Fine wine investors find losses hard to swallow after prices plummet
The boom in wine prices that has seen the value of Bordeaux's prestigious 2005 vintage more than double in two years has come to an end. The value of the Liv-ex 100 Fine Wine Index, the equivalent of the FTSE, is now 20% below its all-time peak reached last summer, with analysts speculating that it could fall further.
Jack Hibberd, market research director at Liv-ex, said the market was now "steady" but had come down 20% since August.
He said: "There are still wines that are holding up in value but prices of the 2005 vintage have fallen, in some cases by 40%. There are some good bargains to be had, but at this stage it is impossible to forecast anything for the first quarter of the year."
Some of the worst hit include Lafite Rothschild 2004, which has dropped by 28% from 2,775 per case to 2,000, and Chateau Montrose 2003, which has seen a 23% fall from 1,625 to 1,250. A case of 2000 Chateau Ausone premier grand cru classe has dropped from 15,575 to 12,200. The October fall in prices was the steepest since the Liv-ex began in 2000.
As the euro continues to strengthen against the pound wine merchants are now calling for a minimum 20% price reduction of Bordeaux to offset currency fluctuations.
Meanwhile, wine sales continue to fall as the global downturn sparks the first drop in sales for decades. The British spend around 4.8bn annually on wine, compared with 3.3bn on beer and 3bn on spirits, and wine sales now account for more than a third of all alcohol purchases, compared with just 24% in 1992. But as household income drops, so do wine sales.
According to research group AC Nielsen, sales of still wine in supermarkets and other off-trade outlets such as off- licences, have fallen 0.2% by volume in the year to October.
Fine wine merchant Justerini & Brooks has also admitted interest in the Bordeaux 2005 has fallen. According to Bernstein Research, total sales volumes of all kinds of alcohol dropped 6.8% in the third quarter from a year earlier, with spirits down 8.2%, wine down 10% and beer and cider each down 4.2%.