Wine Market Finally on Path of Recovery from China’s Crackdown

Published By : 27 Jul 2015 | Published By : QYRESEARCH

After three years of slump, the wine industry finally has a reason to rejoice. Wine prices spiked in the first half of this year even though at a rather modest pace. 

Even after the economic whirlwinds in Asia and Europe, the Liv-Ex Fine Wine 50 Index benchmark rose 0.8 per cent from the beginning of the current year, after declining 40 per cent from its peak in the middle of 2011.

The wine market has been shaken up over the last seven years, beginning with the financial crisis in 2008. In addition, China’s crackdown on luxurious gift giving sparked a recent sell-off. Buyers were discouraged by the steep prices of the critically acclaimed 2009 and 2010 Bordeaux vintages. Lesser vintages since the start of 2011 have been difficult to sell off, leading to the addition of stocks in the market.

Wine Asset Managers LLP, a fund based in London, wrote in its most recent investor letter that the fine wine market is not yet reached a stage that can come even close to being called normal. There is incessant pressure on emerging markets which is still a concern to the industry. However, the market has at least witnessed the downturn as a consequence of the anti-graft steps in China. The market is presently enjoying a relatively calm phase, the investor letter stated. 

The Liv-Ex Fine Wine 50 Index includes 10 physically available recent vintages from all of Bordeaux’s first growth left bank estates. These comprise Chateau Lafite Rothschild, Chateau Latour, Chateau Haut Brion, and Chateau Margaux from the initial 1855 classification and Chateau Mouton Rothschild, which was added later in 1973.

Critic Robert Parker reviewed Bordeaux’s 2005 vintage last month, which resulted in some of WAM’s holdings being given higher scores. These included Chateau La Mission Haut Brion, Haut Brion, Chateau Pavie, and Chateau Cheval Blanc. Wine Asset Managers stated that the review was a net positive for the company. 
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