Regional Buying – At What Cost?
-
Anthony Maxwell, Liv-ex Director
- 29 Aug 2019 | News & Views
Two years ago, Liv-ex wrote that “if the Burgundy momentum continues, buying into the region might offer brave investors some long-term value.” Since then, Burgundy prices have continued to rise, outperforming all other regions. Whether you are an investor or a drinker, it is time then to review the current cost of the top wines of the world—how much for access to the ‘Firsts’ of each region’?
The top wines of their respective regions are consistent with the wines that make up our regional indices, the components of the Liv-ex 1000. For our calculations, we consider the last five physical vintages of each wine; for Burgundy, DRC, Romanée-Conti is excluded as its high 12x75 price would distort the mean.
Unlike the recently released Liv-ex Classification, which ranks the wines of the world purely on the basis of their average trade prices in the past year, our indices better reflect liquidity and long-term market trends e.g. volume and value traded, merchants’ list prices and live bids and offers.
The table below displays the average Market Price of the top wines of each region, both now and two years ago. Sauternes continues to offer the cheapest entry-point into the fine wine market, becoming 11% less expensive over this period. The category has not been helped by declining interest in sweet wines and unsold volumes of back vintages available on the secondary market. The Sauternes 50 has continued to underperform its parent index, the Bordeaux 500.
When it comes to dry still wines, delving into Italy and the Rhône highlights a big north and south divide. The average price of the Southern Rhône shows the relative affordability of Châteauneuf-du-Pape’s most famous producers. Those looking at Hermitage, Côte Rôtie and Cornas must be prepared to pay more than double the price. Still, the two-year price change suggests buyers of the Northern Rhône’s best wines have increasingly recognized the region’s value.
The situation is similar in Italy. The Super Tuscans Solaia, Sassicaia, Tignanello, Ornellaia, Masseto and Tua Rita Redigaffi cost on average half the price of the top Piemonte wines. Both groups have risen in value over the past two years—Southern Italy by 3%, Northern by 22%. The Italy 100 index has also made gains (8.6%), albeit smaller than the broader market (Liv-ex 1000, 10.6%). Interestingly, Italy’s market share has risen from 6% to 8% over this period—a sign perhaps that the region’s potential is only now being discovered.
Meanwhile, red Burgundy wines continue to command the highest prices on the market. They have leapt an impressive 43% in two years. The staggering regional performance is also reflected in the Burgundy 150, which is up 36%. Burgundy dominated the top tier in the Liv-ex Classification, doubling the number of wines that qualified in 2017, and raising the question of the sustainability of current prices, yet again.
White Burgundy has also climbed 25% but remains a more affordable alternative for those looking to invest in the top wines of the region. It is also cheaper than Bordeaux, which has shown a smaller return on investment over a two-year period. The top wines from the Right Bank—Angélus, Ausone, Cheval Blanc, Pavie, Petrus and Le Pin—comprise the second-most expensive group in the fine wine market, costing more than twice the First Growths from the Left Bank.
From the Rest of the World, California stands out (+25%)—wines such as Screaming Eagle, Opus One, Dominus and Harlan Estate have continued to appreciate in value. Their price tags place them firmly, and closer than ever, to the stars from the Right Bank.
In the fine wine world, perceived value is not always synonymous with low prices. The most expensive wines of two years ago have just gotten more expensive. Still, regions such as the Rhône and Italy continue to offer some of the cheapest entries into the market, as well as comparable quality, making them interesting to watch as buyers spread their interests further afield.
Readers should take note that the views of this author represent those of a company with an interest in the wine trade. Liv-ex operates the global marketplace for the wine trade. They have over 440 members from start-ups to established merchants and supply them with the data, trading and logistics services they need to price, source and sell wine more efficiently. Private collectors can view Liv-ex prices and value their portfolios using Cellar Watch and find regular market analysis on the blog. The opinions of Liv-ex are their own and do not represent those of Robert Parker Wine Advocate or Wine Journal. Liv-ex contributes articles to Wine Journal that we feel are of market relevance to readers, but we do not specifically endorse this company.