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.com, October 2012

Trading

Activity hit a new record in October as the number of live markets on Liv-ex reached 3,000. With merchants spreading their nets wider, turnover rose 7.7% on September and total volume of trade rose 7.3%. For the first time since April, turnover was up year-on-year showing a 2.7% increase on October 2011.

The 2009s once again accounted for nearly a third of all Bordeaux trade by value, but the 2005s also took a sizeable portion of trade, with 13.8%. The recently promoted Pavie accounted for a quarter of all Bordeaux 2009 trade, while its fellow Grand Cru Classe A Cheval Blanc took 40% of all 2005 trade.

For the second consecutive month Bordeaux’s share of trade rose, but at 86.5% it was still down five percentage points year on year. As Burgundy took a backseat with 4.6% of trade (compared to September’s 7.1%), Italy continued to see good activity, hitting a five-month high of 3.8%.

All of the Liv-ex indices ran near flat in October. It was a month where the Liv-ex 50 continually hovered just below the 300 level, ending on 297.7, down 0.44% month on month. The Liv-ex 100 also dropped back slightly, falling 0.64% to end the month at 258.4, down 9.8% year to date. Meanwhile the Investables and Bordeaux 500 Indices also saw minor drops.

(more analysis in the full report)

Major Movers

The current popularity of Italian wines is reaffirmed by this month’s Major Movers table, with Tignanello 2003 and Ornellaia 2006 showing clear increases. Other wines on the rise were those driven by events, with the sale of Calon Segur and promotion of Angelus seeing vintages of the two wines move substantially in price. Beating the blues that have afflicted the Second Wines was Pavillon Rouge 2006, with a price increase of 10.7%.

Of the two St Emilions promoted to Classe A status, Pavie emerges the most popular among buyers. The wine accounted for 6.3% of all Bordeaux trade in October— nearly double that of Lafite—and its 2009 took 24.7% of all Bordeaux trade for that vintage. As buyers continue to look beyond the First Growths, Lynch Bages saw good trade for a variety of its vintages, its 2007-2010 in particular, while the 2005 pushed up numbers for Mouton.

(analysed in detail in full report)

Chart of the Month

New 100 point chateaux vs the Bordeaux 500 Index. To receive 100 points for a vintage clearly not only impacts on the sale of that specific wine, but boosts the brand as a whole. Ten vintages from six wines are featured in the index above: Clos Fourtet, Cos D’Estournel, Ducru Beaucaillou, Evangile, Leoville Poyferre and Pontet Canet. They were all new additions to the 100 point club when Parkers’ in-bottle scores for the 2009 were announced at the end of February. Rumours around the anticipated scores led to prices peaking just before they came out, and the wines have continued to ride on the accolade for their 2009s since then. Whereas the Bordeaux 500 as a whole has mirrored the Liv-ex 100’s downward trajectory, its new 100 point wines have all experienced price gains year to date. That these are all non First Growths with high scoring vintages suggests that a wine’s quality has the power to triumph over label in the current market.

Final Thought - Divergent Fortunes

The last three years have seen Liv-ex indices experience both record highs and sudden corrections. But with the market having showed stability for three months, it seems an opportune time to take stock. Using the Bordeaux 500 and its constituent indices as our dataset, we find that (even within Bordeaux) these dramatic market movements have been far from universal.

Firstly, as Chart 1 shows, there are still a number of wines that are hitting record highs. Of the 450 wines in the index (excluding the recently added 2009s), 36 (8%) hit a new price high in October, belying general market conditions. Right Bank wines make up the majority, with 20 having attained Mid-Price records this month. In light of their recent upgrade, it should come as no surprise that Angelus and Pavie are two of the big winners, with the 00, 01, 03, and 07 vintages for the latter all seeing new highs in October. Clos Fourtet has seen six vintages peak in price; Vieux Chateau Certan has seen four. Over on the Left Bank Calon Segur is the big winner— with four vintages hitting new price highs. The 2001 vintage is also showing strength, with Cos, Pichon Lalande and Pontet Canet all in the black.

On the flipside, many wines have now fallen to new price lows. Forty-four wines in the index are now cheaper than at any time since they entered the index (all wines enter in the July of the year they become physically available). These include three vintages of Ausone (05, 06, 08) and four of Cheval (05, 06, 07, 08). It seems the newcomers to the Grand Cru Classe A classification are performing rather better than the incumbents. Moving on to the First Growths and their second wines (which as Chart 2 shows, have fallen further in price than any other group, at almost 35%) the majority are now cheaper than they have been at any point since 2010. A number of top 2000s have rewound even further with Ausone, Cheval and Mission Haut Brion having returned to their early-2007 pricing. The market is clearly still in some stress, with direction depending on individual, rather than collective, demand. But with some wines never having been so cheap (on a physical basis) there would also be some significant value to be had.

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