Liv-ex Power 100 List – 2019

KICKING AND SCREAMING The US has had a topsy-turvy year. Dominus and Opus One both saw previously strong positions eroded. Screaming Eagle, meanwhile, has “hit a wall” – its price has topped out and it slid out of the top 100. But Harlan Estate has zoomed up and in, helped by a good price performance (11.2%) and average price (£3,716) but volumes are next to negligible. Other labels, such as Colgin and Scarecrow, although not in the top 100, have also fallen back a long way too. It would seem, therefore, despite some recent positive chatter about Californian labels, the real beneficiary of an expanding market is still Italy.

With Screaming Eagle it’s an issue of price and rarity, and the others are also likely suffering from collectors sitting on stocks, especially of expressions of Dominus and Opus One, strangling their liquidity. Out of the top 100, meanwhile, but a new entrant that qualified was Joseph Phelps, which this year took an increasingly popular route to market, through La Place de Bordeaux.

NEW AVENUES When talking of an expanding fine wine market there are still parts of the world that are not benefiting from the switch away from Bordeaux. South America in one such area, and Spain has always struggled in the secondary scene. Not much has changed in this regard. Spanish wines work very well when they are offered by merchants.

Excellent quality, value and volume make them very popular sells, but their secondary market – save for Vega Sicilia – is, unfortunately, zip. Nonetheless, the South Americans, alongside Italians and Californians, are increasingly turning to the Bordeaux négociants to help their international distribution. They also help négoce weighed down by all that unsold en primeur stock. A bunch of 15 Super Tuscans, top Napa and icon South Americans now account for 10% of CVBG’s business, according to commercial and marketing director, Valentin Jestin. Almaviva, Seña, Cheval des Andes and Catena Zapata are three recent converts, and how it will affect their global standing will be interesting to track.

Some of them, however, may be coming to the market at too high a price for the demand they’re getting. ‘They need to be low and build or people will lose money and won’t buy them,” warns Gibbs.

AN UNSETTLED WORLD And what of a brief sketch of the future? The three key markets for fine wine: the UK, US and Hong Kong/China, are all facing unsettled economic and political futures, fuelled by unrest in Hong Kong against Chinese authoritarianism, the UK’s ‘will-they won’t they’ split with the European Union, and America’s recently imposed 25% tariffs.

Although at the time of going to press the full figures are yet to be published, it seems likely that Liv-ex’s measures of the secondary market, the Liv-ex Fine Wine 100 and 1000 indices, will finish the year in the red. The Liv-ex 100 in particular has, save for a brief and limp rally over the summer, stuttered all year, and in October was down by 1.2% on the year to date.

The US tariffs present a problem for all wines, save Champagne and Italy, which were, for some reason, left out of the increased import duty, and from which situation they may very well profit considerably. Not that Burgundy and Bordeaux trading will die away completely in the US, given that there is a lot of stock in the country already, but it does put a strain on future imports. There are stories of cancelled orders on unshipped stocks and négociants having to take price cuts to ship others after the tariffs were imposed. Then again, as Goedhuis’ business development director, Georgian Crawley, says: “The talk in the market is that the US will review these going into 2020, and there is every chance of them going as quickly as they came.” Maybe they won’t be a factor, therefore, but can anyone count on that? The biggest headache of this triple-headed beast, however, will be felt most by the Burgundians (who had an excellent but not huge 2019 vintage) to an extent next spring but most particularly by the Bordelais.

MISHANDLED MARKETING It has been touched on before, but the en primeur process is creaking. There has been an unprecedented run of good and great vintages since 2014. But many estates have badly mishandled their marketing and pricing, and with the advent of another excellent vintage in 2019 to be rolled out next summer, many face the prospect of being snookered in how they can go about presenting these wines in a market that, frankly, doesn’t want or need to pay for yet another ‘great’ vintage, when one has already been proclaimed in 2018, 2016 and 2015 to varying degrees of accuracy.

Certainly, Neal Martin’s recent appraisal of the 2018s stopped well short of calling it a universally ‘great’ vintage. The Asian market doesn’t buy futures, the US is going to be very cautious due to the tariffs, and goodness knows what the tax and currency situation will be for the UK at that time. So what do the Bordelais do? Raise prices again? “More expensive? In this environment? No way!” says François Thienpont, who has a foot in both camps, as owner of châteaux and a négociant business. ‘The châteaux need to find a price that reflects the demand of the market,” he continues. “Then the machine can start again. If we play as usual, that’s it; the game is dead.” It’s a comfortingly sensible sentiment, and perhaps next year’s en primeur campaign will prove a pleasant surprise – but past form suggests not all will listen and act so attentively.

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