Analysing the trends from 2017’s Liv-ex Power 100

Indeed, while Asian buyers are buying mature Bordeaux from the top estates through London merchants at a discount, thanks to foreign exchange rates, UK buyers are stocking up once more on the en primeur releases. BI Wines and Spirits founder Gary Boom says: “We have seen a continued increase in volume sales of physical vintages, especially of Bordeaux, particularly to Asia through our Hong Kong and Singapore offices. This has undoubtedly been driven by the continued weakness of sterling relative to the dollar and euro and the ever-growing global demand for the world’s best wines. Around 70% of our physical Bordeaux sales, primarily those sold on through the LiveTrade platform, went to Asia in 2017.”

But he also says that BI “had a very strong 2016 Bordeaux en primeur, with sales almost double that of 2015 (which itself felt like a successful campaign at the time)” – and that was despite “some ambitious pricing”. He adds: “The overall number of wines we had real success with was perhaps the smallest of any top-vintage campaign – but the volumes of each wine that worked were very high. In contrast to the physical wine sales, the 2016 Bordeaux were bought overwhelmingly by UK and Europe-based clients.”

Nevertheless, Gibbs points out that the 2016 vintage in Bordeaux was bigger in volume that 2015, and yet “roughly the same number of cases ended up in the UK”, leading him to believe that the châteaux are holding back more stock. “I think that as much as half the production in 2016 wasn’t released… there is a big build-up of stock in Bordeaux,” he says. Echoing Boom’s point about the limited range of brands that performed well en primeur this year, Gibbs also says that the number of properties that had a successful vintage release last year were relatively few. “There were between 30 and 40 wines that sold; the rest were irrelevant,” he says.


On a more positive note, it is felt that Bordeaux could come back stronger next year with the en primeur release of the 2017 vintage, depending, of course, on how it’s priced. This is because it will closely follow the release of the 2016 Burgundies, the volumes of which were dramatically reduced because of late-spring frosts. In essence, fine wine collectors who either can’t find, or can’t afford to secure 2016 Burgundy may be forced into the arms of the 2017 releases from Bordeaux. Chadwick Delaney, managing director of Justerini & Brooks, says: “The 2016 vintage that is coming up in January is decimated – the worst in a generation – and that’s definitely going to exacerbate pricing. As a result, he adds: “It’s with the Bordelais to get it right; if they can restrain themselves in pricing, they will get people back.” Helping Bordeaux further will be the fact that the celebrated 2015 vintage will be released in bottle. “With the 2015s due to become physical in 2018, we expect to see an uplift in trade on this excellent vintage,” predicts Boom. “The Asian market did not get hugely involved with the 2015 vintage en primeur but the demand will certainly be there once the wines are available to be shipped to collectors. This may well drive prices, which, in turn, may spark interest in other back vintages that are well-priced in the market.”


So what about the other major power-brand-producing regions? With the combined success of Piedmont and Tuscany, Italy has increased its share of the secondary market by value from 5.6%last year to 6.3% this year. Helping the performance in particular has been Sassicaia – the biggest brand in terms of volume traded – and Masseto, one of the best brands in 2017 in terms of price performance. “Sassicaia is the big ticket outside of Bordeaux – with around 15,000 cases, it produces more wine than Lafite,” says Gibbs. As for Masseto, the production is much smaller at around 2,500 cases, but it has enjoyed a price rise on the secondary market over the past 12 months of almost 24%, taking its average trade price per case to more than £5,000. “It is not diluted by any second wines, and it releases small volumes at a slightly higher price each year: it has top scores, the supply is limited, and is seems to be successfully distributed through ‘La Place’,” says Gibbs. As for the Piedmont, the top 100 contains just two brands: Conterno and Gaia. Gibbs suspects that the region has failed to produce more power brands because it has yet to be discovered by the Asian buyer. “The Piedmont is highly prized among the trade and it has a great market in the UK and the US, but it is definitely not a story yet for Asia, and that’s what may be holding it back.”

Liv-ex Power 100: Methodology

To calculate the scores, Liv-ex took a list of all wines that traded on Liv-ex in the last year (from 1 September 2016 to 31 August 2017) and grouped these by brand. It then identified brands that had traded at least three wines or vintages, and had a total trade value of at least £10,000.
Brands were ranked using four criteria: year-on-year price performance (based on the market price for a case of wine on 1 September 2016 with its
market price on 31 August 2017); trading performance on Liv-ex (by value and volume); number of wines and vintages traded; and average price of the wines in a brand.
More than 4,000 different
wines/vintages were traded. These were grouped into 769 brands, of which 218 qualified for the final calculation. The individual rankings were combined with a weighting of 1 for each criteria, except trading performance, which had a weighting of 1.5 (as it combined two criteria). The final 100 brands accounted for 2,046 unique wines that traded, and from the 199 brands that qualified, there were 2,804 wines.

Champagne, now 6.2% of the secondary market by value, up from 5.3% last year, is almost as big at Italy. Benefitting from strong brands and great vintages, released ready to drink, it is becoming an increasingly important part of any fine wine portfolio. “The old Champagne story still holds true: it gives an almost guaranteed 10% return per annum regardless of market conditions,” says Gibbs. Stand-out performer in 2017 was Krug, which has jumped to 15th place in the survey, making it the highest ever for a Champagne. “It’s a 2002 story,” says Gibbs, alluding to the hotly anticipated release of this famously first-rate harvest from this highly-collectible brand. “The 2002 Krug was released last January, just shy of £2,000 a case, and it is trading today at £3,250.”

Elsewhere, he notes that Phillipponnat –for its Clos des Goisses cuvée – “is a brand on the move, but not quite in the power 100”. In general, Champagne is increasing market share and becoming more liquid, but this trend is not showing up in the survey because Burgundy is so dominant. This is in contrast to the Rhône, which has seen its proportion of the secondary market shrink from 2% in 2016 down to 1.8% this year. “The Rhône Index has been the worst performing Liv-ex index this year,” says Gibbs. While the region benefits from a strong following in the US, and an extraordinary number of 100-point scores, as a region it doesn’t appear to have caught the imagination of collectors in the UK or Asia. Tom Stopford-Sackville at Goedhuis says:
“Some of the cheaper/middle-priced Rhônes appear to be harder to sell than in the past. As we are great fans of these wines, we struggle to understand why so many are making regular appearances on our bin-end and clearance sales. It seems the clients have their heads turned elsewhere at the moment.”
However, Guigal is a riser this year, benefitting from a broad range of wines and exceptional ratings. Generally, though, Gibbs says:
“The Rhône has had an endless run of good vintages, and there’s lots of supply, and maybe there’s a feeling that it’s too much of a good thing.”

As for a final subject of regional analysis, California has certainly had an impressive 2017. Notably, Dominus shot up the survey, moving up 56 places, taking it ahead of Opus One, which was last year’s big riser from the US. “The market has realised that Dominus, according to Robert Parker, is the better wine, but trades at a lower price,” says Gibbs. He also notes: “Screaming Eagle has done very well, moving from 69 to 23… it has become a global brand.”

More generally, he says that there have been “12 new Californian wines” traded on the fine wine exchange in 2017 and two new brands that qualified for the survey, Caymus and Verité, while Harlan just missed out on a place in the top 100, ranked this year at 106. “We are definitely seeing more action from California,” says Gibbs.
“The wines are going into the UK and Asia; California is much more global.” This, he suggests, could be down to the excitement surround the 2013 vintage from the region, released late last year. “In the 2013 Robert Parker report on California there were 56 wines that were awarded 100 points – is that the most successful vintage of anywhere in the world ever? I think it is.”

So, while Burgundy is the big theme for 2017, California is another region that seems to be “bounding along with an element of insatiable demand”, according to Gibbs. More generally, the success of en primeur campaigns for 2015 Burgundy and 2016 Bordeaux – the latter boosted by the foreign exchange rates – has bolstered the fine wine business in the past 12 months. “Brexit and en primeur have brought the collector back into play,” says Gibbs, “but they have also taken quite a bit of money out of the market. Buyers in Asia and Bordeaux have filled their boots, and now trade is really quiet among the merchants.”

In other words, this year has been a good year for the fine wine trade, but, with the Liv-ex indices already “flattening”, the next 12 months are predicted to be quieter. Not only that, but there’s a feeling that top-end Burgundy may be becoming too expensive, and Bordeaux may be holding too much stock, whether that’s in the châteaux or with the négociants. Furthermore, 2017 Bordeaux en primeur follows two good vintages, meaning that unless prices fall, “the market won’t give a damn”, believes Gibbs. However, having considered the developments in the fine wine market by region, Corney & Barrow’s Hargrove says that the demand now follows particular winemakers, rather than certain appellations, or styles, which explains the broadening of the market witnessed over the past 24 months. “What is for sure is that the market is becoming more and more focused on producers rather than region or wine type. The great (and upcoming) producers, whether n Bordeaux, Burgundy, Italy, Spain, and well beyond, are in demand, and the number of great producers has never been higher.”

This does, of course, make generalisations harder to draw, and predictions tougher to call. But, at the same time, it makes the fine wine market more eclectic and exciting than ever before.

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