Fine wine outperforms equities over 15 years
Fine wine is the best performing asset class over the past 15 years, outpacing equities on both sides of the pond.
While the Liv-ex 100 and Liv-ex 1000 have risen 213.9% and 258.2% respectively, US equities have gained 143.9%, and UK equities just 59.2%. Asian equities have also lagged behind.
Further, fine wine has seen nine of the volatility witnessed by global equities, ad traded within a 2% range throughout 2018.
Liv-ex comments: “With several significant milestones reached this year, the fine wine market enters 2019 in good health, offering steady returns and low volatility compared to other mainstream assets.”
Liv-ex 1000 closes 2018 up 10%
The Liv-ex 1000 – the broadest measure of the fine wine market – closed 2018 on 363.3, representing a 10% gain on last year’s close.
Over the course of the year, the Burgundy 150 rose by 34.9%, with Bordeaux Legends 50 and Champagne 50 following behind with gains of 8.3% and 7.8% respectively. The Bordeaux 500 and Rest of the World 50 were the slowest risers of the year, with gains of 0.6% and 1.7% respectively.
Meanwhile, the California 50 – introduced in 2018 but not part of the Liv-ex 1000 – closed the year with an annual gain of 21%.
The Liv-ex 100 – the industry benchmark – closed the year on 312.05, down 0.2% on last year’s close. However, the index has demonstrated significant stability this year, trading within a narrow range of 2%.
December’s biggest mover, Haut Brion 2000, yielded a monthly increase of 4.7%. The biggest faller, Clos Papes, Chateauneuf du Pape 2015, dropped 5.6%.
Burgundy dominates 2018’s best price performers
The Liv-ex 1000’s top 10 price risers from 2018 all came from the same region – Burgundy – with Armand Rousseau, Gevrey Chambertin Clos St Jacques 2010 taking the top spot, leaping 194.8% in price.
It is followed by the same producer’s Chambertin 2010, which has increased by over 150% year-to-date. DRC Romanee-St-Vivant 2007 (+132.9%) and Richebourg 2010 (+105.1%) also feature in the top ten.
As Liv-ex notes, “The relative scarcity of wines at the top end, combined with growing demand, has particularly influenced the prices of Armand Rousseau and DRC, which have gained 42.7% and 33.5% on average respectively. A number of wines from these labels have doubled in value this year.”
Market broadens to record levels
Last year was a “record-breaking year” for the fine wine market, according to Liv-ex. Bordeaux’s market share – which has been falling since 2010 – dropped from 68% by value in 2017 to 59% in 2018, briefing falling to an all-time monthly low in January 2018, when it fell to 51%.
Meanwhile, Burgundy hit a record monthly high of 20.9% in November, and while it’s overall share of trade for 2018 sits at just below 15%, this represents a jump from 12.7% in 2017. Champagne overtook Italy to become the third most traded region by value, having risen from 6% to 8% throughout the year.
The fine wine market has continued to broaden overall. According to Liv-ex, 2018 saw more than 5,700 different wines traded through the secondary market, compared to 4,500 distinct wines in the previous year.
Since 2015, the number of brands trading on Liv-ex has increased by 252%. Exposure – the total value of bid and offers on the market – also reached record levels in 2018, when it surpassed £50million in October.
Chateau d’Yquem reports 40% drop in production
The 2018 vintage from Sauternes estate Chateau d'Yquem will see limited release in the market, due to a 40% drop in production compared to an average vintage.
The estate’s marketing director, Jean-Philippe Lemoine, revealed the drop was largely due to a devastating hailstorm that hit the south-western part of Sauternes in July, as well as mildew during the early summer. The harvest was the longest on record for the estate, lasting 78 days.
However, despite the smaller volume, Lemoine says the 2018 vintage produced a “very beautiful crop” created by growing conditions akin to the recent 2016, which Lemoine says is a “great vintage for Yquem”.