Tom Cannavan's   

market report

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Liv-Ex Market Report
by, August 2004

Activity in August was unusually brisk given that most merchants and their clients take the month off to holiday. Trade was down 9.2% on July, but up 83% year on year. Indeed August has proved to be the third most active month of the year. The Liv-ex 100 composite fell 0.4% for the month while stock held by the UK's leading stockholders dropped by 3.1%.

(more analysis by region in the full report)

Major Movers for August
The table below shows the major movers for August. While top wines from older vintages topped the gainers, the hangover from the Bordeaux 2003 frenzy accounted for all of the major fallers.

(featured wines analysed in detail in full report)

Critical Corner
As highlighted on Jancis Robinson's Purple Pages, Robert Parker makes twelve predictions in this month's issue of Food and Wine magazine about the wine industry ten years hence.

  1. Distribution [in the US] will be revolutionised - The three-tier system (a throw back to Prohibition) that involves importer, distributor and retailer is "absurdly inefficient" and "costs the consumer big bucks".
  2. The wine Web will go mainstream - The instant dissemination of information will develop rapidly. Liv-ex hopes it is playing its role!
  3. World bidding wars will begin for top wines - Competition for the world's greatest wines will increase exponentially. "If my instincts are correct, 10 years from now a great vintage of the first growths will cost over $10,000 a case" due to finite supply, increasing demand.
  4. France will feel a squeeze - France's obsession with tradition and the status quo will result in the bankruptcy of many lower end producers.
  5. Corks will come out - corks will be in the minority by 2015. Stelvin scewcaps will become the standard, except for the great wines made to age for 20-30 years.
  6. Spain will be a star - Untrapped by history and possessing many old-vine vineyards, regions like Toro, Jumilla and Priorat will supersede Ribera de Duero and Rioja as Spain's foremost quality wine regions.
  7. Malbec will make it big - Argentinian wines made from the Malbec grape will be recognised as "great."
  8. California's Central Coast will rule America -Santa Barbara's Chardonnays and Pinots will to continue to make headway.
  9. Southern Italy will ascend - While the top Barolos and Barbarescos will become unaffordable to many, areas such as Umbria, Campania, Basilicata, Sicily and Sardinia will become household names.
  10. Unoaked wine will find a wider audience - More sophisticated palates and eating habits will demand it.
  11. Value will be valued - There will be more high quality, low priced wines than ever before, with Australia playing the leading role.
  12. Diversity will be the word -Expect to see quality wines emerge from Bulgaria, Romania, Mexico, China, Japan, Lebanon, Turkey and perhaps even India!

Final Thought
"Americans may scream bloody murder when looking at the future prices for the 2003 first growth Bordeaux (an average of $4,000 (2,300) a case), but if my instincts are correct, 10 years from now a great vintage of these first growths will cost over $10,000 a the minimum. It is simple: The quantity of these great wines is finite, and the demand for them will become at least 10 times greater". Robert Parker in Food & Wine Magazine September 2004.

It is comments such as these that have driven young wines to unprecedented levels in recent en primeur campaigns and created a gaping pricing anomaly for the best claret. Indeed, why is it that normally rational and considered human beings seem to lose their marbles when buying young wines? We have talked about this on several occasions in the past, but it is surely the key issue for any serious investor in Claret.
(detailed analysis using various wines and comparative tables in full report)

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