Four weeks ago it looked as if the fine wine market was well on its way to recovery. But after regaining a measure of lost ground in the first quarter of the year, the Liv-ex Fine Wine 50 Index has turned on its heels. Why the sudden change in direction?
In the January Market Report we suggested that several scenarios could trigger (and sustain) a recovery in 2012 – among them a return to value. This is certainly something we saw in the first few months of the year. Following dramatic price falls in 2011, the First Growths finally re-entered the “buy zone” and began to find support. Optimism trickled back into the market and in January the Liv-ex Fine Wine 50 Index posted its first monthly rise since the summer.
The next “positive trigger” that we noted in the report was high 2009 in-bottle scores. When Parker unveiled his vintage review in early March, he effectively moved the market overnight. In total, 19 wines were awarded 100 points – more than the perfect scores awarded to the 1982, 2000 and 2005 vintages combined. Parker’s approval not only strengthened trade in the 2009s, it also boosted confidence in Bordeaux wines in general.
Two out of three, however, may not be enough. The third key factor that we outlined was an affordable 2011 campaign – something that has failed to materialise. Although many chateaux have reduced release prices compared to last year, most of the new releases are still more expensive than other vintages of a similar quality level. (See the Liv-ex En Primeur Pages for the latest prices and scores.) As the chart below clearly shows, this has undermined the market’s confidence.