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Market Watch: Hopes rise as Bordeaux shows signs of life

Fine wine buyers have spent August rediscovering their thirst for top Bordeaux, according to several traders, but talk of a full-blown recovery is premature.

For the first time in a year, trading platform Liv-ex has reported a month-by-month increase on its Liv-ex 50 index, which tracks sales of the 10 most recently bottled vintages of the five Bordeaux first-growths.

Although the index only rose by 1.3% in August versus July, the news has fuelled fresh hope that a three-year malaise for Bordeaux’s Left Bank could finally be bottoming out.

That in turn could spark a general resurgence in the fine wine market. Demand among collectors and investors for Burgundy, Champagne, Rhone and Tuscany may have grown in recent years, but Bordeaux continues to dominate this upper echelon of the global wine sector. Bordeaux accounted for 82% of all trades on Liv-ex in August.

‘We’ve been here before,’ said Wine Asset Managers, commenting on the Liv-ex data, which also showed stronger overall bidding for wines through August.

‘We don’t know whether this is the start of the next cycle or a false dawn, but this is what the start of the next cycle will look like when it arrives.’

Others have been more bullish. Traders at Bordeaux Index (BI) highlighted healthy demand for Bordeaux in the US and Asia, in particular.

‘We believe we are seeing the green shoots of a recovery,’ said BI’s managing director, Gary Boom.

He cited a ‘significant uptick in investment grade Bordeaux sales (as shown by our LiveTrade data), two of the three most powerful global markets driving this increase, and a real increase in the average prices of each case sold’.
Boom said that falling prices since the peak of June 2011 means it is ‘arguably the best time in five years to buy top Bordeaux’.

At auction so far this month, Bordeaux has continued to face stiff competition from Burgundy.

On 6 September, Zachys Hong Kong sold 61 bottles of Mouton-Rothschild spanning every vintage from 1945 to 2005 inclusive, except 1949, 1953 and 1993. The lot fetched HK$477,750 against a pre-sale high estimate of HK$600,000.
In contrast, a single bottle of DRC Romanee-Conti 2009 fetched HK$104,125, albeit only slightly over its pre-sale estimate of HK$100,000.

Last week in London, Christie’s sold 12 bottles of Armand Rousseau, Gevrey-Chambertin Clos Saint-Jacques 1962 for £25,850 versus a high estimate of £9,000.

Written by Chris Mercer

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