Wine market affected by FX volatility, slower emerging economies’ growth
The world fine wine market took a breather in April, affected partly by slower growth in emerging economies and by exchange rate fluctuations.
The main indices fell, by 1.3% on the Liv-ex 100 and 0.6% on the Liv-ex Investables. Lafite (which represents some 23% and 28% of these indices respectively) was the weakest of the first growths, falling by nearly 3% on average across the key vintages.
Andrew della Casa, founder director at The Wine Investment Fund (TWIF) said auctions had provided a few surprises. There were some “very high” results for Pétrus in Hong Kong – a 1995 sold for over £46,000, more than three times the UK market price.
“Some of the market’s weakness in April may be a result of exchange rate movements. The yen fell sharply following the monetary easing early in April and the dollar and the Chinese renminbi also dropped following a particularly strong first quarter,” noted della Casa, manager at Anpero Capital Limited.
The fund invests only in the top 1% of wines from the Bordeaux region. As predicted, prices for the 2012 Bordeaux en primeurs or pre-bottled wine have eased over the year.
Analysts say the market is challenging, with merchants reporting “a quiet campaign” from producers, and only a few wines selling well. April data was also affected by changes in the Liv-ex index at the end of February, particularly for Lafite, which has a significant weighting.
Mouton and Margaux were around 1% down, while Latour and Haut Brion dropped just fractionally. Cheval Blanc and Pétrus fell by approximately 1%. There was quite wide variation amongst other wines, Lafleur and Pichon Lalande were noticeable risers Château Margaux appointed a brand development manager in the US, suggesting that they see further potential in the American market.
TWIF, launched in 2003, excludes Champagne from its portfolios but figures from the Champagne promotion body, the Comité Interprofessional du Vin de Champagne, suggest the main growth markets are China, India, Japan, Australia and Russia. “The presence of India on the list is particularly interesting given that TWIF has highlighted its potential importance as an emerging fine wine market,” said della Casa.
TWIF’s performance in April was -0.6%, ahead of the Liv-ex 100, largely due to a lower holding of Lafite. The fund’s prediction for 2013 sees the Liv-ex 100 up by 14% over the year. In the last four months the Liv-ex 100 and Liv-ex Investables rose 5.9% and 5.2% respectively.
Real assets are proving increasingly attractive to international investors, including art, wine, watches, classic cars and other “collectibles”. Wine trader Nick Martin has just launched an online trading platform, WineOwners.com, to connect private buyers and sellers.
Fully integrated with portfolio management, including valuation, comparison and analysis tools, the exchange aims to make sourcing and selling wine fast, simple and safe, with four separate channels each subject to independent inspection.
Members can buy wine already offered for sale in the market by accepting a current invitation to ‘buy now’ from a wine owner. The buyer then has the option to request a pre-settlement inspection to verify the condition of the wine is as described on the exchange.
Would-be buyers can create a “new bid” for wines they want to source at a price they are willing to pay, which invites sellers to match to that bid with an offer. Members are able to sell wine stored in professional (bonded) storage.
Sellers can choose to have the wine independently inspected before or during a listing, increasing its desirability to buyers reassured of its provenance. Finally, members can match eligible wines they own to ‘open bids’ of members looking to source the corresponding wine at their stated price.
Private sellers are charged a fee of 6.5% and buyers just 2.5%. Founded in 2011, the exchange realizes value for private collectors, enthusiasts and investors. It is totally independent and has no exclusive merchant relationships, does not buy or sell wine, nor does it participate in trading.