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We are pleased to have seen the back of 2012. A wine market that spiked too hard and fast in 2011, a forgettable Bordeaux EP campaign, sluggish Asian demand, no new global markets and a weak UK and European economies all came together in one perfect storm to flatten the market. By August it was lucky we had Victoria Pendleton in Lycra to cheer us up. However, from September, we have certainly seen signs of stability and then some actual life returning to the market, although everyone was rightly cautious and it felt rather more like a lawnmower than a Bentley.
It has certainly gathered some momentum since then and we finished the year positively and now, going into 2013, the Liv-ex-100 forecasts that we will end the year 14 % up on 2012. I don’t think I would disagree with this. For your interest, last year, the Liv-ex Fine-100 Wine 100 finished 9.6% down on the year, compared to a 5.9% rise in the FTSE 100 and a 2.1% rise in the price of gold. It will be an interesting year to monitor these “SWAG “(silver, wine, art and gold) investments and how they perform against each other.
A major trend that will continue in 2013 will be the recognition of the investment potential of regions other than red Bordeaux. This is to be expected as new markets, especially in Asia, become more aware of the wider range of top quality wines. Burgundy is certainly in this category, and the Super Tuscans and top Champagne producers offer potential as new markets diversify their collections and taste.
At the current time there are no indicators that there will be another market with the influence of China, but in the entire region, the demand for wine is increasing. Alongside the traditional buyers of Japan, Singapore etc, there are clear signals of very influential buying power emanating from Indonesia, Malaysia and Thailand. A reduction in tax from these countries would have a very potent effect on the market. China is certainly not to be written off. The last few years are only the beginning, but the skill of the buyer/investor will be keeping up with the demands of such an un – transparent nation. Only a fool would think it was all just a flash in the pan. One just has to spend a day in any Asian country for confirmation that they take their eating and drinking very seriously.
Surprisingly , going against what many merchants (including ourselves) have thought might happen recently, we have seen a trend with buyers focusing on “˜off’ Bordeaux vintages to get value for money. Even Lafite has seen a rise in price in these vintages in the past couple of months, with Liv-ex recording price rises of 5.7% and 3.8% respectively at the end of the year. But I am certainly still of the view that currently the best vintages offer the best long term yields.
With regard to 2013 as a year to buy, unless we see something “game changing” for the worse in the Asian economy then I would not hesitate to say that there is an opportunity to buy and I am confident that we are at or near the bottom of the market. I do have a personal indicator of how I judge the market and that is “would I let my brother buy it”…….and currently there are some wines that I would sell to him. It goes without saying he had a very cheap year in 2012, but 2013 may be less so!