Fine Wine Market Update



The Fine Wine Market enjoyed an eagerly anticipated boom from late 2005.  Prices had been somewhat flat for a couple of years and the top wines, particularly those from the 1996 & 2000 Bordeaux vintages, were beginning to look exceptionally cheap.  By early 2006 the bull was up and running, fed by massive demand from the “new” markets, investment funds and private customers increasingly aware of the value, both in drinking and investment terms, of the best wines in the world.

At the same time, we were waiting for the 2005 Bordeaux vintage to be released.  We had been hearing great things almost as soon as the grapes had been picked; talk was that we would have a legend on our hands.  Trips to Bordeaux in early 2006 to taste these young legends in the making confirmed the hype – this was a truly exceptional vintage.  The wines were released slowly, at prices that we hadn’t imagined, and they sold as quickly as we could offer them – we sold 1,000 cases of Lynch-Bages on the day that it was released.  Prices continued to rise, and the boom continued into 2007.  Customers buying wine in February and March 2007 quite often found that their investments had “washed their faces” even before the invoice had been settled.

The market slowed a little in August 2007, which is nothing unusual – the majority of Bordeaux negociants take the month off and much of the wine trade follows suit.  However, the September pick up was late in arriving – some chaps with salaries larger than most of us had a bit of a problem with some bad debt.  The “credit crunch”, as the media called it (thankfully not “creditgate”) was on the front page, and stayed there.  Try to find an article on this without the words “the first run on a bank in living memory”.  The economy, or at least the financial markets, became rather nervous.

There is little or no correlation between the financial and fine wine markets, though the doom and gloom in the financial pages and on the television news did make some buyers a little more cautious.  On the surface, the wine market has remained fairly flat since.  Prices for a few wines have softened a little – though this can easily be put down to a few merchants discounting a little to get stock moving, a bit of nervous selling by small investors, and some cautious buying prices on the part of some trade buyers, some very happy to exploit the situation. 

Look beneath the surface, however, and a great deal of wine has been changing hands: there has been no shortage of trade – there is no glut of first growth claret.  Demand for the top wines remains strong, the current highlights being the 2005 vintage (still) which will be arriving in the UK over the next few months, and, as ever, there is remarkable demand for all vintages of Lafite (and the second wine, Carruades de Lafite) in the Far East. 

I personally believe that the market is having a much-needed “breather”.  How long this consolidation will last is a key question, though my thoughts are that this period represents an excellent buying opportunity for those with the conviction and the cash to make the most of it.  The fundamentals remain unchanged: fine wine is a tangible, luxury asset that more and more of us aspire to own and enjoy.  Demand is rising, and once a vintage has been harvested its supply is constantly dwindling.