You are currently viewing the International Edition. You can also switch to the Hong Kong Edition.
Thursday 2 July 2015

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 *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

If that's interesting, how about these?

Rise for Haut Bailly in Liv-ex 2015 classification

Liv-ex’s bi-annual “re-classification” of Bordeaux saw Haut Bailly leap more...

Bordeaux 2005: 12 ‘perfect’ wines

Twelve wines have been given “perfect” 100-point ratings in Robert more...

WOSA woos UK indies and on-trade

Wines of South Africa has announced plans for a new UK trade tasting later this more...

Hatch Mansfield – Brand Manager

London, United Kingdom

Competitive salary

Bordeaux wine thieves found guilty

A French court has sentenced 15 men over the audacious theft of $1.1 million of more...

BBR to host pop-up dinners in 'secret' cellar

Berry Bros. & Rudd has unveiled a "secret" cellar underneath its shop in more...

China recognises 'Bordeaux'

China has said it now recognises the term “Bordeaux” as a brand after what more...

E-commerce, Sales & Marketing Executive

London, United Kingdom

Competitive salary and bonus package based on experience and qualification.

Santa Rita launching new Irish campaign

Chilean wine producer Santa Rita Estates is spending €500,000 on a new more...

BI offers 2014 imperial collection en primeur

Fine wine merchant Bordeaux Index is offering its clients a 10 imperial more...

Wine thieves go on trial

A gang of wine thieves accused of stealing a million euros worth of wine from more...

Burgundian négociant celebrates gin smuggler

Burgundian négociant, Vallet Frères, has allowed a special bottling of more...

UK craves Spanish wining and dining

British foodies are passing over Bordeaux and Burgundy in favour of Spanish more...

Hardys invests £4m in summer of cricket

Hardys has unveiled a new £4 million consumer marketing campaign to tie in more...

Marketing and eCommerce Manager

London, United Kingdom

Competitive, includes equity options

Burgundy headlines at Acker’s June HK auction

Featuring smaller-sized lots and classic vintages of Burgundy and Bordeaux, more...

UK market in growth as price increases slow

The latest figures from the Wine and Spirit Trade Association show that more...

Parker retrospective boosts 05 Palmer

Château Palmer’s 2005 is the latest wine from that vintage to see an more...

Head of On-Trade Sales

London, United Kingdom

Oddbins woos Naked staff with love letters

Oddbins has allegedly been sending love letters and bottles of wine to key more...

En primeur: beware the heralded vintage?

From an investment point of view is it best to buy the “vintages of the more...

Lidl hints at plans for online wine shop

UK supermarket Lidl has not ruled out launching an online wine shop, reporting more...

UK Sales Manager

London, United Kingdom

Auction house snaps up online wine specialist

Online auction firm Bid for Wine has been sold to The Fine Art Auction Group in more...

Bordeaux 2005: Biggest movers

Expectation surrounding the 2005s is building and pushing up prices for top more...