The Wine Investment Fund (TWIF) predicts that the fine wine index, the Liv-ex 100, will see the value of fine wine rise in 2013 by 14 per cent.
January provided evidence that the fine wine market is continuing its recovery. The main indices rose by 2.8 per cent (Liv-ex 100) and 2.5 per cent (Liv-ex Investables), the sharpest monthly increases since February 2011.
The volume and level of bids also continued to increase over prior months. This rise follows an increase of 1.3 per cent (Liv-ex 100) and 1.2 per cent (Liv-ex Investables) in December 2012 when the fine wine market started to show signs of a recovery in prices.
Of the finest wines Mouton was much the strongest performer with rises of approximately 10 per cent on average in the top vintages. The other first growths saw average increases of approximately three per cent, while La Mission Haut Brion, Pétrus and – for once – Cheval Blanc all beat the market at nearly four per cent. Apart from for Mouton, it was the lesser vintages which generally performed the best.
Auctions painted a slightly different picture, with hammer prices for the top vintages (especially 1996) being the highest relative to the wider market. Lafite was marginally weaker at auction than the other first growths.
The three largest wine auction houses released their full 2012 results. Total sales were down 17 per cent on 2011. Hong Kong remained the most important venue although Sotheby’s noted a reawakened North American market and significant new demand from Latin America.
Exchange rate movements may have played a part in January’s upward movements as sterling weakened by about three per cent against the yen, renminbi and dollar and by nearly five per cent against the euro. While most of the headlines are still made by the Chinese market, the actual data suggests that developments in Japan may be more significant for wine prices. Meanwhile the long awaited reduction in import tariffs in India may be implemented in the spring.
Both the US and Chinese economies showed signs of slowing in the final quarter of 2012. Chinese growth, however, remained a very healthy 7.9 per cent and analysts predict a stronger performance this year. The US showed a very slight decline in output over the same period in 2011.
Other economic news was dominated by further loosening of monetary and fiscal policies. Japan raised its inflation target from one per cent to two per cent and will engage in quantitative easing until this target is met. It also announced a USD116bn fiscal stimulus. India cut interest rates and reduced the amount of deposits which its banks must hold at the Central Bank, another form of easing.
“Despite the clear improvement in confidence in the fine wine market and the favourable long-term backdrop, we await the end of February valuations with interest. December and January benefited from Christmas/New Year and the lead up to Chinese New Year, as well as the exchange rate effects referred to above. It remains to be seen whether the short-term momentum can be sustained,” says Andrew della Casa, director, The Wine Investment Fund.
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