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Viewing post categorized under: Fine Wine Investment News



The joy of words… (Wine brings!)
Well known quotes on the marvellous subject of WINE & LIFE!
We all have our favourites, so I thought (during a hot (and seasonably quiet) August afternoon) I would share my favourite top 10 (in no particular order) …………………………………

“What contemptible scoundrel stole the cork from my lunch?”
~ W. C. Fields

“Good wine is a necessity of life for me.”
~ Thomas Jefferson

“I have lived temperately….I double the doctor’s recommendation of a glass and a half of wine each day and even treble it with a friend.”
~ Thomas Jefferson

In water one sees one’s own face;
But in wine one beholds the heart of another.
~ French proverb

When you ask one friend to dine,
Give him your best wine!
When you ask two,
The second best will do!
~ Henry Wadsworth Longfellow

“You haven’t drunk too much wine if you can still lie on the floor without holding on.”
~ Dean Martin

“When a man drinks wine at dinner, he begins to be better pleased with himself.”
~ Plato

“Consuming wine in moderation daily will help people to die young as late as possible.”
~ Dr Philip Norrie

“One should always be drunk. That’s all that matters…But with what? With wine, with poetry, or with virtue, as you chose. But get drunk.”
~ Charles Baudelaire

“Wine is one of the most civilized things in the world and one of the most natural things of the world that has been brought to the greatest perfection, and it offers a greater range for enjoyment and appreciation than, possibly, any other purely sensory thing.”
 ~ Ernest Hemingway

Strength & resilience of the Bordeaux wine investment market

“The Liv-ex Fine Wine Investables Index tracks the most “investable” wines in the market around 200 wines from 24 top Bordeaux chateaux. In essence, it aims to mirror the performance of a typical wine investment portfolio. The index data starts in 1988, further back than any other Liv-ex benchmark.” (Source: Liv-ex)

Strength & resilience of the Bordeaux wine investment market

In today’s fine wine investment market there can be found two extreme views when assessing the success of investors – when of course following the traditional route for investment in this market as mirrored in the Liv-ex Investables Index.

Firstly, there are those wine collectors who are seasoned with the economical cycles and who have experienced wine prices rise but also seen them fall. These investors approach (or who have realised) the ‘investment product’ with an understanding that only over time (good advice will suggest 5 years min) will a reasonable profit be generated (steered of course by the wider economic environment)  – simply by the laws of supply and demand. Patience here is key.

Secondly, there are those who sadly (only down to bad timing from May 2011) have only experienced a loss on their investment and with it a bitter taste! For those whose timing was indeed wrong – fear not!

Correct advise is paramount. Wine investments do not generally make vast profits overnight. The investment horizon should be a minimum of FIVE years and this must be brought to your attention! If not then I would question your broker, agent, or whoever advised you why this was not explained.

Despite the need to diversify (as in any market place), the aim of the investment must never be clouded with greed and therefore it is imperative not to increase ones risk whilst doing so.

Basic Discipline will serve the investor well. Looking back at the Liv-ex chart for the ‘Investatbles’ market – time and patience reaps rewards for those that follow and stick to the plan!

A Five year plan at least should be kept (unless you meet your desired target of return). In fact the longer you hold the less volatility you will have over the holding period.

View from tasing rooms at Chateau Latour
View from tasing rooms at Chateau Latour

Over the past ten years, the wine market has offered various platforms for the investor to take advantage.

Of course for a good investment opportunity there must be a perceived level of Value for it to be deemed attractive. Many traditionalists (including myself) tend to stick with what we know best and bide time. Ok, we have seen up-take(s) in demand for the Super Tuscan ranges for example – but the real issue here is how much risk is involved if we simply follow the sheep. Or should I say, how long will this latest ‘trend’ last. There is no denying that together with the Champagne and DRC market, these areas have served the investor well over the past 5 yrs or so. In fact, looking at the below graph one can see just how well they have performed against the Liv-ex 50 Index (Bordeaux First Growths – most recent ‘physical’ vintages). As you can see, each of the regional indices has been rebased to 100 in June 2007.

Where there is value.....

This was an interesting time for the Bordeaux market; with the 2006 (Vintage) En Primeur campaign drawing to a close, collectors as well as the speculators became weary of further price hikes for an average vintage that came after the exciting 2005’s. Such premiums allowed eyes to wander and seek better value elsewhere – DRC as well as the Super Tuscans and not forgetting the ‘Bubbles’ market presented the obvious choice.

 

It is clear that during the time-span of the graph, the ‘value’ available to the investor has been apparent; switching between the regions from 06/07 until the steep decline of the Liv-ex 50 from 06/11.

 

At the point of falling below the Champagne 25 Index (towards the end of 2011) – the misery kept coming for Bordeaux top 50 wines – but many think (as I do) that this again was just a matter of ‘better value’ elsewhere.  As we all know, the main reason for the further declines from April 2012 was (again) due to an ‘over-priced’ En Primeur campaign – which again failed to ignite interest in wines that are yet to be bottled. However, since the lowest levels seen after the ‘Summer break’ in 2012, there is firm evidence (if twelve months trading is anything to go by) that prices will begin to move north again. Looking across the market (as indicated in the graph) there certainly seems more value once again in the top Bordeaux wines again – and if recent auction sales (and volumes) are anything to go by then if one can buy (from a good vintage) 12 bottles of Bordeaux First Growth or ONE bottle of DRC for the same price – I for one know which I would pick at this moment in time!

 

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