The growth of the wine investment market has been significant over the last decade and each year provides exciting opportunities for investors keen to secure their money in the commodity. But what does 2013 have in store?
It is fair to say 2012 was a mixed year for wine investors. The Liv-ex Fine Wine 100 finished 9.6 per cent down on the year and struggled in particular up until July, when notably Vin-x called the market and issued the statement in the trade press that they felt that the market had bottomed. The 2011 crop was not a good harvest and en primeur pricings suffered as a result, the early commentary on the 2012 harvest is it is expected to be small and one we are approaching with caution. A further dynamic was the slowdown in Asian investment as the Chinese economy stumbled somewhat.
It was of course not all bad for investors; the 2009 vintage achieved record scores from Robert Parker at the end of February 2012, marking it as the most out-standing vintage of modern times. Positive steps were taken to tackle the problem of fraud within the industry with the announcement of the launch of the Wine Investment Association (WIA), a new self-regulatory body, in November. Certainly in 2013 investors can look for firms with the WIA stamp and feel safe that they can invest with confidence.
Despite the negatives, the final quarter of 2012 saw a solid period of stabilisation and in a perverse way, the coming together of the negative factors on the market has provided extremely fertile ground for wine investment for the year ahead. Equally the history books provide evidence that following a market correction wine investment then enjoys a strong period of growth, precisely what happened in 2008.
Most importantly the correction in the market has brought prices down to a level at which some of these offer serious value, particularly the blue-chip First Growth wines such as Margaux , Haut-Brion and even Lafite. A number of First Growth back-vintages are significantly underpriced against trading highs of eighteen months ago, as a result there are some excellent opportunities for investment with the market poised for an upward ride. Certain vintages will always excite investor interest, 2005 for example is recognised as a year with a safe and strong reputation with some market commentators suggesting that Robert Parker underscored the vintage that year, meaning there are some gems to be discovered.
Parker will taste and score the 2010 vintage in early spring before it goes to bottle and given the significant effect of the scoring last year on 2009 wines, where £100million in value was added overnight to the vintage. There will be great anticipation for the 2010's which at initial scorings were reckoned to be on a par with the '09s in potential. Vin-X clients have invested in 2010 en primeur and are now positioned for any movement, in particular Pontet Canet and Pichon Baron are expected to be shrewd purchases. For those who have not yet taken a position there could be value in acquiring 2010s en primeur now before the scores are released.
Liv-ex, the marketplace for professional buyers and sellers of fine wine, is providing statistics to back this optimism up. Having studied the top 30 wines, Liv-ex has shown it has provided an average return of 14.9 per cent compound year-on-year over the last 20 years. Yet based on their current data charts and the market correction, it is suggesting that we could be looking at as much as 17.6 per cent returns for the next five years. Liv-ex reports on the 15th January that current activity is looking very positive with the value of bids on the market reaching an all time high totalling £7.9 million that week, the previous high was £7.5million in February 2011 and the total number of bids hitting a three-year high. This performance, on top of the 3.4% increase in the Liv-ex Fine Wine 50 over the last two months, are clear green shoots at the start of 2013.
We are strongly optimistic of a good year at Vin-X in 2013; with the stabilisation of the fine wine market and early indicators of a return to consumer confidence including the fact that the Asian market is still buying and will continue to grow, we believe it really is a great time to buy and are hopeful of double digit returns in 2013.