EVEN FINE WINES ARE CAUGHT UP IN THE FURY OF THE GLOBAL FINANCIAL CRISIS. LIV-EX INDEX FALLS WHILE MILLIONAIRE COLLECTORS IN EUROPE AND U.S.A. ARE DISCOURAGED BY OVER THE TOP PRICE INCREASES DICTATED BY ASIAN DEMAND

The effects of the crisis have been felt even in the golden world of “Fine Wines”. The multi millionaire collectors in Europe and the United States, according to a Bloomberg survey, seem very discouraged by the continuing price increases of the best Bordeaux wines driven by the stellar figures of the Asian demand. The Liv-ex index, considered the “stock market” of the wine world, after years of continuous growth (in December 2010, the index, had broken the “epic” barrier of 400 points reaching 402.11, making wine one of the most profitable investments on the same level as gold, oil and stocks), in recent surveys shows a minus sign.
The growing demand for top French labels (the sensational case of Château Lafite), particularly in Asia, has pushed prices to new records both at auctions and futures of these treasured labels. This phenomenon however, has overturned important balances, especially in a time of crisis.

The prices of some of the more expensive bottles are, in fact, beginning to discourage even the wealthiest collectors in Europe and the United States. As early as January some dealers had warned about the possibility of the bubble bursting in 2011 and it is now a reality.

The Chinese buyers especially, have pushed the prices of Bordeaux “en primeur” up 80% for 2010, which are still completely in barrels. But now, the sales of “en primeur” have suffered a setback as a result of their high prices and the tendency of the most important chateaux to issue fewer bottles than last year.

Even the growth of auction sales has slowed down. The reference bottles for this particular market, in the first six months of 2011, according to a Bloomberg estimate, increased 46% over the same period in 2010, but the trade value fell by 88%.

The Liv-ex Fine Wine 50 index, which monitors the daily price movements of the 10 most recent vintages of Bordeaux wines, fell from 445.49 points in July to 434.17 points in early August.

The prices of some châteaux began to fall, while prices of the most important ones are stable. The rise in prices could not have continued indefinitely. In the meantime, the buyers are more and more interested in some of the so-called “minor” chateaux, reducing the “gap”, so to speak.



Focus - The latest index data of the Liv-ex

The indexes of the Liv-ex Fine Wine Exchange (www.liv-ex.com) in July 2011 all indicate a minus sign. The Liv-ex 100 Fine Wine, which follows the daily movement of prices of the most traded bottles in the wine market-the Premier Crus of Bordeaux- including the ten most recent vintages of Bordeaux (excluding futures, currently 1999-2008), without applying any other qualification criteria - see a downward shift of 1.56%, finishing the month at 359.01 points. The index increased 6.76% from the first of the year and 19.30% compared to 2010.

The rise in prices of Premier Cru has suffered some hard blows, pushing the Liv-ex Fine Wine 50 downward with a decrease of 2.44% on the previous month at 434.53 points. The index, which follows the price movement of the ten most recent years of the Premier Cru, increased by 28.10% last year and 8.33% per year up until now.

The Liv-ex Claret Chip index, calculated weekly - which follows the oscillations of Premier Crus of Bordeaux scores, that is the “blue chips” of wines in the world, including all the wines that have scored 95 points in the past 15 years, particularly by Robert Parker - closed July at 441.55 points, down 1.85% compared to June. The index has increased 6.72% since the beginning of the year to date and 22.27% compared to 2010.

The value of the Liv-ex Fine Wine Investables Index, which follows the most “investable” wines on the market (about 200 labels of 24 Châteaux Bordeaux wines) and reflects the performance of a typical investment portfolio, with data starting from 1988, was 365.28 points on July 31st. It decreased 1.23% compared to June and increased 9.42% in 2011 over the 23.74% in 2010.

Finally, the only index to gain ground in July, the Liv-ex Fine Wine 500- which monitors the movement of prices in the market for wines from Bordeaux, Burgundy, Rhone, Champagne, Porto, Italy and the New World - closed at 294.17 points, +0.53%. So far this year, the benchmark has climbed 37 points, or 14.39%. It increased 25.73% compared to 2010.