Will 2013 be the turning point for fine wine prices?

New Year Fireworks on the London Eye

London saw in 2013 with a firework display on the London Eye. Photo by Marcia Taylor.

A Recap of 2012

2012 was for both wine and the greater investment markets globally a meagre continuation of 2011. The unceasing Eurozone soverign-debt crises weighed heavily on everything from consumer-confidence and spending, manufacturing PMIs, to equities and commodities, bonds and investor appetite for risk. However, whilst 2011 was in the words of one commentator “a great stagnation”, 2012 saw some emergence of hope, with a new same-same leadership in place in China, the Eurozone still whole and functioning-ish, the US economy growing slightly, and the world not ending on the 21st of December as many had hoped for thought.

More specifically for wine and fine wine prices, 2012 was a year of ups and downs, with decidedly more downs figuratively speaking - The Bordeaux Index is down 7.3% for the YTD, whilst the Liv-ex 100 Index finished over 11% down for the year. For those who weren’t following the market in 2012 we provide the following recap:

  • The optimism of the start of a new year led to a surge in trading and speculation coupled with a renewed interest in Bordeaux, which had languished unfashionable for much of the latter half of 2011.
  • This boost in market activity was neatly buoyed by Robert Parker’s re-scoring of the 2009 Bordeaux vintage in February as every man and his dog clamoured for any of the 18! newly scored 100-point wines.
  • Unfortunately, either a fear of an over-heating in prices and/or, the realisation that the likes of Smith Haut Lafitte whatever the score is still Smith Haut Lafitte, led to a plateauing in trading in the Spring with anticipation for a successful Bordeaux En Primeur campaign, which was a resounding damp squib.
  • This combined with the ensuing general Summer malaise meant that the markets slumped in the second half of 2012, as they’d done in 2011, and so
  •  It wasn’t until mid September and early October that we saw a return in interest and an edging up in prices. The St Emilion reclassification also buoying trade.
  • The Festive Season provided it’s usual mix of demands and prices rose piecemeal.
  • That is not to say that 2012 was all doom and gloom; Burgundy, Rhone and the Super Tuscans all lifted off the back of Bordeaux’s perceived demise, particularly out east, where demand at auction saw rare Burgundies going for previous unheard of prices and buyers looking beyond the First Growths.

So with the state of the market tentatively hovering around stagnation and prices bottoming at a two year low, are we likely to see a repeat pattern of the events of 2012 or will prices edge up? Looking ahead there are several key factors and events that will affect wine prices, the first of which we cover below:

En Primeur Campaigns – Burgundy 2011 and Bordeaux 2012

The Burgundy 2011 campaign is already under-way as grower offers are starting to drip through and over 25 tastings are being held in the next fortnight. The quick comparisons that have been discussed so far is of a vintage qualitatively somewhere between the density of flavour of 2003 with the freshness of 2007, good although not stellar years, but again with the crop size similar to 2010 (with over-all production down).  As with all campaigns the release prices will cause some retrospective purchasing as speculative buyers look for bargains amongst older vintages, but this is not (thankfully) the vintage of the century. We look forward to providing you with our thoughts in the following weeks.

Bordeaux 2012 will be on everyone’s mind come the start of Spring, as the great and good of the world fine-wine trade and media descend upon Bordeaux to pronounce on the latest offering. Despite prices coming off around 40% from the previous vintage, many felt that 2011 was still too dear and rarely worth the asking price or even inclusion in the cellar. Whilst it is still too early to discern the quality of the vintage, the most important description we’ve heard so far is of a “winemaker’s vintage”. The long and short of this being that those wealthier and more renowned properties will make the better wines despite the difficult growing season and thus charge more for them, as the costs to keep the quality high ramp up. Whether we’ll see a repeat of last year’s prices and cellar-exclusion or a refreshing sea-change from the Bordelaise, where attractive pricing will lead to a bounce in demand for both current and previous years, still remains to be seen.

Wine Critics – Robert Parker and the Wine Advocate

Aside from his usual February vintage re-score of the 2010 Bordeaux vintage, the other factor that is likely to affect prices is Robert Parker’s interesting financial move of selling The Wine Advocate to a Singaporean consortium of investors. The proposed launch of a Chinese TWA will likely lead to a broadening in wine demand as Chinese consumers will have a greater confidence with previously untried brands thanks to the wealth of information available.

The 2010 re-score is also likely to have the traditional effect of uplifting those with good rescores and punishing those that failed to live up to their potential,  followed by the realigning of prices to their respective peers and scores and then an end to the initial price volatility as the vintage becomes physically available to all and sundry.

Finally, there has been mention that Robert Parker will be reassessing the 2003 Bordeaux vintage in the coming months, and as with any rescore we expect prices to fluctuate as they did last year when he re-tasted several vintages of La Mission Haut Brion. Whilst critical opinion is divided on the 2003 vintage it will be interesting to see if these are wines for the long-haul or whether they are over-baked and over-the-hill.

Food for Thought – Looking Ahead

From our perspective, Vinetrade will be tracking the market with great interest over the coming year, our gut feeling is that should global economic fortunes improve then so too will wine prices. We will be following on from this recap blog-post with several more posts, the first of which will be looking at those wines we think will benefit most in 2013 and the key factors related to them: The Asian Financial Markets, the Bordeaux Surplus, The Latour EP-Exit, and more.