Fine wines (pic: Shangri-la)

Fine wines (pic: Shangri-la)

Liv-Ex in its latest report said that 2021 has been the best year yet for fine wine market, outperforming FTSE 100, Dow and gold.

Burgundy rises as the winner of wine trades

Bourgogne wines enjoy bullish demand in Hong Kong (pic: BIVB)
Bourgogne wines enjoy bullish demand in Hong Kong (pic: BIVB)

With more diverse wine coming from the region itself, Burgundy recorded the highest number as well as the biggest year-to-date increase in wine trading. It accounts for 21.4% share of wine trade this year which beat its previous record of 19.7% in 2019. 

In terms of price performance, rising global demand coinciding with increasingly small vintages has leveled up the price of Burgundy. The prices of the region’s leading labels increased 27.1% this year, reaching a new all-time high.

For instance, several vintages of Domaine de la Romanée-Conti surpassed their all-time highs this year, while grand cru wines from Armand Rousseau and Domaine Leflaive have been among the year’s best-performing labels. 

France outstrips Australia to become China's No. 1 wine supplier again (pic: iStock)
Bordeaux (pic: iStock)

Bordeaux trades fall to new low

Although the First Growths are some of the top traded wines by value this year, the Liv-ex 50 (which tracks the performance of the First Growths) sees slower rise than the Liv-ex 100 and Liv-ex 1000. 

Of the Liv-ex 1000’s sub-indices, the weakest performer has been the Bordeaux 500 with a 9.2% year-to-date increase. By region, Bordeaux recorded a continual decline in trade share from 42% in 2020 to 38.8%, which is a new low. 

Although trade activity did rise substantially over this summer when the 2020s were offered En Primeur, Liv ex forecasted that it is possible for the share to decline further as buyers may focus on the First Growths.

The First Growths’ share finally rises

Previously during the bull run in 2010, the First Growths accounted for 60% of Bordeaux trade by value while Bordeaux accounted for 95.7% as a whole.

However this share fell to 53.5% during China’s anti-corruption measures in June 2011 and the broadening wine market. Since then, the share has fallen steadily until this year.

In 2021, the First Growths’ share among Bordeaux trade went up to 35.9% from 32.6% last year. Liv-ex forecasted that if the trend of Bordeaux buying continues to shrink, it’s possible that First Growth’s share will grow later.

Despite Bordeaux’s declining trade share, what continues to hold the back of Bordeaux and even the First Growths is the price performance. The top five price-risers this year had all returned over 66%.  

Liv-ex pointed out that one of the reasons could be the continual withholding of stock from the market, especially at En Primeur, which stifled demand to some extent. A series of middling to poor En Primeur campaigns means what stock is out there is still readily available in many instances. 

Among the First Growths, Château Lafite Rothschild has been in high demand and the most traded wine on the secondary market in 2021. Lafite’s 2011 vintage has been the best-performing red wine with a 32.5% price growth.

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