Fine wine up 6.7% year to date

With underlying conditions relatively strong, the “en primeur” campaign well underway and China steadily rebuilding, the medium and longer-term prospects for investing in fine wine look bright according to The Wine Investment Fund

Fine wine up 6.7% year to date

May provided another healthy stride on the road to a sustained market recovery in wine with the main, independent indices rising by +0.6% (Liv-ex 100) and +0.7% (Liv-ex Investables). Year to date, the indices are now up by +6.7% and +6.6% respectively.

The increases come despite sterling strengthening against most major currencies. A stronger pound generally tends to depress the indices, so this is indicative of healthy underlying conditions.

Most of the fine wine trade’s focus has been on the “en primeur“ releases from Bordeaux of the 2015 vintage. The Wine Investment Fund (TWIF) believes quality has been uneven – very high for some properties, but average for others. TWIF, which does not invested en primeur because it feels the price volatility in the first years of a wine’s life does not justify the potential returns, remains an interested observer of the ‘campaign’.

“Overall the wider market has seen some benefit from the “en primeur” releases,” said Andrew della Casa, founder director of TWIF. “Last month was the first time that the Liv-ex 100 has risen in May (the key en primeur month) since the offer of the last really successful vintage in 2009.

“There may be a further boost as the remaining wines, including the first growths, are released in the next couple of weeks.  As with other asset markets, however, the run-up to the UK referendum on the EU in late June may have a ‘wait and see’ effect on buying decisions.”

Recovering interest

VinExpo Hong Kong, the major wine trade fair, saw a 9% increase in visitors from the Chinese mainland compared to 2014 when it was last held in the city, a sign of the recovery of interest in China. In the auction world there were several large and successful sales around the world. Headlines were taken by a single owner sale at Sotheby’s in New York which made USD $21.9m, the highest ever for a collection sold at auction.

“With underlying conditions relatively strong, the “en primeur” campaign helping to a degree and China steadily rebuilding, we consider the medium and longer-term prospects for the fine wine market as being bright,” della Casa said.

“An investment in fine wine continues to make a very useful addition to a wider investment portfolio, given that the fundamentals of fine wine as an asset remain sound and fine wine market’s long run tendency to outperform more traditional asset classes remains unchanged, with considerably lower volatility.”

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