by Wine Owners
Posted on 2019-12-09
I have just finished reading the latest threats relating to U.S. trade tariffs. In response to France’s application of a 3% digital services tax on heavyweight U.S. tech companies (you know the ones), DT and his representatives are considering recouping $2.4 billion from France’s premium markets; namely handbags, make up, certain cheeses and sparkling wines made from grapes. These tariffs will not be introduced until the new year if at all, so Christmas is saved at least. These products are possibly facing a 100% tax penalty so it’s out with Vuitton, Chanel, Roquefort and Krug and in with Coach, Maybelline, Monterey Jack and Napa Mumm – maybe Brexit isn’t looking quite so bad for us Brits after all!
How these lists are drawn up I do not know; the cheeses include Edam, Gouda and Parmesan which, as we all know, are not known for their Gallic qualities. Unlike still French wines below 14.1% alcohol, Champagne dodged the tariff bullet in October but may now be hit four times harder. These tariffs are messing up our market and we don’t like it! Tit for tat exchanges cannot be the way forward, and we look and hope for more stable trade agreements globally, but we must live with them for now. We have heard of several ‘swerves’ so far; U.S. buyers storing in Europe in the short term, importers identifying the highest alcohol level of any of a producer’s wine and employing that number universally across the producer’s range and even producers being asked to mark 14.1% on the label!
| Index || Current Value || MTD || YTD || 1 Year || 5 Year || 10 Year |
| WO 150 Index || 315.67 || -1.95% || 1.44% || 2.03% || 62.62% || 91.05% |
| WO Champagne 60 Index || 493.15 || 0.77% || 5.40% || 7.02% || 73.96% || 166.01% |
| WO Burgundy 80 Index || 744.26 || -0.61% || 6.08% || 7.35% || 147.25% || 239.18% |
| WO First Growth 75 Index || 274.38 || -3.16% || -2.76% || -2.65% || 48.45% || 64.45% |
| WO Bordeaux 750 Index || 366.5 || -2.23% || 8.20% || 8.98% || 69.82% || 111.68% |
| WO California 85 index || 679.17 || -3.41% || -0.14% || 0.83% || 98.95% || 296.39% |
| WO Piedmont 60 Index || 335.87 || -1.70% || 5.64% || 6.32% || 81.94% || 125.17% |
| WO Tuscany 80 Index || 312.88 || -2.43% || 6.86% || 10.01% || 61.16% || 86.68% |
As predicted last month, the indices are beginning to tell the story of recent headwinds. It is interesting to note that Champagne was bucking the trend - that will not continue now. All the other main indices drifted down; the Italian numbers surprise me as the wines we are currently seeking to accumulate have shown no weakness in price. Italy remains free of any U.S. tariffs although further scrutiny can be expected.
I expect there to be some continued easiness in the market in the short term, but I would not recommend selling now as I think it unlikely the market will retreat by 10% or more. Spreads have widened a little and bids are currently around 10% (or more) below the cheapest market price. There will indubitably be some very interesting buying opportunities in the coming months for those brave (and clever) enough and it is interesting to note rarer stocks already becoming available. Great 1990 Bordeaux is a perfect example; normally very scarce and difficult to buy, there is some volume available and it is a buyer’s market.
If some of the current headwinds, namely Hong Kong politics, U.S. tariffs and uncertainty surrounding GBP stemming from UK elections, and no deal Brexit fears, died down activity would increase, and the wine market would soon shore up. In the world we live in, with low (or negative) interest rates and where investors buy bonds for capital appreciation and equities for income, wine will make a lot of sense again soon. There needs to be a certain amount of unravelling of these issues first, however.
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by Wine Owners
Posted on 2019-09-09
August was much like July with summer holidays being the prime concern for most people. The wider market has felt quiet, maybe because the Bordeaux market is still largely flat, but there are definitely pockets of excitement about and the broad-based Wine Owners Index was up 0.9%. Trade was brisk with Piedmont, Tuscany and Champagne dominating turnover at Wine Owners.
The solid, relative value investment case for the wines of Piedmont has created demand which, in turn, has led to us step up our sourcing efforts. Liquidity is tight, obviously one of the plus points in the investment case, but we have managed to unearth some lovely parcels, particularly some legendary Bartolo Mascarello vintages.
Sterling has remained weak due to the Brexit shenanigans, and this has finally translated into some positive moves for various wine indices. As we know, a weaker pound generally leads to increased demand in the sterling denominated secondary fine wine market, especially from U.S.$ based buyers. Little has come out of Asia, however, as continuing rhetoric surrounding the U.S./China trade wars rumble on and Hong Kong is still suffering from the most vocal political protests in its modern history. They (the people of Honk Kong) have even appealed to Mr. Trump to help!
The largest region within the wine market will always be Bordeaux and it is business in the wines of Bordeaux that is suffering the most from these continuing issues. Many of the other top wine regions are less affected by these global events and market conditions as the wines are less traded, and the supply and demand ratio in a different place. Bordeaux has been looking cheap versus its peers for some time now, and there’s a lot of bad news in the price but the stars need to start aligning. This can and will happen, but when is the big question!
by Wine Owners
Posted on 2019-08-20
A brief and holiday interrupted report for activity in July
The wine market continues to hold its breath. Boris fulfils (what somehow now feels like) his destiny and moves into Number 10 and the pound plummets. It has since recovered a bit but even so, the wine market didn't flinch. As we know, a weaker pound generally leads to increased demand in the sterling denominated secondary fine wine market, especially from U.S.$ based buyers, but maybe not during the hot days of summer? Certainly not when the U.S./China trade wars rumble on, the rhetoric becoming ever stronger, and most definitely not when Hong Kong explodes into the most violent scenes of pro-democracy protest in its modern history. The Brexit backdrop adds to the confusion, so no wonder little happens.
The largest market within wine will always be Bordeaux and it is business in the wines of Bordeaux that is suffering the most from this continued malaise. Many of the other top wine regions are less affected by these global events and market conditions as the wines are more scarce, with the supply and demand ratio is in a different place. Bordeaux has been looking cheap versus its peers for some time now, but the stars need to start aligning. This can and will happen, but when is the big question!
Despite these almost stagnant overtones, trade has never been brisker with July setting a record level of turnover. Numbers of users, bids and offers forever grow. Collectors looking to trim positions have been well accommodated by others adding and reorganising their cellars, something we are seeing a lot more of.
Burgundy continues to look for its feet, Champagne and Super Tuscans gently hum along nicely, and we’ve seen a little demand for some of the new world too.
Here at Wine Owners, Barolo dominated trading in July. Many vintages of Bartolo Mascarello changed hands, also many Bruno Giacosas, Riservas and otherwise. Fratelli Alessandria becomes ever more popular, as does Luciano Sandrone. And there were some big-ticket trades in Monfortino and Ca d’Morissio.
Miles Davis, 20th August 2019
by Wine Owners
Posted on 2019-06-07
The wine market in May was completely dominated by Bordeaux en primeur. Overall the market is steady but lacklustre, ongoing concerns over U.S. and China trade wars and boring old Brexit rumble on and even a weaker GBP hasn’t managed to inspire substantially more marginal demand from USD based buyers. The secondary blue chip Bordeaux market is solid but a little stodgy. The bids are there but nothing much is moving north. As a result it is little surprise that merchants’ 2018 Bordeaux offers, backed by some exuberant critic’s reports and scores, have been flooding the inbox.
For our Bordeaux 2018 ‘in a nutshell’ report on the 2018 vintage, please click here.
Obviously the more exuberant critic reports and scores, of which there are (too?) many, have been the ones used by merchants and their sales teams. Julia Harding MW, of JancisRobinson.com, provided the reviews most in common with our own team’s appraisal and her scores are more subdued than others. She lends perspective to a vintage that we do not regard as highly as 2016 and one that may turn out to be overblown in some quarters. Antonio Galloni of Vinous Media is another commentator in the less exuberant camp and we look forward to his colleague Neal Martin’s commentary when it arrives (Neal did not taste en primeur this year due to ill health – we wish him a full and speedy recovery).
A very important point regarding the ’18 vintage, largely ignored by the salesmen and one I would like to repeat, is that whilst certain wines are very impressive, incredibly concentrated yet well balanced, they are really, really BIG. Nearly all of the alcohol numbers are between 14 and 15%. The poor unsuspecting punters may get quite a shock when they sit down, sometime from now, to enjoy their excellent claret only to discover they have something they weren’t quite expecting in their glass!
It'll be fascinating to see how the wines from 2018 develop as wines, but also from a market perspective. The Chateaux are holding back more and more wine every year and in some cases, releases are up to 50% lower than last year. Will this drive some scarcity seekers to market or will it have the opposite effect of creating a nervy overhang? It is fair to say that so far, Latour has not exactly flourished since retreating from the age old system. En primeur to my mind, apart from a certain few every year, has not made clear financial sense for years and few releases have come close to our ‘proto-prices’ (where the price needs to be to make clear financial sense to buyers), more here on JancisRobinson.com.
Successful releases so far include: Calon Segur, Canon, Carmes Haut Brion, Lafleur, La Mission Haut Brion, Leoville Las Cases, Pichon Lalande, Pontet Canet and Rauzan Segla. The majority of releases have not sold through.
In other areas there is still plenty of demand for high end Burgundy, it’s just that the prices that are being achieved by sellers are well below advertised levels. Piedmont is in good health but in low supply, a good thing for holders! Champagne holds firm, so do Super Tuscans.
by Wine Owners
Posted on 2019-02-07
The broad-based WO 150 Index was flat for the month, as were nearly all the indices. The only real note of interest was the Burgundy Index, dropping by 0.7%. As you can see from the graph below it has been the stellar performer amongst the great wine producing regions of the world. It’s far too early to start calling a general cooling off period but as I have been arguing here it feels right to top slice some of the better performing names and start looking for some laggards.
The numbers in the box below are performance numbers over a five-year period, so all very respectable but nothing comes close to Burgundy. The consistency and lack of volatility must surely be a thing of beauty to the investor and connoisseur alike?
January is a busy month in the wine world when the latest Burgundy vintage is sold ‘en primeur’. 2017 was a decent vintage (See WO Blog) and has sold through pretty well given another year of testing prices.
The ‘Southwold group’ met in January to review the now in bottle Bordeaux 2015 vintage and there are two excellent reports on the three day session to be found on Vinolent.net and FarrVintners.com. In brief summary, ’15 is maybe not quite the excellent vintage that was first pronounced, certainly when judged by ‘English’ palates but still pretty damn good with some show stoppers therein. At the end of the Farr report there is an interesting table of recent vintages in order of perceived quality.
Here at Wine Owners we are betting more heavily on the ’16 vintage (not yet included in the Farr report) which we believe will move very close to the top of the leader board. Messrs Martin and Galloni of Vinous Media have recently reviewed the 16s in bottle and are waxing lyrical. Our very own meteorology and Bordeaux expert called the ’16 vintage some time back - pre the en primeur tastings even! All subsequent tastings and encounters of the vintage have confirmed our views and we are confident enough to shout BUY. What and when is a much more interesting question - so please get in touch to hear our thoughts.
by Wine Owners
Posted on 2019-01-11
In a year, and particularly the last quarter, of great uncertainty the wine market has proved to be a place of great refuge - the WO 150 increased by 10.3%. The wine market performance during the fourth quarter of 2018 was flat, having been gently on the rise until December when indices, including the red-hot WO Burgundy Index, came off a little, in line with a noticeable drop off in turnover throughout the market. In the context of all asset classes, this is another demonstration of the low correlation with more conventional investments the wine market enjoys. Ongoing trade wars between China and the U.S. continued to damage confidence across the board, hitting stock markets, both developed and emerging and depreciating the Yuan – a significant factor as we estimate 40% of fine wine by value lands there. As global markets faltered the wine traders of London, the epicentre of the fine wine trading world, were and still are, gripped in the throes of Mrs. May’s desperate attempts to pass her Brexit bill.
The main story of 2018, like 2017, was Burgundy, the index posting a gain of 33%. A combination of Asian-led demand and real scarcity is a powerful dynamic. The biggest names amongst the producers and the grandest crus still dominate; the usual suspects of DRC and Rousseau are still out in front and may always stay that way but Coche-Dury, Dujac, Leroy, Mugnier, Roumier, and Rouget, are some of the names that are hot on their heels and we suspect there are plenty more sitting in behind. Prices of some wines have skyrocketed and are, some may argue, fast becoming the preserve of the insane (or very brave) as they rush headlong into unknown territory! A lot of serious collectors we know have been taking profit in these sorts of examples and are looking for value elsewhere.
The WO Champagne index rose by 8.8% on a feeling of increased interest from investors. Italy and the Rhone both performed respectably. More for reference, as it is so difficulty to source efficiently in the U.K., but the California index was more than respectable with +17.2%
Wine Owners Indices