In December 2020 we wrote a blog on the likely prospects for fine wine as an investment in 2021. In it we reflected on how, despite the turmoil in the stock market and the financial side-effects of the COVID pandemic, that the fine wine market was still rising. This seems to be continuing as Liv-Ex reported last month that their 100 rose 0.59% in January alone leaving it surging towards a 10-year high as it put on 6.3% in 2020.
The reasons for this revival in interest – and it is a revival; while the Index is now at 340, back in January 2015 it was languishing at around 230 – are complex. The market for the finest and rarest Burgundies such as DRC, Leroy, Rousseau and De Vougue has continued rising, albeit not at the breakneck speed we have seen in recent years. Bordeaux’s best have seen a surge in interest with the likes of Mouton Rothshchild 2000 up 5.7% while the rest of its First Growth cohort, Latour, Lafite, Haut Brion and Margaux, have all risen in value too.
New Wines On The Investment Block
What was particularly interesting in 2020, and which seems to be continuing in 2021, is that new players have entered the wine investment market. While there are thousands of wines that will cost you thousands a case, not all have proved good investments. Traditionally the wines from the Rhône, for example, weren’t considered to be bankers. For while many fit the criteria – small production, outstanding quality, longevity and Parker scores north of 95 – they lack the x-factor that would make them darlings of the sale room. Take Guigal’s wonderful single vineyard Cote Rotie La Mouline. Production is tiny – typically just 400 cases – and it’s a wine that’s on most wine lovers must-taste list. Look at its price over the past couple of years on wine-searcher, however, and such rarity and quality aren’t reflected in prices as they have remained flat.
This seems to be changing though. Last year saw a tranche of new players take to the field. Opus One, Massetto, Grange, Pingus and vintage and prestige cuvee Champagne such as Dom Perignon have all surged. As the number of buyers grows so investors are looking beyond the usual suspects and are taking positions on wines that were once destined for drinking.
In terms of the wines’ origins, the market is becoming global for the first time. Notable exceptions (thus far) seem to us to be Chile – though Almaviva seems to be on the rise – Argentina and Germany. Interest in Portuguese wines, especially Vintage Port, has risen sharply. The shippers’ marketing efforts have become much slicker and ambitious of late with special limited releases such as Graham’s Ne Oubille (a bottling of the 1882 vintage that will cost you around £6,000). This, and a succession of good years including back-to-back declarations in 2016 and 2017, and things have never been busier. We’ve seen demand for anniversary vintages like 1991 soar as well as for fine old wines like the 1985, 1977, 1970, and 1963.
2020: A Fresh Opportunity?
At the time of writing we are around six weeks away from the start of the Bordeaux 2020 En-Primeur campaign. Once the event of the fine wine calendar, the past decade has seen activity range from frenzied (2010 and 2015) to indifference (2011 and 2017). While this has been in part due to vintage variation and the increasing number of good years Bordeaux is seeing, that’s not the whole story.
Buyers have become nervous of Bordeaux futures. Some who bought heavily in 2009 got their fingers burnt with the arrival of the 2010s and the economic decline that greeted their physical arrival in 2012. The situation has become so extreme that despite the admirable quality of the 2019 Bordeaux the wines had to be released at bargain prices.
Given the increase in popularity for Bordeaux’s wines in the speculative market will we see another 1996-style frenzy come the spring? Well the early reports are of a vintage that has much in common with the excellent (if controversial) 2003. In a year that saw deluges of rain, drought and heat, getting the best from the grapes will take skill but the potential is definitely there and with the leading château firing on all cylinders who’s to say that great wines won’t be forthcoming?
Burgundy seems to have been blessed with a great year in 2020 too, with some already calling it ‘unforgettable’. Tuscany and Piemonte enjoyed good years and while Australia’s year has been blighted by bush fires and smoke taint, the small harvest (its anywhere from 50-80% down) with producers such as Clonakilla stating they will make no wine at all, what’s survived is good.
With more and more regions looking to offer wines as futures, there could be a lot for investors to get their teeth into in 2020 and that could stir further demand.
The End Of COVID Uncertainty – A Double-Edged Sword?
While no one wants to see the pandemic last a second longer than it has to, the ending of uncertainty could hit wine investment. Wine – like art and antiques – is often described as being an ‘alternative market’ and certainty returning to the stock market could take interest away from wine as investors go back to what they know. Over the long-term, a decade or more, wine has delivered impressive returns - ones that have consistently outpaced stocks. That could (should?) point to its continuing ascendancy but if history in these matters has taught us anything, it’s that it teaches us nothing. Markets rise, markets fall, often without rhyme or reason.
Fine Wine Investment: A Fine Idea For 2021?
At the time of writing the fine wine market is in fine fettle and there’s reason to think that 2021 will prove another good year for returns. The key, as always, is the right wine at the right price. Burgundy isn’t looking quite as stellar as it has done while fine (especially mature) claret looks good. The best Italian, Australian and Californian wines (outside the likes of the preposterously Screaming Eagle) could be good moves and it will be interesting to see how wines like Almavia and Luce perform. All in all, it’s going to be another interesting year.
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We hope you found this fine wine blog of use, but if you are looking for a specific wine then please get in touch by calling Mike on 0118 984 4654 or by emailing MWH Wines.