Vinetrade to close

To our customers,

18 months ago we set out to build a marketplace for fine wine owners. Our mission was to introduce technology to an antiquated market, and in doing so, increase the efficiency of wine trading and provide a better deal for those of us who trade wine.

To some extent, we were successful. We built a technical platform, launched our iPhone app, collected unique price data and, most importantly, facilitated trades. Our buyers were able to source wine at great prices, and our sellers were able to get a better deal than selling through a traditional merchant.

In order to get this far, we had to overcome many challenges. Unfortunately, there are many more rocks in the road ahead (payments, logistics, the current depression in the market). As a small team with limited resources, operating in a niche market, we have taken a view that these challenges are not currently surmountable. For these reasons, we have made the difficult decision to close Vinetrade.

Starting today, we will begin shutting down our services and winding down the company. Our website has now closed, and we are not accepting any new trades. All trades in progress will be completed, payments made to sellers and wines transferred to the private accounts of buyers. We are working with Nexus Wine Collections to ensure that all clients who store their wine with us have their own, independent, account.

If you’re reading this and have any questions about our closure, an interest in our technology, or opportunities for the future, please do not hesitate to get in touch.

Finally, we would like to say a big thank you to everyone involved with Vinetrade for your support and for taking a chance on us.

James Maskell (@jmaskell)

The 5 Things You Need to Know About Burgundy 2011.

The Burgundy En Primeur fortnight has come and gone. For those of you who missed the 25+ tastings held around London, we have distilled our thoughts, notes and discussions into the 5 things you need to know about the 2011 Burgundy Vintage.

Burgundy 2011

2011 Reds on show at the Philip Mould Gallery in Mayfair, courtesy of Goedhuis & Co

1) It is not “Vintage of the Century”.

Unlike the previous two vintages, 2011 is not a stellar/legendary/epic/amazing vintage. Simply put, the growing season was backwards and it’s surprising that the wines are as they are. Burgundy shared the same fate as the rest of France in 2011, where the growing season was upside-down; summer in spring and spring in summer. April to the end of June had abnormal temperatures, up to 30 degrees on some days, with flowering taking place over 3 weeks ahead of normal expectations, and with a distinct lack of rain. July till early August was beset with summer storms, with hail hitting parts of Chablis and Rully, although the rain provided the parched vines with must needed water, but meant that spraying was obligatory. Given the topsy-turvy nature of the growing season it’s surprising that the wines turned out the way they did.

2) It was, again, a small harvest.

The downside to the abnormal growing season was undoubtedly the smaller crop that was produced. Despite another record breaking early harvest at the end of August, yields were down, especially at those Domaines where the prudent decision to restrict yields to ensure quality was taken. Over all the volumes are similar to 2010, which will unfortunately mean higher prices despite the vintage being more comparable to a combination of 2007 and 2010 in quality, than say the stellar 2009 or muscular 2010.

3) The wines are better than you think.

Unlike Bordeaux 2011, which struggled with green, sandy tannins, and a lack of ripe fruit character in some parts, Burgundy 2011 is decidedly rewarding. Nearly all of the wines we tried were ripe and well balanced, with few showing any angular tannins, aggressive acidity, high alcohol or lack of backbone. What struck us most was quite how drinkable the wines are now, and how pleasurable they are. We’ve heard the vintage described as both “accessible and delicious” and from our own notes “approachable and very pleasant.”

4) The whites are more consistent but the better reds are more rewarding.

Probably the best comment we heard on the 2011 whites was that they were “relaxed”. Easily comparable to 2007, the general quality is good to excellent, and with alcohol and acidity levels lower than 2010, the whites are honest, reliable and will drink well young. The reds are harder to characterise with one broad definition, and as is always the trouble with Burgundy, there is large variation in quality amongst growers. That said, the general impression is that the reds are often charming, almost always balanced, and will save those who own them from opening their 2009′s and 2010′s too soon. For our part, the red s are ripe, fruit forward, often fresh and with low tannins.

5) Buy this vintage if you like drinking Burgundy.

Certainly something that we noted during the tastings was how rewarding this vintage is. The wines aren’t tough, or angular, and thankfully display their typicity without being overly cerebral. If ever you wanted to taste the difference between say, a good Meursault and a Rully 1er Cru, this is the vintage to do it with.

For our money (and of those we tried) the producers this year we were most impressed with for whites:

  • Domaine Jean-Marc Boillot – Ripe, but beautifully crafted gracious Puligny’s that you can enjoy young but will age.
  • Domaine Roulot – Elegant Meursualt’s, a great example of the terroirs of the village
  • Domaine Etienne Sauzet – Rich and borderline savoury Puligny’s, classic and well balanced.

And for reds:

  • Domaine Fourrier – Ripe, approachable village wines and Gevrey’s 1er Crus. His three new négociant wines are definitely ones to watch.
  • Domaine Meo Camuzet – Fine Cotes de Nuits, that are light but generous.
  • Domaine Sylvain Cathiard – Delicate, fruit driven Nuits and Vosne’s. This is Sebastien Cathiard’s first solo vintage at the helm of the Domaine and the quality is spot on.

 

Are You Long 2013, But Short Fine Wine?

One of the better things about being involved in the fine wine trade as a growing industry (more fine wine being produced and bought than ever before), is speculating what factors currently affect the market and which events are likely to in the future. Amusingly, even before the first half of January is over, we have already seen several disparate views on 2013, which can broadly be drawn down to one simple question – are you bullish or bearish on 2013?

Those who are bullish were buoyed this week by The Wine Investment Fund’s report predicting a positive year, with their central forecast projecting a rise of 14% on the main benchmark index. While those who are bearish are predicting a year of more stagnation and low volumes. A sentiment echoed by Goldman Sach’s Economics Research Team, made easily digestible thanks to the excellent folk at the FTAlphaville.

For those of you yet to make up your minds we offer the following breakdown:

For the Optimists: A Rebound in Asia, the End of the Fiscal Cliff, and a Look Back.

As has been mentioned elsewhere there is an apparent strong correlation between Asian stock-markets and the benchmark index. Irrespective of how strong this correlation is, it cannot be denied that the appetite for risk and the buying power of the world’s second largest economy will have a great affect on wine prices. With a new leadership in place that is adamant in keeping the status quo, whilst rebalancing their economy to avoid a hard-landing (in layman’s terms - to keep their GDP growth above 6%), and looking like it will succeed, we could well see a return to the demand levels of yesteryear as stability sets in.

Whilst it is more speculative on our part, an end to the fiscal-cliff problems that currently beset the U.S. economy would be a boon to the global economy and a boost to market sentiment generally. Admittedly this is a tad vague, but given President Obama’s success in previous negotiations we feel that this is a reason to be optimistic.

Looking back historically, with credit due to Chris Smith et al.  for their aforementioned 2013 report, fine wine is a proven asset class that has performed well in the past and while the usual economist disclaimer of past performance is no definite indicator of future events holds,  it is undeniable that  ”fine wine as an asset class remains very strong”. As Chris Smith continues: “since 1998 only four calendar years have seen negative returns to fine wine of more than 1%. 1998, following the Asian financial crisis and collapse of the hedge fund Long Term Capital Management; 2008, with the credit and banking crisis and the collapse  of Lehman Brothers; 2011 with the eurozone crisis…;and 2012″.

For Pessimists: A Weakening Pound, En Primeur, An End to Chinese Bungs, and No Sign of India.

Starting off with the least pessimistic of the four, the possibility that the Pound will weaken against the Euro over the coming year is fairly likely according to our FX-economist source. There are the few underlying problems that are, or probably will weigh on the pound rising further: including general weakness in UK economy, the fact that the UK’s external balance has deteriorated recently (that is, the current account deficit widening an overall bad sign for global competitiveness), and the remaining fiscal contraction that is bigger for the UK than for the Euro area as a whole. The effect of a GBP/EUR drop to around 1.18 explicitly is that wines purchased from the Euro-zone will be more expensive.

Although we touched on En Primeur in our last post, we didn’t highlight the changes that are happening with this centuries old system; first and foremost the exit of one of the top five First Growths, Château Latour. Given the dismal nature of last years campaign, and if this year is also a washout, will other properties follow suit and sell when and where they want to? Whilst this is less of a pressing question for 2013 specifically, it will be an interesting one to watch, as Latour is not alone in exiting the En Primeur system. Chateau d’Yquem too announced they wouldn’t sell En Primeur. Furthermore, there is talk of the 2012 Bordeaux vintage being both “heterogenous” and of “potential price decreases”. We think it’s still far too early to tell, but if the quality does not match the prices, as last year, then the demand will evaporate and we will see a re-run of 2012.

An end to Chinese bungs may seem like an odd notion for pessimists to pick up on but it’s wise not to discount it entirely. Last September there was an amusing article in the Wall Street Journal in the run up to the 18th PRC Party Congress (the change of leadership in China) about how the lack of certainty was causing a drop in luxury goods’ sales; put simply, “Sales are down because no-one knows who to bribe.” One of the key tenants of the new leadership was that they would crackdown on gaudy displays of wealth and high level corruption that is apparently rife in the country. To that end, they have already begun and it is not unreasonable to posit that with luxury bribes like Louis Vuitton hand-bags and bottles of Lafite falling out of favour, so too will the demand for them across the country.

Finally, India has long been trumpeted as the next China, in terms of growing economies yet to discover the joys of fine-wine, and although there were some positive signals last year, such as the lowering of trade tariffs, it is easy to forget that constitutionally India is still a temperance country, and federally still prohibitive in certain states. Given that the same barrier to entry, exorbitant taxation, still exists we doubt that 2013 will be the year that India takes off.

The View from the Trade: “The wine glass is filled up to the half way point.

Whether you find the above more encouraging or discouraging for the year ahead, we also offer the following small insight garnered from canvassing  the trade.  The prevailing sentiment is overall positive, with prices predicted to rise somewhere between five and ten percent. However this will not be due to any sizeable increase in demand, but a general lack of supply, with total global turnover remaining static.

2013 is set to be an interesting year whether you’re bullish or bearish, and we here at Vinetrade will continue to bring to light all the events that will affect the global fine wine market, right here in our blog.

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.