Firstly, we would like to wish a happy and prosperous 2017 to our friends, clients and prospective clients. 2016 has been full of promise and positivity at Cru Wine Investment, and within the fine wine market. With 2017 now in full swing, there is trade-wide expectation of a successful year to come for wine investment.
The key points of the wine market in 2016: currency and year-long growth for the fine wine indices.
The weakening of the GBP, and strengthening of international currencies, has been a blessing in disguise for the fine wine market. With the market valued in GBP, this has ultimately meant a surge in international trade for the UK, as price conscientious buyers seek out the best global prices. Resultantly, this has heightened focus on the UK wine market. This uplift in demand has subsequently resulted in market prices increasing throughout the year, after a sustained period of decline and unease.
2016 saw an unprecedented 12 months of continual growth for the key Liv-ex indices, the primary market indicators for the wine market. The aftermath of the market bubble of 2005-2011 resulted in a lengthy period of undervaluation in the wine market. However, the first half of the year saw steady and assured growth, as present and future confidence grew within the trade. The 6 months post-referendum only served to accelerate uplift and, subsequently, interest within the trade and from new and seasoned investors alike. Fine Wine significantly outperformed nearly all other commodity markets by year end. The previously steadfast real estate market, long seen as the primary safe haven for investment, proved highly volatile in the final months of the year. The Liv-ex Fine Wine 100 Index closed the year +24.8% above its 2015 close, with no immediate signs of market weakening.
Market positivity and resurgence seems on course to continue in the wine market for 2017.
With relative value still to be found, there remains some distance to go before prices near the market peak of 2011. Upside optimism remains the firm expectation of things to come, whilst investors remain keen to diversify their underperforming assets into a category showing greater promise. Fine wine has proven to be a viable and potentially lucrative alternative asset class, and continues to do so. Concurrently, it is becoming more regulated, transparent and ultimately an increasingly attractive diversification asset.
The increase in national and international investment and buying is set to continue, with the spotlight firmly on the market performance of 2016. This will likely drive new and increased investment into the UK fine wine market, ultimately strengthening it further.
After a run of mediocre Bordeaux vintages, three good to excellent vintages, 2014-2016, look set to further the spotlight on the key area of fine wine investment. And subsequently raise demand in the wine market. The 2014 en-primeur vintage is currently being released onto the physical market, driving demand and prices for some excellent wines in a very good vintage. Astute purchasing of the superb 2015 vintage will be the primary focus within CWI and trade-wise, whilst prices remain sensible. Further information on the seemingly very good 2016 vintage, currently in barrel, will be relayed after the arduous task of tasting the wines in Bordeaux in late Spring.
For any further information, you can contact the Cru Wine Investment team on: [email protected]