The Euro Weakens and Fine Wine Just Got Cheaper
In January the Euro went from 1.271 to 1.339 against the Sterling with plenty of volatility to get the currency traders popping champagne corks…. In February while Greece teased the Eurozone about paying back their 388 billion dollar debt it went further to 1.36 to the pound and is currently hovering around the 1.4 mark.
Over the last 2 years its been as low as 1.14 to the Pound which makes the Euro 23% weaker in less than 2 years. If you look at the USD to Euro chart the percentages are also similar.
What this means for fine wine is that it just became a whole lot cheaper to buy wine in Euros and even better if you are converting it from Pounds, Dollars or any other major currency that has been holding up.
The Bordeaux market has a rebound of enthusiasm since the end of 2014 and beginning 2015. First growth wines are making an attempt at rebounding back from a three year dip.
Several wine trading exchanges such as Cavex and Livex in London reported their best months in the last 3 years since the start of 2015.
Looking at the prices fro top quality first growth wines direct from the Chateaus in Bordeaux I can see some of the 2012 Bordeaux vintages around 10% cheaper than the UK trade just because of the weaker Euro. And that’s without negotiating on a bulk purchase parcel!
All the indicators show positive signs that the wine market has bottomed out and will improve over the course of the next 1-2 years.
The Euro dollar although it looks weak today, should strengthen over the next 1-2 years. The European Central Bank announced in January of a 1 trillion Euro stimulus package. They will buy 60 billion euros a month in Assets like government bonds and debt securities. This has already began and though we see the Euro down this is expected in the short term while the economy adjusts to the stimulus.
The 2012 Bordeaux wines look very promising and Champagne still looks very strong.
The 2012’s have some good ratings and look like the best opportunities in the market right now. For example Lafite 2012 is 1500 pounds per case cheaper than vintages like 2004 with similar ratings. That makes this vintage around 50% cheaper, It’s a great opportunity to capitalize on this market as it makes a come back.
The market has never looked in a better position for over three years and its an opportunity if you are able to move into the market now before prices rise up again. If the market has rebounded by the end of the year we could be looking at gains of around 15-20% in less than 10 months.
In our wine price update in February there were some big jumps on a number of vintages in just one month. For example: Angelus 2009 went up 6%, Haut Brion 2005 went up 8%, Mouton 2000 went up 7% and 2005 went up 9%… All these are increases in just 1 month. Activity in March was less but after the bullish run up to Chinese New Year it was obvious that we would not see an aggressive recurrent month as the market prepares itself for the upcoming En Primeur campaign.
We are confident that buying fine wine in Euros is the right move to build your wine portfolio.