Wine market performance for 2018
As we finish it is an ideal time for investors to reflect on the performance of the fine wine market over the past 12 months and use those findings to hone our strategy for the coming year.
A buoyant Liv-ex 1000
The big picture view for fine wine in 2018 is looking exceptionally positive. According to a recent report by Liv-ex the market has outperformed global equities with the Liv-ex 1000 reporting a 9% gain for the year. This is a welcome piece of news for investors nervous about the poor performance of the FTSE 100, S&P 500, DAX, and Hong Kong’s Hang Seng, and a reminder of how fine wine can weather stock market storms and provide an excellent option for portfolio diversification.
Bordeaux shrinks while Burgundy grows
Following the trends of recent years, 2018 has seen Bordeaux lose market share while Burgundy makes significant gains. Bordeaux accounted for 68% of the fine wine market in 2017, but this is down to 57% for 2018. Things are looking much rosier for Burgundy which has risen from 12.7% in 2017 to 15% of the fine wine market in 2018. Burgundy also claims all of the top 10 performers on the Liv-ex 1000 in terms of value thanks to the relative scarcity and high demand for these limited-production, rare wines from producers like Armand Rousseau and Domaine de la Romanée-Conti.
Italy and New World on the rise
This year has also witnessed the continued rising prominence of Italian and New World wines.
Of particular note is the Sassicaia 2015 which was revealed as Wine Spectator’s Wine of the Year. Following the announcement the wine became the top traded wine on Liv-ex both in terms of value and volume, giving Italian wine a 11.8% share of total trade.
For the New World the big news earlier in the year was the launch of California 50, the new index dedicated to wines from the United States. The California 50 will track the last 10 vintages for five of the state’stop fine wines; Dominus, Opus One, Screaming Eagle, Harlan Estate, and Ridge Monte Bello. According to Liv-ex, when tracked from 2003 these wines have offered impressive returns of 207% combined with very low volatility.
Interestingly, over the period July 2017 to July 2018 the California 50 is up 15.8% which puts it high above other Liv-ex indices. In comparison the second best performing index over that period is the Liv-ex 50 with a modest 5.2% increase. When combined with the US’s growing market share which has rocketed from 0.5% in 2013 to 3.7% in 2018, these dynamic performance figures suggest a very bright future for fine wine from the appropriately-named Golden State.
Looking forward to a prosperous 2019
2018 has undoubtedly been an exciting year for fine wine investors with Burgundy, Italy and the New World continuing to offer plenty of excitement. Although Bordeaux remains the cornerstone of the market, it is becoming increasingly evident that prudent investors should look beyond the traditional options. Going into 2019 market trends strongly suggest top wines from Italy, Burgundy and the New World are set to perform well and should offer a solid alternative to diversify portfolios hit by a yet another tumultuous year for the stock market.