Billionaires and Bordeaux pricing show almost perfect correlation

A recent Liv-ex study has shown a startling correlation between the number of billionaires in the world and fine wine prices since early 2002.

While there’s no data to show billionaires’ actual fine wine buying habits, Liv-ex said the number of very rich was a “good measure of global wealth creation, particularly among the richest in society”.

As a Liv-ex graph shows, comparing the number of the world’s billionaires and Liv-ex 100 fine wine index in pounds sterling and US dollars yields a remarkably close correlation.

The data on the number of billionaires globally comes from Forbes.com, which has just released its annual rich list. Interestingly, results showed that 62 of the 97 new entrants to the world’s richest individuals came from Asia.

The US remained the country with the most billionaires but China has moved into second place. Twenty-seven new billionaires from China were added to the list and the country (including Hong Kong) has 89 “super-rich” in total. This means that China has doubled the number of its billionaires along with India, Turkey and South Korea.

Russia had 62 billionaires listed, 28 of them returning from last year. The Forbes report also claimed that the number of billionaires had risen by 27% in the past year and now stands at 1,011 people.

Last year the total was 793, while it peaked in 2008 at 1,125.

Liv-ex has previously stated that fine wine prices are not strongly correlated with the price of other asset classes, such as land and gold.

Last year Liv-ex published a report that showed the average compound annual growth rate (CAGR) for fine wine, between January 1988 and May 2009, was 12.6%.

It compared its own index against those of other assets such as the FTSE 100, London Gold PM Fix and Land Registry Price Index over the same time period.

The CAGR for the FTSE 100 was 4.3% and only the Land Registry Price came close to matching wine, with 6.4%.

Rupert Millar, 25.03.2010