Wine has a proven track record of stability during some of harshest financial storms

 

This is a concerning time for everyone but investors have had a very bumpy ride via the global equities markets and its knock-on effects. Following Boris Johnson’s escalation of social distancing and isolation measures, many are wondering where to look for stability among all the uncertainty.

Wine has a proven track record of stability during some of harshest financial storms we have weathered to date, but how has the wine market reacted to the Coronavirus outbreak?

 

With a low correlation to equity markets, fine wine moves at a glacial pace and is generally influenced by two long term economic fundamentals – namely supply and demand.

Liv-ex, March 2020

 

The modern fine wine market has come a long way since the days of deals being brokered over the telephone from faxed stock lists. The introduction of online auctions, exchanges and logistics have helped to build an environment where trade can be conducted remotely. Wine can easily be bought, sold, viewed, valued and delivered online with the help of trade partners in the supply and logistics chains.

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The Liv-ex Exchange remains open for trade reporting today that their Fine Wine 50 index (which tracks the price movements of the last ten bottled vintages of the Bordeaux First Growth wines) had retreated just 3.45% year-to-date, holding relatively firm in comparison to the free fall witnessed on the FTSE 100 & 250 and around the world due to panic selling.

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Zachy’s auction house in the US also confirmed to us today that they are open for business, giving access to another key sector of the wine market. Following from last year’s successes which saw them become the most active fine wine auctioneer generating $121 million worth of sales, Zachy’s form part of a global fine wine auction market which grew by 9% in 2019 from $479 million to $521 million.

We’ll continue to monitor the market as the situation develops and if you’re yet to take a serious look at the market yourself, now may prove to be a good time to keep tabs.

By Spencer Leat