeaux en primeur campaign. While in the very good years, the campaign can run through the month of July, the 2004 vintage was almost done and dusted before it even began. Turnover was down 25% on July 2004. Stock held by the leading UK merchants rose 5.4%, while the Liv-ex 100 added a further 1.5% for the month. Breaking down June's trade by region, we saw the Bordeaux share collapse, as the 2004 campaign came to a sudden close and other areas of interest emerged. In particular Burgundy, Italy and “Others” (Australia and Spain) put in strong performances.


(extensive analysis and charts by region in the full report)

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


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

Critical Corner
The New World is often talked about in terms of its relentless march on the old- reeking havoc as it champions “branding” and price competition. This is very true in the volume game, but not yet at the finer end of the market. At the finer end of the Australian market, there are but a handful of names that aficionado's pursue- Penfold's Grange, Clarendon Hills' Astralis, Henschke's Hill of Grace and Yalumba's Octavius amongst them. But as the broader Australian market continues to grow, so too does the premium end and these wines (much like the Spanish we mentioned last month) are increasingly hitting the radars of the various critics.

A few weeks ago, Langtons (Australia's premier wine auction house), published its 4th edition of Langton's Classification of Australian Wine. It lists collectable wines based upon secondary market trade and support from those who trade it, or as Langton's themselves say, inclusion is “dependent upon the sale frequency, intensity and sentiment surrounding its place in the market.” This list has grown from a mere 34 wines in 1991 to 101 today. Below we list the 33 wines that made the Exceptional or Outstanding categories.


(analysis of these wines compared to Bordeaux, etc. in the full report)

Final Thought
As of April next year, investing in fine wine is coming out of the closet in the UK. In a desperate attempt to persuade the British public to save for their retirement, the government is making some radical changes to SIPPs (Self Invested Personal Pensions). This will do two things; a) increase the amount of money savers can put into their pension pot prior to paying income tax (the annual allowance initially being £215,000 up to a limit of £1.5m) and b) widen the net of qualifying investments to include residential properties and chattels, such as fine wine, art and other collectibles.

It is true that occasional sales of fine wine have always been exempt from UK capital gains, which has been a positive for having a flutter in the past, but from April onwards, one will essentially be able to buy wine before paying income tax (i.e. at a 30-40% discount) if it is siphoned off into a SIPP. No doubt, as with all these sorts of government initiatives, the devil will be in the detail, but what is clear is that it lends a good deal of legitimacy to fine wine as an asset class. Indeed, judging by the number of enquiries that we have had from the savings and investment industry, it has put fine wine investment on the map as financial advisors mull over the opportunity to provide their customers with a product that gives them exposure to the commodity.

(comparative chart of Fine Wine vs FTSE 100 plus analysis in full report)

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