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Fine wine market back in balance?

With Bordeaux no longer the over-riding force in fine wine, does the market stand a better chance of ending the year on a high?

Claret from both banks is still the dominant force in the fine wine world but its drop from a 95.7% share of trade by value to 74.2% between 2010 and today mean its ups and downs will exercise less of an influence over market dynamics in the foreseeable future.

In fact, Bordeaux trade is back to 2004 levels according to Liv-ex, while the drive to other regions by buyers seeking less expensive wines after Bordeaux was driven to unsustainable heights by the Asian bull market, has boosted areas such as Italy and Champagne which now hold market shares of 6.9% and 6.1%.

Liv-ex noted: “When viewed purely in terms of market share, one could say that bubble is now well and truly behind us. Buyers have broadened their interests – and the market looks more balanced.”

As the end of the year approaches, therefore, what might we reasonable expect? From 2011 to 2014 the fine wine market closed the year in negative territory – a record run of poor performances.

There were promising signs in the summer of last year when the Liv-ex 100 index finally returned some positive numbers after 15 straight months of decline – in itself another record.

So far in 2015 however, the record has been patchy and hard to follow. From 2011-2013 there was at least a pattern of the market rising as en primeur approached (a sign of Bordeaux’s continued sway) and then falling away in the wake of what were less than inspiring campaigns before the cycle came round again.

This year started very strongly, fell away a little and has then been up and down month-to-month, “revealing a confused market struggling to find its feet,” says Liv-ex.

In contrast to 2014, July has been the worst performing month so far this year, August ran roughly flat, and the market has drifted a little in September and October.

Nonetheless, the Fine Wine 100 is up 0.75% so far this year and this month (November) and next will be crucial in determining whether 2015 ends on a high or if the market slumps to a fifth year in the doldrums.

With the Bordeaux hype train already getting into gear to expound on what may very well be an excellent vintage, maybe, just maybe things might be looking up. But if by next summer the headlines are talking of another unsold campaign, what then?

For more on the fine wine market, see the November issue of the drinks business.

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