Amid global Covid-19 uncertainty, fine wine offers stability

Amid global Covid-19 uncertainty, fine wine offers stability

article originally featured in Liv-ex Mar 16th 2020

Global equities have taken a severe hit this past week as Covid-19 has continued to spread globally. With every small piece of fresh news adding to the uncertainty, finding calm waters has been challenge. But fine wine has been almost boringly stable.

With a low correlation to equity markets, fine wine moves at a glacial pace and is generally influenced by two long term economic fundamentals – namely supply and demand. Over the past three months, wine prices have drifted, due to factors both internal (wine tariffs) and external (Covid-19), but there has been scant evidence of panic selling. Indeed, long term buyers are emerging to hunt for any bargains that might appear.

Trade volumes have remained steady but Bordeaux (57.3%) has seen its share of trade grow, taking over 50% for the first time since late January. 2016 has recently been the most traded vintage for Bordeaux but this week was led by the great vintages of 2010, 2009, and 2005. Burgundy (12.2%), Champagne (5.3%), Italy (12.3%) and the USA’s (3.5%) shares of trade all drifted from the week prior. Rhone (2.5%) maintained its share while the Others category (6.9%) was led by Germany…

Bordeaux dominates the rest of the table with Carmes Haut Brion 2015 leading the charge. Not only is it the cheapest of the bunch, but Carmes Haut Brion 2015 is also one of the top performers: having released in London at £480 per 12×75, the wine has risen 114% since… The Union des Grand Crus de Bordeaux has announced the suspension of the En Primeur tastings that were due to take place at the end of the month. In a statement the Union said, “The UGCB & its members have decided to suspend the 2019 En Primeurs week. For the time being, we shall all commit to implementing the recommendations set out by the authorities to cope with the situation and take care of our loved ones in a spirit of solidarity.”

Latour 2012 is set to be released onto the market March 18th. The Chateau opted out of the En Primeur system in 2012 following the release of its 2011 vintage. Price details of the new release have not been disclosed but according to Liv-ex’s Fair Value analysis, we have a decent idea of where the wine could place.