Liv-ex Index | July 2013
A monthly report on the wine market
Financial Times, 25 July 2013 http://on.ft.com/19mF6ll

Rarest of wines buck stable market trend

A string of rare Burgundies from winemaker Henri Jayer were the stars of a remarkable auction at Sotheby’s earlier this month, though the index of leading wines shows little sign of movement.

Eleven bottles of Jayer’s 1970 Richebourg sold for more than double their high end estimate, reaching £72,850, and three further wines bearing his name were in the top five lots at the London sale.

Fine vintages from the famed French region can still command impressive prices, and Jayer – who died in 2006 – has become one of Burgundy’s most desirable producers.

“There was very strong Asian activity in this sale, bidding with enormous brio online,” says Serena Sutcliffe, Sotheby’s worldwide head of wine.

David Elswood, head of wine at Christie’s agrees that “buyers are prepared to pay significant premiums for the rarest wines,” with the market for those with excellent provenance “strong across the board”.

Their performance is not representative of the market as a whole, however. The Liv-ex 100, which reflects the movement of the 100 most sought after fine wines, remained almost unchanged falling 0.4 per cent. Though the data does not include the result of July auctions, it does reflect the current market trends. The index is comprised primarily of Bordeaux which have slid considerably from their 2011 peak.

The results mark the end of a disappointing second quarter, which failed to match the modest gains made in the first few months of the year.

As buyers diversify away from Bordeaux, however, Champagne has seen prices rise steadily through much of the year, and many brands have now established themselves as fine wines. The 1996 Krug leapt 10 per cent in June alone, and Cristal 2002 and 2004 also showed impressive growth. The sparkling wine is increasingly viewed as a safer and more affordable investment than more volatile first growth Bordeaux. Cristal 2004 accounted for nearly a fifth of the Champagne trade in June and, at a little over £1,200 per case, it is attracting more investors.

Wine-AugOutside of France, Sutcliffe notes huge interest in Vega Sicilia, an iconic Spanish wine producer located around 100 miles north of Madrid, whose reds have long been considered among the finest in the world. Supplies of its best vintages were readily available in the early 1990s but are now far scarcer and – in response – prices have soared. Aged at length in French and American oak casks, the Spanish estate withholds its wines until it considers them ready to drink. Unico, its flagship wine, is aged for between 10 and 25 years before being released to the market.

Looking ahead, Elswood thinks that investors’ appetite for scarce wines from prestigious vineyards in the heart of France will continue to be the most salient trend over the coming months. “It seems likely that the market’s attention will continue to rest on rare Burgundy,” he says.

Sutcliffe agrees that there is an insatiable thirst for the region’s finest wines, pointing to impressive auction results for another of its leading producers. In the same auction a handful of lots from Domaine de la Romanée-Conti breezed comfortably past their guide prices. “It is all about demand for the best,” she says.