The Brexit vote may have made some investors jittery but those who invest in fine wines are celebrating with a glass of fizzy Krug. Wine trading platform Liv-ex who manage 1,600 portfolios, saw a twenty-eight percent increase in their index of the top fifty most heavily traded wines which are Haut Brion, Lafite Rothschild, Latour, Margaux and Mouton Rothschild. Anthony Maxwell, director at Liv-ex, said the wine market was experiencing strong interest before the EU referendum but this accelerated after the vote, driven by dollar-based buyers in the US and Asia. Sotheby's London auctions also attracted buyers from mainland Europe, Asia and America, according to their wine specialist Simon Herriot. “The increase in buyers resulted in prices rising with the demand,” says Herriot, “ which has taken away the effects of currency fluctuations.”
The grape leap forward
One of the contributing factors is foreign investment in wine. Liv-ex confirm that Hong Kongese are influential wine buyers with a Sotheby’s report showing they buy thirty-four percent of worldwide wines, with the USA at twenty-two percent, UK ten percent, China nine percent and Taiwan eight percent. The Asian market is particularly interested in elite brands and ‘second wines,’ which have superior quality and are mostly Bordeaux. Sotheby’s said they had a four percent increase in Asian buyers in 2016, who now make up fifty-six percent of their global, $40 million sales. Just in London, forty-one percent of their wine went to buyers from Asia.
Americans raise a glass to Brexit
“The strength and importance of the buying cannot be underestimated,” says Simon Herriot. “A high proportion of wines are moving from Europe and the US to Asian cellars.” Although a review of Google revealed a big business in counterfeit wine in China with names such as ‘Lafeet Rothschild’ appearing on labels. “However,” says Maxwell, “Asia is not the only big buyer in the market. We have seen the US market increase two-and-half times in size because of the dollar strength.”
Top of the crops
Simon Herriot says, Burgundy and Bordeaux wines still dominate the market, especially the First Growths. “The wines from Domaine de la Romanée-Conti are not only the most revered in Burgundy but also in the world,” he said. “This is shown in the value and volume Sotheby’s has sold both here in London and around the globe, with sales beating $12million in 2016.” Herriot goes on to say that the leading Châteaux from Bordeaux will always continue to attract interest from collectors because of their history and prestige. “We also see a growing appetite for the other great Domaines from Burgundy, the top names from the Rhône Valley and from leading Champagne houses. Always worth watching out for are cult wines from California and the top producers from both Italy and Spain.”
Either give me more wine or leave me alone (Rumi)
Although the taste for fine wines hasn’t changed, the way collectors store their wines has undergone some changes. Maxwell says that in Europe, as well as other continents, the traditional, damp, underground cellars of stately homes filled with old Bordeaux are becoming more of a rare sight, with many new emerging collectors now choosing to store their wines in temperature controlled, professional warehouses. Another advantage of storing wine in a bonded warehouse in the UK is that no duty or VAT is payable until the wine is delivered for drinking, according to Guy Seddon, who manages private sales at wine merchants Corney & Barrow.
So for good or for bad, we can drink through Brexit and as Easter is almost upon us it seems timely to offer a slightly amended thought from Pope John XXIII who was the fourth of fourteen children: “Politicians are like wine, some turn to vinegar, but the best improve with age."