Favourable Wine Investment Conditions Likely in 2013 after Last Year’s Market Decline

By: Tsveta van Son
Tsveta van Son
Tsveta van Son is part of Invezz’s journalist team. She has a BA degree in European Studies and a… read more.
on Feb 13, 2013

It would seem that 2013 is shaping up to be a better year for those interested in wine investment with the Financial Times recently reporting that the fine wine sector was likely to enjoy favourable entry conditions after a three-year wait. The wine market which saw prices fall in 2012, picked up in January with the Liv-ex fine wine 50 index posting its biggest monthly gain in two years.

**Favourable Entry Conditions**
The FT quoted Chris Smith, a former government economist and an author of a recent report by the Wine Investment Fund, as arguing that 2013 might be the most favourable time to enter the wine market since 2009. Mr Smith noted that market conditions for 2013 appeared much brighter than the previous two years since price falls in 2012 took place in the first half of the year, whereas the second half saw a return to stability and even some signs of recovery toward the end of the year. The weak market resulted in prices dropping to levels well below trend which Mr Smith sees as encouraging a sharp recovery.

And the market indeed seems to be picking up in 2013, with Bloomberg reporting on February 9 that the Liv-ex fine wine 50 index rose 3.5 percent in January, its biggest monthly gain for two years. In addition, as noted on the Liv-ex’s Cellar Watch website, the Liv-ex fine wine 100 index advanced 2.8 percent in January.
Bloomberg quoted dealers as saying that January auctions as well as a sale earlier in February by Hart Davis Hart Wine Co indicated that investors and collectors were looking to take advantage of lower prices which followed the market decline in 2012.

**2012 Market Decline**
And while 2013 is seen as favourable for wine investment, the FT reported that in 2011, investors saw their assets fall in value by roughly 15 percent, with the trend continuing into 2012. The Liv-ex 100 index finished 2012 8.9 percent down overall, whereas the Liv-ex 50 declined by 9.6 percent. The Bordeaux 500 in turn shed 5.1 percent. Bordeaux’s market share however reached an eight-month high in December, rising to 90 percent. By contrast, Burgundy, Rhône and Italy all saw their markets decline.

The FT quoted Mr Smith as attributing 2012’s downturn to the global economic environment, a lacklustre 2012 en primeur campaign as well as to a high level of net sales by institutional investors.
!m[Liv-Ex Fine Wine 50 Index Posts Biggest Monthly Gain In Two Years](/uploads/story/1436/thumbs/pic1_inline.png)
**2013 Trends**
In January, The Telegraph quoted the Wine Investment Fund as predicting that the Liv-ex 100 would end 2013 14 percent higher as compared with its 2012 weak performance. The Telegraph quoted the Fund director, Andrew della Casa, as noting that similarly to gold, wine was a physical asset immune to inflation and as such was “likely to attract attention when inflation fears rise”.

In terms of specific wines, it would seem that Lafite, which was one of the wines dominating the 2012 fine wine market, is gaining popularity in 2013 as well. On February 2013, Bloomberg reported that a case of Chateau Lafite-Rothschild 2009 sold for £7,800 pounds on the Liv-ex market, posting a seven-month high on the exchange. On February 11, five cases of Chateau Angelus 2005 Saint-Emilion, another popular wine, sold for £2,750, a record for the Liv-ex exchange and up 15 percent from December.
Those considering wine investment could also note some upcoming auctions, with Bloomberg reporting on February 9 that six bottles of Moet & Chandon 1911 champagne for instance are estimated to fetch as much as £40,000 at an upcoming sale at Christie’s, whereas a case of Chateau Lafite-Rothschild 1982 Bordeaux is estimated at £30,000.

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