Brexit shakes up the Bordeaux market
Fine wine does not take well to shaking — sloshing the sediments around the bottle only muddles the product inside.
Yet similar upheaval has hit the market for top wines over the past five years. Having grown in prominence as an alternative asset class on the back of booming demand from international buyers, the wine market boasts its own global stock exchange, Liv-ex, which provides real-time pricing on anything from Petrus to Latour. However, wine collectors may find its five-year investment performance somewhat unpalatable.
Following decades of heady returns, the global wine bubble arguably burst in 2011 following China’s anti-corruption clampdown. By the beginning of this year, the Liv-ex Fine Wine 50 index had fallen 40 per cent from the peak.
This year, there was hope that the hangover could be lifting. Prices had begun to rise again. But by the spring, the unwelcome surprise of higher-than-expected prices in the key Bordeaux wine region caused many private investors to question whether they could ever profit from the traditional system of selling the world’s top wines. As if that was not enough, Brexit happened — with the resulting crash in sterling immediately leading to higher prices for UK consumers of imported wines.
This has left wine investors in an uncomfortable position. Having examined the data, FT Money assesses how recent events in the world of fine wine have gone down with investors, and whether they will be buying, selling or likely to turn to drink.
Break for the Bordeaux
If you have a taste for investing in wine, you must first understand how France’s premium wine market operates. The annual highlight of the wine merchant’s calendar is the en primeur market in Bordeaux, the closest thing the wine world has to a futures market. Every spring, the best of the region’s winemakers provide merchants with a chance to acquire their product early, before it even enters the bottle....MUCH MORE