Fine Wine Investment Blog

Fine Wine Investment Market Starts 2011 with Strong Performances

The fine wine market started 2011 with a strong monthly performance with positive returns in January while other stock markets have remained relatively weak, according to a new report.

The Liv-ex 100 rose by 2.9% and the Claret Chip by 3.4% and year on year, the indices are up 40.8% and 52.4% respectively.

Evidence is emerging that the market is in a new phase in terms of favoured brands. Lafite, in particular, has underperformed the other first growths for two months in a row, and at precisely the time when Chinese demand might have been expected to be high in advance of the New Year celebrations.

Lafite prices have risen, but only around 2.5% over the two months on average across a range of vintages. It is a welcome trend according to Andrew della Casa, director of The Wine Investment Fund as the concentration of Asian demand on this particular brand has distorted index returns over the last 18 months and led to a number of misleading stories about conditions in the wider market.

The spotlight in January was taken by Haut Brion and Mouton Rothschild, both increased by an astonishing average of around 9%. Some specific vintages rose by much more, notably 1995 and 1996. Mouton 1996 recorded a remarkable 32% increase in just one month. ‘Mouton is now emerging as the most likely candidate to be the next Lafite, no doubt at least in part due to shrewd marketing associated with the presentation of its bottles.

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Lloyd Webber Hong Kong Sale Fetches Nearly $6m

Chateau Lafite – and Andrew Lloyd Webber – have proved as potent a draw as ever in the latest Sotheby’s Hong Kong auction.

US$14.6m (HK$113m) worth of wine was sold in two sales this weekend, setting several records.

The sales, held at the Mandarin Oriental Hotel on the 22 and 23 January, included 746 lots from The Andrew Lloyd Webber Collection and 668 lots from Bordeaux Winebank 2000 Collection.

The Lloyd Webber sale exceeded its high estimate to fetch US$5.6M. A case of 1982 Petrus reached US$77,564, while Chateau Lafite continued to attract feverish bidding, earning US$58,949 for a case of 1982.

Six bottles of 1996 DRC Romanee Conti fetched US$55,846.

'Top Bordeaux and red Burgundy really took off, but it was particularly warming to see knowledgeable Asian buyers snapping up the fabulous white Burgundies from what must be the best selection so far offered in the region,' said Serena Sutcliffe MW, head of Sotheby's International Wine department.

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$10m at Acker Merrall Hong Kong Auction

Acker Merrall & Condit's first Hong Kong auction of 2011 fetched over US$10m – with some prices trouncing the higher-profile Lloyd Webber sale at Sotheby’s.

Acker Merrall’s two-day sale with over 1200 lots from various cellars, on 21 and 22 January at the Island Shangri-La and the Grand Hyatt hotels, took HK$84.6m (US$10.8m).

Burgundy took centre stage at this Bordeaux- and Burgundy-dominated sale. The top-selling lot of eight bottles of 1985 Henri Jayer Richebourg went for US$100,103 while a 6-bottle case of 1978 DRC La Tache fetched US$65,692.

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Wine Booming After 40% Rise in 2010

Wine investors enjoyed stellar 2010, with prices for the top vintages rising 40% on surging demand in Asia.

Over the twelve months, the 40% rise for fine wine's benchmark index - the Liv-ex 100 - comprehensively beat the return investors gained on the FTSE 100, which rose only by 9%. And the gains are set to continue, according to The Wine Investment Fund (TWIF).

The fine wine investment specialists predict that the Live-ex will end this year 21% higher.

The star performer in 2010 was Chateau lafite, with most of its vintages increasing by between 60% and 100%. Added to that, the Liv-ex showed very low volatility. In eleven out of the twelve months, wine prices showed positive figures, with just a small fall in July.

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Fine Wines to Soar This Year

Fine wines are predicted to soar during 2011 with increases of 21 per cent expected for the main wine index, according to The Wine Investment Fund.

Last year the asset class returned an impressive 40.5 per cent on the Liv-ex Fine Wine 100, with very limited volatility, mainly due to a boost in popularity in the Asian market.

Wine surpassed many other asset classes in 2010 and saw price increases in 11 out of 12 months of the year. Its returns compared well with other equity markets including the FTSE 100, which rose by 9 per cent, and the FTSE All-Share, up 11 per cent.

According to TWIF, reasons behind the impressive performance include the continued good performance of the main wine-purchasing countries, especially China, the growing attractiveness of wine as an asset class to institutional investors and the effects of exchange rate movements, especially between the Chinese renminbi and sterling.

The star performer for the year was Château Lafite, with most vintages increasing by between 60 and 100 per cent.

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Fine Wine Proves Canny Investment in 2010

Fine wine proved a canny investment for 2010 — outperforming other assets by providing investors with a 32% return.

The fine wine merchants and traders Bordeaux Index predicted 2011 will be another strong year for the category as order books were already “groaning” after the first full day of trading yesterday.

December’s price rise was limited to 1% - less than those enjoyed by shares, gold and oil - but throughout 2010 wine outperformed all other asset classes for the second year in a row.

The returns of 32% are substantially higher than the 22% rise in gold. And over the last 15 years, the average annual return on fine wine has been 15%.

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Fine Wines Take Top Prize For Investment Returns, Beat Gold, Oil, Stocks

After a year in which “real assets” have been often favoured by wealthy investors, data from a London-based electronic exchange shows that the market for holding fine wines outperformed gold, oil and equities in 2010, driven by strong emerging market demand.

The Liv-ex Fine Wine 50 Index, produced by the Liv-ex Exchange, tracks the top five Bordeaux brands across ten different vintages; it rose by almost 60 per cent in 2010, having broken through the 400 point barrier at the end of December (it was based at 100 in January 2004).

Over the past 10 years, the exchange has delivered an annual compound return of 12.5 per cent.

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Liquid Gold Just the Goods in the East

The price of fine wines, like many commodities, is being determined by China - and demand from the country's new millionaires remains insatiable.But it is not only rising wealth that has caused a rise in Asian wine sales. Two years ago Hong Kong scrapped all duty on wine and beer and became the centre of the world's fine-wine sales.

The figures speak for themselves. Data published yesterday shows that of Sotheby's total worldwide wine sales this year, 60 per cent occurred in Hong Kong. The auction house sold wine worth about $88 million this year, of which $53 million was in Hong Kong, $21 million in London and $14 million in New York.

In fact, the price of Lafite Rothschild 1982 has shot up by more than 60 per cent this year, according to the wine blog Liv-ex. That compares with a rise of just 25 per cent for gold. Over the past 10 years the price is up 1000 per cent.

By Liv-ex calculations this means Lafite Rothschild 1982 is now worth eight times its weight in silver and costs the equivalent of half a tonne of copper.

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Xu Lei Confirmed as Mouton 2008 Artist

Chateau Mouton Rothschild has just revealed its wine label for the 2008 vintage – confirming Chinese painter Xu Lei as the artist.

Xu is artistic director of Today Art Museum, Beijing’s leading contemporary art gallery, and a graduate from the prestigious Nanjing Academy of Fine Arts.

For the label, he has reworked the classic Mouton emblem with a delicate ink drawing that depicts the famous ram standing between two halves of the moon.It asserts, says the chateau, ‘the role of a great wine as a link between people and cultures, from one hemisphere to the other’.

Prices for Mouton 2008 have been rising in recent weeks on the back of this expected announcement. When speculation of a Chinese artist first surfaced in late 2009, the price immediately moved upwards from the opening £1800 per case to around £2200.

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Christie's Hong Kong Auction Takes In £6.6m

Christie’s latest Hong Kong wine auction, held 26 and 27 November, has fetched HK$80,322,600 (£6,601,526) – capping off the auction house's Asia wine department's best year ever in the region.

The Finest & Rarest Wine Sale at the Hong Kong Convention & Exhibition Centre sold 90% of the 600 lots at 96% of value.This contributes to the 2010 total of HK$169m/£14m – which Charles Curtis MW, new head of wine sales for Asia, said was the Asia department’s best yet.

Christie’s resumed wine sales in Hong Kong in 2009 after a hiatus of several years.

The average lot value of HK$141,000 (£11,657) was also a new high.

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