May 2014 Wine Investment Report
Here is a quick wine market report as I wanted to share with you what’s been going on lately in the fine wine world.
Before I start, I have some good news, if you have been reading our updates then you will be aware that Champagne has been doing very well lately. Our February recommendation was Ace of Spades, Armand de Brignac Champagne; our current bid price is 9% higher than what we recommended it at.
Now the market news: It was reported in Q1 by the wine and spirits exporters federation that last year France shipped 200 million cases of wine overseas worth 15 billion Dollars and the exporters federation said that due to the small harvest in 2013, they’re worried about the low volume that will be supplied in 2014 which could make the vintage more expensive. With a smaller production, it may have a knock on effect for Bordeaux wine prices, it could be a potential boost that we have been waiting for.
Last year there was a fall out between China and the EU on wine imports to China. The good news is the row ended last month. It started because of the tax the E.U imposed on solar panels coming out of China. In retaliation, China imposed taxes on wines coming from the E.U. It has been decided that the E.U agree to provide China with wine experts and in turn China will provide more European wine tastings and educational events to train up wine experts in China. This news has a very good chance of boosting the wine market. If you were following at the time, it did impact the market last year and contributed to the slow down in the Bordeaux market. Gift giving to government officials was already being clamped down on and this added salt to the wound, creating a bad impression to give officials wine from the E.U. With that all blown over now the Bordeaux market in China could start to pick up again.
A Wine research group said that because of China’s growth potential over the next few years, they predict the wine industry will return to the growth levels we saw between 2000 and 2005, after reflection on the Bordeaux market dropping over the last 2 years. Could now be the right time to buy Bordeaux again while the prices are still very low? It was also noted that 85% of the wine consumed in China is still locally made so there is still a lot of growth potential in China for the wine market.
Looking at the current market trends, Champagnes and Rhone Valley wines are wines which are showing decent growth and that’s where the best wine investment opportunity’s look to be right now.
Moet Hennessy have reported on champagne sales being up against last years first 3 month figures. They produce Krug and Dom Perignon Champagne. Both of which we have our eyes on as potential recommendations.
Prices are very low right now and there’s potential to make a decent return over the next few years with the right wine investment.
We are trying very hard to secure good Champagne deals at the moment but it is not easy to find decent allocation of stock to recommend and prices are rather varied across the market for the same wine. Champagne houses are not offering good allocations to the market and of course the key is to buy at the right price.