Liv-Ex Market Report
by Liv-ex.com, June 2008
Trade on the exchange was extremely strong in June, up 117% on last year. A new record for the exchange was set, beating the previous record month set exactly two years ago at the height of the 2005 Bordeaux En Primeur campaign. The wine funds were active as new capital came into the market, as was the UK trade. In contrast, the Europeans, with the 2007 Bordeaux to sell, were absent from the secondary market. The Liv-ex 100 also had a strong month, increasing 5.73 points to 264.14. This 2.2% monthly gain takes the year to date increase to 10.1% – a strong recovery following last autumn’s market wobble.
Among the movers upwards, we saw a strong performance from a number of wines that were looking comparatively good value. Both Angelus 1996 and 2000, for example, performed well as highly rated wines from back vintages began to narrow the gap on their highly priced 2005 brethren. The Carruades de Lafite story needs no elaboration, save to say that we are seeing a slight increase in prices for the 2004 vintage as a whole, as the movement of Margaux 2004 shows. Among the fallers, we are again seeing a degree of softening in some of the major movers of the past year. The slight drop in the price of 2005 Latour adds evidence to the argument that the top wines from this vintage are entering a period of price stagnation.
(analysed in detail in full report)
Antonio Galloni on Tuscany, Wine Advocate #177 As a break from the never-ending diet of Bordeaux and Burgundy, the report from Antonio Galloni on 2005 Tuscany (with a few wines from 2004 and 2006 thrown in for good measure) comes as a welcome change. Unlike for most of France, the 2005 vintage in Tuscany was one of some difficulty: “2005 started off as a promising year, but the summer was rather cool and fresh, with many areas receiving rainfall that was significantly higher than the average. The final period of the growing season saw periods of rain which compromised the harvest for laterripening varieties in some spots”. Galloni’s general view on the vintage is that the majority of wines are “smaller scaled... with pretty aromatics and vibrant fruit”, but without “the layered, structured personalities that made the 2004s so compelling”. The best of the 2005s are “medium-bodied wines that can be enjoyed today or cellared for the mid-term”. Regarding pricing, he states: “The wines aren’t likely to attract the frenzied attention of the 2004s and 2006s so patient consumers should be able to find the wines at reasonable prices at some point”.
(more analysis and score charts in full report)
Liv-ex is also launching a new index – the Liv-ex Claret Chip. Born of a desire to produce an index that is fully investable and transparent, it consists only of top-rated Bordeaux First Growths. Its components are chosen according to the index rules, rather than by committee, and there is no weighting for scarcity or production. The rules are as follows: · Left Bank First Growths · Components priced with the Liv-ex Mid Price · Components must score 95 points or above from Robert Parker (official erobertparker.com score only) · Wines added when physically available and final bottle scores given (generally three years after vintage) · Components removed after 15 years from vintage · Components reviewed at 6 month intervals (30 June and 31 December) By removing the component wines from the index when they reach 15 years from vintage the price distortion of condition issues (including duty paid stock) is reduced. This also removes much of the need to account for increased scarcity in the weightings as relatively few First Growths will be consumed over this period. Moreover, as the First Growths all have relatively high production levels, ranging from 11,000 cases for Haut Brion to 20,000 plus for Mouton (including second wines), this negates the need to weight the components by production. There are currently 31 components in the index with no upper or lower limit. As you can see from the graph, the Claret Chip has been the best performing of the Liv-ex indices since January 2004 – the date all the indices were rebased at 100 – with its current level of 298.53 some 13% above that of the next best performer, the Liv-ex 100. An investment of £37,707 in January 2004, plus a further £21,812 to buy the proceeding vintages as they became available in bottle, would now be worth £121,716. A 104% return on investment. In addition, you would also have received £10,616 from selling off the wines from 1989 and 1990, increasing the return to 127%.
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Liv-ex Limited, Tel:+44 (0)207 228 2233