Have you noticed some relatively sharp price increases for certain wines recently? If so, the cause may be currency. Sterling and the dollar have weakened by 15% against the euro since last May, causing significant damage to the current en primeur campaign, as highlighted by our recent survey. Less obvious, however, is the effect currency movements have had on the pricing of older and harder to find wines. Indeed, any wine where the stock is available in the UK has already been sold through (or where there are no willing sellers) will now have to be sourced direct from Europe with obvious ramifications for pricing. This is also true of younger wines where the production was low to begin with, particularly right bank chateaux.

To highlight this we have converted the Liv-ex 100 into euros on a month by month basis (using the exchange rate on the last trading day of each month). You can clearly see that the market’s recovery since the turn of the year is somewhat less dramatic if you price in euros.

This is a question we will be looking at in depth in the June Market Report, including a discussion on the effect of the weak dollar. Perhaps it will be the news emanating from the currency exchanges, rather than the wine critics, that will define the fine wine market in 2008.