Fine wine prices fall as Bordeaux and Burgundy weaken, says Liv-ex

Main Liv-ex fine wine indices set to post declines for 2019
Political uncertainty hitting confidence
But it’s not bad everywhere: Piedmont, Rhône and Champagne top Liv-ex growth chart
Auctions are still strong, with Sotheby’s reporting record results in Asia

New figures from Liv-ex show declines of between 3% and 7% across several indices tracking prices of top Burgundy and Bordeaux in the first 11 months of 2019, in sterling currency.

The main Liv-ex 100 index also fell by 2.5% over the same period, said the group in its 2019 fine wine market review. However, in US and Hong Kong dollar terms, the Liv-ex 100 was up by around 1%.

Liv-ex doesn’t represent the entire secondary market, but its figures suggest collectors have become more cautious.

‘The second half of the year looks different to the first half,’ Liv-ex co-founder Justin Gibbs told Decanter magazine’s January 2020 issue Market Watch prior to publication of the group’s fine wine market review.

‘A general sense of wellbeing has been replaced by one of concern.’

A new US import tariff, political unrest in Hong Kong and concerns about how Brexit will affect sterling currency have created uncertainty in the world’s major fine wine hubs.

‘These are all conditions that can, and will, change but for now it is tin hat time,’ said analyst Miles Davis, of the Wine Owners trading exchange, in a recent blog post.

Several market analysts had already been concerned about a stock build-up of younger Bordeaux vintages and signs of momentum slowing in Burgundy.

Yet, Liv-ex data shows the fine wine market has also continued to broaden in 2019 as investors and collectors have sought to diversify their cellars.

More than 7,000 different wines have been traded on Liv-ex in 2019, double the number traded in 2015 and up from 5,700 last year.

Bordeaux has accounted for 55% of trades this year, compared to 59% in 2018, 68% in 2017 and 74% in 2016, Gibbs said.

Italy, Rhône and Champagne have been consistently highlighted by merchants and analysts as having price growth potential, albeit the threat of tariffs now hangs over Champagne houses and growers.

The top five performers on Liv-ex in 2019

Based on the difference in price from January to the end of November 2019.

Giacomo Conterno, Monfortino Riserva, Barolo 2002 – up 75%
Chapoutier, le Pavillon, ‘Ermitage’ [Hermitage], Rhône 2007 – up 53%
Bollinger, Grande Année, Champagne 2004 – up 37%
Domaine Auguste Clape, Cornas, Rhône 2011 – up 35%
Gaja, Barbaresco, Piedmont 2007 – up 35%

How bad is it for Bordeaux and Burgundy?

The Liv-ex Fine Wine 50 fell by 3.6% in the 11 months to the end of November, said the group, which describes itself as a global fine wine marketplace.

Its ‘Fine Wine 50’ tracks secondary market trading via the Liv-ex platform for the 10 most recently released vintages of Châteaux Margaux, Lafite Rothschild, Mouton Rothschild, Haut-Brion and Latour – excluding en primeur.

The Liv-ex Burgundy 150 index, which includes several DRC wines, dropped by around 7% in the first 11 months of 2019.

That’s nowhere near enough to erode major price rises on several wines in recent years, notably those of Domaine de la Romanée-Conti (DRC).

And no one has suggested that the market faces the sort of collapse witnessed for Bordeaux in mid-2011.

Yet, Wine Owners’ Davis told Decanter, ‘I wouldn’t be surprised if we see a gentle slide on the market’. He said that this could be around 1% per month in the short-term.

Auction scene has remained strong

Several major auction houses have enjoyed a strong year, suggesting collector demand remains healthy for rare and older wines that have been well-stored.

Sotheby’s said in October that it had already enjoyed a record-breaking year in Asia, with sales of HK$462m / US$59m, despite the political turmoil on Hong Kong’s streets.

At auction house Acker, a rare sale of Jean-Louis Chave wines dating back to the 1920s and sourced directly from the Rhône estate’s cellars has also fetched high prices in Hong Kong in recent months.

An eight-bottle cache of Ermitage Cuvée Cathelin, featuring every vintage released from 1990 to 2010 inclusive, was top lot after more than doubling its pre-sale high estimate to fetch HK$545,600 (£54,312), said Acker. Winemaker Jean-Louis Chave attended the sale.