August 2013 Wine Investment Report
Chateau Ausone won a trademark case in China recently. It is good to see China finally tightening up on trademarks. Its important for trademarks on investment wines because it reduces fraud and keeps them exclusive. If you are not aware about Chateau Ausone – It’s a first growth from the St Emillion classification.
If you have been reading our newsletters you will have read there are some fears of Austerity measures in China affecting the wine market. There has been a study on companies spending on alcohol and it showed that hardly any were cutting back on buying wine in fact only 7% were drinking less wine overall. The majority of cutbacks are Baiju which is Chinas famous rice wine. More than 50% of companies said they were cutting back on Baiju and not buying as much Chinese rice wine as before. The study was conducted on more than 100 companies in China.
There were some bad Storms in Bordeaux and Champagne a few weeks ago which means the yield for the 2013 vintage is going to be very low, many Chateau are predicting a loss of up to 15% with the damage that’s been done to the vines. A low crop in 2013 may increase the price of the vintage.
It is worth noting that the lower priced wines are still in high demand, perhaps austerity measures and economical woes are making people think twice about buying the most expensive bottle on the wine list and they are going for something slightly more affordable yet still of good quality. Champagne is also on the rise and its not easy to get decent allocations to recommend to you.
The not so good news is the first growth Bordeaux wines are still not picking up. The London and Vintners exchange went down in July and the top wines that went up for the month were burgundy, Champagnes, Rhone Valley and second growth Bordeaux wines. Some went up 9% just in the month of July.
The Asian market has shown it is capable of paying a lot of money for high end first growth wines and the gap on these lower priced wines only needs to close a bit and from an investment perspective this could equate to good returns.
We are seeing fairly good growth on up and coming wines from regions like Rhone valley or lower priced burgundy wines.
Merchants in the market are suggesting Champagne suits the China market because it doesn’t need to mature to pop it open. The China market has been famous for opening first growth wines before they mature. The first growth Bordeaux market is very unsure of itself so its better to balance out your wine portfolio with wines from other areas to ensure your wine investment returns are moving in the right direction. The facts that market sentiment on investing in Bordeaux has lost a lot of confidence and Chateau continuing to increase their prices and not pay attention to the negociants or merchants asking for them to release en primeur lower has not helped the Bordeaux market to come back as quickly as we hoped.