16
such as Italian wines, have enjoyed good
returns, even in the difficult market of
the last few years. Italian wines, with
SuperTuscans and Barolos leading the
way, are a particular example of this.
As blue-chip Bordeaux has floundered
since mid-2011, Italy has gradually filled
its shoes, in both volume and value
terms. Italy’s share of trade on the Liv-ex
exchange has climbed steadily since
2010, culminating in a record 13.4% rise
in September 2014, more than six times
its average for the last eight years.
In December 2014, the New York
Times reported that more than three
quarters of the fifty most expensive
wines in the world now come from
Burgundy, Jonathan Reeve, the content
manager of the global wine price
database wine-searcher.com, explained
that Burgundy is a “notoriously fussy
grape. It’s hard to really nail it. But
when it’s perfect, it becomes a kind
of unicorn wine. Actually finding
one is such an obsession for some
people they’ll spend anything”
34
.
INVESTMENT HORIZON
Fine wine is a medium to long-term
investment. Transaction costs can be
high and certain items can sit on price
plateaus for considerable periods
of time until a new burst of interest
pushes prices higher again. Most
investors have a 5-10 year investment
horizon as a minimum and generally,
the longer you hold the wine the more
its value will appreciate. Wine matures
and improves with age and because it
is a consumable, it becomes rarer as
more bottles are drunk. In addition
it matures and improves with age.
With most investors looking over
the medium-term, it can be a while
before certain assets resurface onto
the market. However, unlike other
passion assets which are historically
based, such as antiques, new vintages
of wines do become available annually,
which fuels speculation and gives
opportunities for market entry at more
affordable levels. (Always assuming
the right quality asset is chosen with
the potential to appreciate in value
as it matures and becomes rarer and
more popular, and whose provenance
is protected by proper storage).
An even better performer over that last five years has been Burgundy and the
strength of the region is underlined by the recent world record prices achieved
at auctions - in April 2015, Acker Merrall & Condit’s Connoisseurs’ Club sale saw
more than 50 new world records set, of which nearly 40 were from Burgundy.
32
In
November 2013, DRC, la Romaneé-Conti 1978 (12 bottle case) sold in Hong Kong for a
new world record price of $476,280 in late 2013 // $39,690 per bottle.
34
SUPERTUSCANS
VS
BORDEAUX FIRST GROWTHS
(2004-2014)
Super Tuscan Index
Liv-ex 50
Sep 2004
Feb 2005
Jul 2005
Dec 2005
May 2006
Oct 2006
Mar 2007
Aug 2007
Jan 2008
Jun 2008
Nov 2008
April 2009
Sep 2009
Feb 2010
Jul 2010
Dec 2010
May 2011
Oct 2011
Mar 2012
Aug 2012
Jan 2013
Jun 2013
Nov 103
April 2014
Sep 2014
400
350
300
250
200
150
100
50
0
Source: Decanter.com
31
This demonstrates the need for diversification within the wine portfolio itself to protect returns
and the expertise required to identify those vintages with the characteristics to achieve this.
6 months
12 months
2 years
5 years
Sep 2010 Mar 2011 Sep 2011 Mar 2012 Sep 2012 Mar 2013 Sep 2013 Mar 2014 Sep 2014 Mar 2015
150
140
130
120
110
100
90
Source: Liv-ex
WINE INDICES COMPARISON
(2010-2015)
Liv-ex Bordeaux 500
Burgundy 150
Italy 100
BURGUNDY 150
-1% -2% 2% 43%
LIVE-EX BORDEAUX
0% -3% -9% 6%
ITALY 100
1% 0% 4% 21%
