Fine wine market analysts are increasingly confident that prices for recent vintages of top Bordeaux have bottomed out after a three-year slide.
Has Bordeaux turned a corner?
Bordeaux prices have found stability on several indices in recent months, prompting UK-based Wine Asset Managers (WAM) to suggest that prices may have reached their cheapest point.
It’s hardly comparable with the plume of optimism that drove Bordeaux prices skywards before several years ago, but WAM’s Miles Davis thinks there is extra reason to be cheerful in 2015.
‘For those who are familiar with the characteristics of the fine wine market, what has happened over the last six months is becoming significant,’ he said.
‘The fact that the market has been flat for six months now suggests that it is in the process of changing direction and that the China fall out is now fully in the price.’
Trading exchange Liv-ex said in its latest market report that its Bordeaux 500 index – representing the 10 most recently physical vintages for 50 top chateaux – had crept up by 0.6% in the past month. It is still down by almost 5% versus a year ago.
Rival Bordeaux Index saw prices creep upwards in the final quarter of 2014, albeit the index remains around 25% below its mid-2011 peak. Bordeaux Index has reiterated that it believes the much-touted 2005 vintage is still ‘significantly undervalued’.
Bordeaux still dictates the overall health of the fine wine market due to its scale, despite higher buyer interest in alternative fine wine regions, and particularly Burgundy, Champagne and Tuscany.
The Liv-ex chart below suggests prices for wines from several regions struggled for momentum in 2014.
Liv-ex said that Bordeaux’s share of trades in the past month was around 82%, continuing a steady climb versus the first few months of 2014.
But, it said this was so far not being driven the by the five first growths. They accounted for only a quarter of trades. ‘Instead, it was increased activity for wines such as Mission Haut-Brion, Pontet Canet and Chateau Montrose that boosted trade for Bordeaux,’ Liv-ex analysts said.
Looking ahead to 2015, several commentators have said that Bordeaux’s en primeur campaign for the 2014 vintage could help to fuel a market recovery, depending on how it is priced.
However, other experts have warned that consumer demand remains sluggish.
‘There are certainly fewer buyers, even at the upper end of the market, as the dubious benefits of naked “wine investment” are more difficult to secure,’ said David Elswood, head of international wine at Christie’s auction house, in the February issue of Decanter magazine’s Market Watch section.
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Written by Chris Mercer