Bordeaux drags market down in 2013

12th December, 2013 by Rupert Millar

The poor performance of Left Bank Bordeaux frustrated the predictions of merchants this year and although other fine wine regions have performed strongly the Liv-ex Fine Wine 100 is looking at an unparalleled third consecutive slump.

The five Bordeaux first growthsLiv-ex’s merchant members were overly bullish in their predictions for this year’s fine wine market performance, which suffered the twin indignities of an awful en primeur campaign and the withdrawal of China.

Every January Liv-ex: the fine wine market asks its global members to give their thoughts on where the market will go in the coming year, before taking another reading in the summer.

The Liv-ex Fine Wine 100 index (which measures the performance of the 100 leading fine wines on the market) closed at 260.78 in December 2012 (see chart below).

With average rises of 11%, merchants predicted a rise to 290.12 and despite the catastrophic 2012 futures campaign they were still hoping for a 9% rise to around 284.42 in late summer.

However, the index closed at 258.46 this November and a 10% Christmas miracle rise will be needed if the market is going to deliver on merchant hopes.

liv-ex 2013 predictions

source: Liv-ex

Liv-ex director, Justin Gibbs, told the drinks business that after two years on the slide it was no surprise to see the merchants hope for a bounce – though they were hoping for an 11% rise on the back of a market that had slumped 25%.

“Looking for a bounce was not completely nuts,” he said. “Merchants are stockholders and you need to make money on your stock. It’s a rare merchant that calls the market down.”

The year actually began quite well, he continued, climbing 7% in the first quarter, “then it got nailed by the en primeur campaign.

“It was the same as last year, the market climbed and got nailed by the 2011 campaign.”

Although the campaign “killed a lot of optimism”, there were still hopes that the Chinese market might provide some relief in time for the Autumn Festival – this, however, did not materialise; fine wine sales suffering enormously.

The chance that Hong Kong and China might buoy the market by buying in preparation for the Chinese New Year is also slipping away and Gibbs suggested that they may have enough stock to supply their needs for now.

In short, the fine wine market is looking at an unprecedented third consecutive slump.

Gibbs said that since the index was started in 2000, there have been slumps in 2004 (actually flat rather than a fall), 2008, 2011, 2012 and now 2013.

The Liv-ex Investables by contrast, going back to 1990 has seen slumps in 1998 (the Asian crisis), 2008, 2011 and 2012 and actually is half a percentage point up this year so it’s “just holding”.

Both indices are dominated by Bordeaux and this is the problem. Bordeaux’s share of trade by value on Liv-ex has fallen from 95% to 80% in around two years.

Those who might point out that the market is widening, this is true and the Champagne, Rhône, Burgundian, Italian and even Right Bank indices are all up this year – it hasn’t all been ashes and sackcloth.

But the share of the market taken by these wines is still small and it is not taking up the slack left by the doyenne of fine wine, Left Bank Bordeaux.

It is estimated that the first growths alone accounted for around £210 million in 2012, in 2010 they would have constituted a three quarters of a billion pound offering. That is a huge disparity to be made up just on the back of five wines.

“It’s why when we talk about the market we talk about Bordeaux,” said Gibbs.

Looking ahead to 2014 he thought the merchants might not be quite so enthusiastic.

“Three down years in a row is quite extraordinary. My guess is when we run the survey this January, it’ll be interesting to see what answers we get.”

Nonetheless, he added: “If I were a betting man, after three down years, I’d be looking for a bounce.”

On the other hand, with an en primeur campaign which may be in trouble before it’s even begun if it even happens at all, expectations may be reined in substantially this time around.

Leave a Reply

Your email address will not be published. Required fields are marked *

Please note that comments are subject to our posting guidelines in accordance with the Defamation Act 2013. Posts containing swear words, discrimination, offensive language and libellous or defamatory comments will not be approved.

Subscribe to our newsletters

Job vacancies

Sales Account Manager

Jascots Wine Merchants
London, UK

Marylebone Sales Manager

Philglas & Swiggot
Marylebone, London, UK

Area Sales Manager

Bon Coeur Fine Wines
North England, UK

Procurement Assistant – Wine

Adnams PLC
Southwold, UK

Account Manager Central London

Speciality Drinks Ltd
London, UK

Brand Ambassador

Speciality Drinks Ltd
London, UK

National Business Development Manager

Speciality Drinks Ltd
London, UK

Marketing Assistant

Hatch Mansfield
Ascot, Berkshire, UK

Marketing Manager

Bancroft Wines
London, UK

Regional Sales Manager – Scotland

Bancroft Wines
London, UK

Sales Manager – London On-Trade

Bancroft Wines
London, UK

Customer Service & Sales Support Executive

Jascots Wine Merchants
London, UK

Market Insight Analyst

Conviviality PLC
London, UK

Technical Manager

Enotria&Coe
Park Royal, London, GB

The Global Sparkling Masters 2017

Deadline : 25th August 2017

The Global Malbec Masters 2017

Deadline : 25th August 2017

Global Chardonnay Masters 2017

Deadline : 1st September 2017

The Global Sauvignon Blanc Masters 2017

Deadline : 1st September 2017

Click to view more

The Global Rosé Masters 2017

With wines from the palest of pink to almost ruby red, bone dry to almost cloyingly sweet, reductively handled to barrel-aged, as well as gently spritzy to fully sparkling.

The Global Organic Masters 2017

The drinks business is thrilled to announce the launch of The Global Organic Masters

The Drinks Business Awards 2017

Now in its 15th year, the db awards have become the most authoritative, internationally respected badge of achievement in the alcoholic drinks industry.

The Asian Cabernet Sauvignon Masters 2017

the drinks business Hong Kong announces its first year of The Asian Cabernet Sauvignon Masters.

Click to view more