The Fine Wine 50 Index has continued to firm in recent weeks. It closed Tuesday at 304.05, its highest level since October 2013. Likewise, global equities have been on a bullish run. The S&P 500 Index and Dow Jones Industrial Average have hit new all-time highs, while the FTSE 100 Index struck an 11-month high this week.
This year, the fine wine market has benefitted from weaker Sterling. There has been strong Euro and Dollar-based buying that was boosted in the aftermath of Brexit. Exposure on the Exchange – the total value of firm bids and offers – has hit a new all-time high of £34.5 million, while the bid:offer ratio has climbed steadily post-Brexit to 1.47. The number of active markets – wines with a bid or offer against them – has also reached a new record of 6,500, while the number of spreads – wines with a bid and offer against them – stands at 1,300.
There is, however, a caveat to this bullish outlook. The average spread on the Fine Wine 50 Index currently stands at 5.4%. One month ago it was 4.4%. Widening spreads suggest sellers are now raising their prices faster than buyers are raising their bids. The market is also now entering the seasonally slower summer period.
While global equities continue to ride a bullish trend it should be noted that the Fine Wine 50 Index is still 32% below the June 2011 peak it reached at the height of the China-led bull market.
We have observed a tentative recovery underway this year after a long period of decline. The question is whether Brexit and the resulting currency effect is the spark that lights the fuse for a more sustained long-term recovery for fine wine prices.