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market report

Liv-ex is an electronic exchange for fine wine. 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. Sign-up with Liv-Ex at www.liv-ex.com

Liv-Ex Market Report

by Liv-ex.com, August 2010

Trading

Exchange activity was slow but steady last month, as the languid holiday season lingered throughout August. As usual, the First Growths saw heavy trade, although it was insatiable demand for their second wines that was the more notable theme. And though the market seemed sedate in comparison with the frenetic months that surrounded the 2009 en primeur campaign, exchange turnover edged upwards, rising 20% year-on-year. All of the Liv-ex indices pointed north by month end, with the Liv-ex Fine Wine 100 Index closing the month at 303.58—up 0.9% on July. The Liv-ex Claret Chip Index posted the largest gains, climbing 1.6% to 365.66. (See www.liv-ex.com for details or find the Liv-ex 100 on Bloomberg: see index code LIVX100.) Bordeaux continued to monopolise trading in August, securing 96.5% of total turnover—down from 98% in June and July. After accounting for more than a third of exchange turnover in July, the 2009s commanded just 11% of trade by value last month.


(more analysis in the full report)

Major Movers

The phenomenal price appreciation that the second wines of First Growths have seen recently continued through August, pushing Carruades de Lafite and Forts de Latour to the top of this month’s major movers board. Elsewhere, Bordeaux back vintages that offer value remained a focal point. On the downside, Lafite 2005 slid well below July’s high to £9,900. The vintage’s fall is its first since April 2009. Prices for non-Bordeaux continue to meander.


(analysed in detail in full report)

Critical Corner

In the latest issue of the Wine Advocate, Robert Parker reviewed 490 “Rhone Rangers” from vintages 2006-2009, though coverage of the most recent vintage is comparatively thin. In all, three Californian reds received 100-point in-bottle scores and another six were ushered into the realm of the potentially perfect. Parker’s scores leave little doubt as to his enthusiasm for the 2007 vintage and his preference for Central Coast Syrah, which he describes as “the most consistent high-quality wine in California”. Of the nine top scorers, eight are Syrah blends and five are 2007s. According to Parker, weather conditions were particularly harsh in 2008 and 2009, whilst 2007 was a year of quiet balance—”a perfect vintage virtually everywhere in the Central Coast”. Good growing conditions produced powerful and intensely fruity wines that have greater ageing potential than their 2008 and 2009 equivalents. Still, 2008 was not without its share of superb wines, with around 30 Rhone Rangers receiving upwards of 95 points. The “forgotten” 2006 vintage also boasts some beautiful wines. Three 2006s were awarded the full 100 points, including Alban, Reva Syrah 2006, which was upgraded from its previous score of 96-98—”spectacular in every sense”.


(more analysis in full report)

Final Thought: Surveying the funds

In the 18 months since we last produced a survey of the major wine funds, the fine wine market has experienced a dramatic turnaround. Back in February 2009 the market was struggling for direction after experiencing falls of up to 25% in the second half of 2008. Today, prices are continuing to hit new highs and the market remains buoyant following on from (or perhaps despite) a long and expensive 2009 campaign. The first eight months of 2010 has been a strong period for fine wine investment, with all of the major Bordeaux-dominated funds posting impressive performance figures (Noble Crus is Burgundy dominated). If we look over a longer time period, we find similarly good results, with only those who had invested money immediately before the 2008 downturn sitting on losses (and even here some funds have shown increases). Of course, with a number of different base currencies, fund structures and valuation methods being used, direct comparisons are difficult – there is no equivalent of Reuters Lipper to help when making wine fund performance comparisons. As such, the results in the table below should only be considered with reference to the data shown overleaf. The strong recent performance of the Fine Wine Geared Growth Fund, for example, is largely due to the fact that is heavily geared, so its initial losses and subsequent recovery are exaggerated. Nevertheless, this gearing has ensured that FWCG is the only fund to outperform the Liv-ex Fine Wine 100 Index this year.


(detailed analysis in full report)