February 2014 Wine Investment Report
We’ve done some analysis on the wine market and found some interesting bits of information for you:
Sothebys in Hong Kong had a very successful auction a few weeks ago, most of the Bordeaux wines that they auctioned off were sold above their estimated selling prices. They sold 29 million hong kong dollars (3.7 mil USD) which was over their estimate by 4 million (Hong Kong dollars). The prices of the Bordeaux wines didn’t increase after news of this auction but trading activity has picked up which is a good sign.
The London Vintners exchange launched a new index called the Index 1000. This means they collect all the data for 1000 wines, about 50% of the wines in this index are Bordeaux wines and then 10% each from Burgundy, Champagne, Rhone Valley, Italy and the rest of the world. Despite 50% of this index being Bordeaux the Index did actually finish up at the end of 2013 when they looked at the data.
Whereas the Liv-ex Index 100 which is only the top Bordeaux wines finished down. Well what I’m trying to say is that the Bordeaux market went down last year but the Burgundy, Champagne and Rhone Valley went up so much that even with an index of 50% Bordeaux wines the price of this index still went up. That’s how well the Champagne and Rhone Valley and rest of the market is doing.
The wine market is actually doing very well, its just the Bordeaux market which is not performing as good as the rest.
The biggest problem with China and the fine wine market was when the government clamped down on gift giving. This was really what affected the market. But at the Wine Expo this year in Hong Kong they said China has overtaken France and Italy as the 2nd biggest consumer of red wine. A wine research firm in London said that China drank 1.8 billion bottles of red wine last year which is an increase of 136% over 5 years.
When we said last year that we had changed direction to recommending Champagne and Rhone Valley it was probably the best move we have made. Most of them are already up 6% there’s only one that is down just over 1%. It’s still early for these wines but they’re showing very good results already. We need to keep a good strategy this year, keep looking for the bargains and watching where the next moves will be.
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