Wine Investment Review 2011

Wine Investment Review 2011

Investing in wine has become increasingly popular: The price falls of the late 2008 Bordeaux vintage were restricted to just a few wines, and the market recovered very quickly. Wine is becoming increasingly attractive to those with the long-term view and to those who want to put their money into something tangible. 2010 saw a bumper year for the fine wine trade – partly on account of the release of the 2009 Bordeaux vintage – with the prices of many wines reaching new highs.

The increased investment in wines is not without its effect: more buyers push prices up in the same way that sellers pull them down and we may well see more ups and downs than we have seen in the past. The wine market is relatively illiquid when compared to stocks and shares, though it is more tradeable than ever before.

The key driver of all the prices isn't the investors, though: ask anyone in the Far East. This relatively new market for fine wine is booming and this is just the beginning. We may well have customers in the UK whose cellars are full but the cellars in Hong Kong and mainland China need filling and, sadly, one just can't make any more Mouton, Lafite et al.

After a frenetic 2010, January 2011 started with a bang. Demand from the Far East remained very strong (we are very well-placed to view this: our Hong Kong office was established in 1999) and it is notable that the focus of demand is spreading. Château Lafite-Rothschild is still number one, though demand for its first growth peers has strengthened. Moreover, a number of other châteaux have emerged as runners and riders, notably Lynch-Bages, Beychevelle and other established grand cru classé properties familiar to the UK market for many years.

The 2010 Bordeaux En Primeur vintage was released onto the market in May 2011. These wines (from selected châteaux) could well be worth considering from an investment point of view but one MUST take the following into account: The 2010 vintage will be bottled in 2012 and shipped to England in early 2013. As such it is generally prudent to consider the size, reputation and trading history of the selling merchant. Berry Bros & Rudd has been trading for more than 310 years and is the largest buyer of en-primeur Bordeaux in the UK.

The future
So what does the future hold? The world of wine is everchanging, partly due to technological innovation, partly due to evolution of customer tastes and, in recent times, to a warming weather trend in certain parts of the globe. The product itself is deeply susceptible to the vagaries of the weather during the growing season, and this, allied to all the factors mentioned above, make it difficult to look forward and predict the future state of the wine market with any confidence.

Economic factors play a part too, as the fine wine market, in particular, has a habit of reflecting broad movements in international stock markets. Overall, however, from a quality point of view we are living in a Golden Age for wine, certainly as far as the mid-to-upper quality levels are concerned.

Berrys' Fine Wine Report for 2011
The report (released in December 2011) identifies trends within the global wine market, highlighting potential and existing problems as well as flagging up exciting signs of progress, particularly in the realm of improvements in the quality of wine.

To read more on wine investment, go to our investment pages. 

To discuss this further, please contact our Fine Wine Department.
9.00am to 6.00pm Monday to Friday
Tel: 44 (0) 1256 340123
Fax: 44 (0) 1256 340149
Email: Fine Wine Enquiries