In order to track the movement of the wider fine wine market as accurately as possible, Liv-ex is introducing its most comprehensive index to date. The Liv-ex Bordeaux 500 represents the price movement of 500 leading Bordeaux wines and is calculated monthly using the Liv-ex Mid Price – the most robust pricing measure available anywhere in the fine wine market. The index only includes the 10 most recent physical vintages of each qualifying label, with new components added in June of the year they become physical. It will replace the Liv-ex Fine Wine 500, which was based on merchant list prices rather than Liv-ex trading prices. It is price weighted and has been backdated to December 2003. The full details of the component wines are available via a dedicated page on Liv-ex.com.
The Liv-ex Bordeaux 500 is unique in that it comprises six sub-indices: the First Growth 50 (FW 50); the Right Bank Super 50 (RB 50); the Second Wine 50 (SW 50, which tracks the First Growths’ second wines); the Sauternes 50 (SA 50); the Right Bank 100 (RB 100); and the Left Bank 200 (LB 200). This greater depth of data offers more detailed insight into fine wine market trends.
Last month, the Bordeaux 500 closed at 264 – reflecting a year-on-year decline of eight per cent. If we compare its movement to that of the Liv-ex Fine Wine 100 during the correction in the second half of 2011, we find that the broader-based index fell at a slower pace – 12 per cent compared to 21 per cent. Of course, splitting the Bordeaux 500 into its component indices paints a more detailed picture.
Chart 2 shows the independent progress of each sub-index. Surging interest in the First Growths’ second wines ignited a phenomenal rally in 2010. But in the second half of 2011, when demand for all things First Growth began to wane, the Second Wine 50 fell 19 per cent. Interestingly, the indices that had seen more sedate growth in the period leading up to June 2011 were little affected by the pullback. The Right Bank 100 was particularly defensive and rose 11 per cent during 2011.
Since the start of the year, the First Growths have recovered three per cent, but the second wines have yet to follow their lead. The Right Bank 100, however, continues to edge higher and is up 1.3 per cent year to date.