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market report
Liv-ex is an electronic exchange for fine wine used by professional merchants and collectors. Market Report is part of a package of services offered to subscribers of Liv-ex, with subscriptions starting at £49.95 per year. 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, July 2008
Trading
July saw the exchange continue to break new ground, with a record level
of turnover set for the second month in a row. Despite the continued
economic malaise, turnover was brisk, with trade up 16% on last month
and 75% up on last year. Along with strong demand from traditional
merchants in the UK and elsewhere, new investment capital continues to
enter the market – presumably seeking calmer waters away from the
volatility of equities and the commodity markets. Despite the record
trading, the Liv-ex 100 hit the doldrums, recording a modest 0.6% drop to
262.63. The 2005 Bordeaux vintage, newly added to the index, was the
main cause of the fall, with 2005 prices softening across the board. The
year-on-year increase is now 6.4%, the lowest it has been since July 2005,
although the year-to date gain remains healthy at 9.5%. (See www.livex.
com for details or find the Liv-ex 100 on Bloomberg: see index code
LIVX100). White Bordeaux came to the fore for the first time this year, accounting
for 4.5% of trade, with Yquem leading the charge.
(more analysis in the full report)
Major Movers
For the last year the major movers table has been dominated by the 2005
vintage, with ten months of prices surging upwards now followed by two
month’s of declines. It is the more famous names of Bordeaux (some of
which have more than doubled in price in the last 12 months) where we
are seeing the greatest declines, with Petrus, Lafite and Leoville Las Cases
all down in July.
Regarding the risers, the 2004 vintage continues its good run, while the
upward trend on back vintages of Yquem continues to grow. Angelus
makes the top movers list for the second month in a row with the strong
performance of the 2004 following that of the 1995 and 2000 vintages last
month. Indeed,1995 Bordeaux is seeing modest price rises across the board
as the better wines approach their drinking windows.
Final Thought
(analysed in detail in full report)
Bordeaux’s liquid gold
With Bordeaux’s sweet wines undoubtedly the stars of the 2007 vintage, it
is perhaps time to take another look at Sauternes. With investment money
focused solely on its red wine brethren – and Asia yet to fully wake up to
its delights – it is an easily overlooked part of the Bordeaux wine world.
Yet Yquem (Sauternes’ only Premier Cru Supérieur in the 1855
classification), is surely one of the greatest brands of the fine wine world.
As we mentioned briefly in last month’s report, investment attention has
undoubtedly been turning towards the chateau following the decision by
its owner, LVMH, to adopt a more aggressive pricing strategy. What’s
more, its full involvement in the annual en primeur jamboree from the
2000 vintage onwards – in contrast to its previous strategy of only selling
the wine when it is physically available – has also brought it to the fore.
With the 2005, 2006 and 2007 all hitting the UK secondary market at more
than £3,200 a case, wines such as the 1988, 1989 and 1990 (which all trade at just under that level) look extremely good value. Even the 100-point
2001, at £3,900, looks strong value when compared to similarly scoring red
First Growths.
In order to gauge the trends in the Sauternes market we also looked at
the other three top sweet white Bordeaux chateaux (in terms of profile, if
not price): Climens, Suduiraut and Rieussec. We then limited the data to
the six leading vintages from 1988 onwards: 1988, 1989, 1990, 1997, 1999,
2001 and 2003, giving us an index of 28 wines. Since January 2004, it is
clear that the big increases that have affected other parts of the fine wine
market have not totally passed Sauternes by, with the Liv-ex Sauternes
Index increasing from its base level of 100 to 160.33 by the end of July.
And although this 60.3% return is significantly below that of the Liv-ex
100 Fine Wine Index at 163.3%, this story has reversed in the last year,
with the Sauternes Index gaining 17.3%, and the Liv-ex 100 just 5.9%.
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