The 2016s are set to be released at an interesting time for the fine wine market. After a number of disappointing years, market participants started to perceive value in Bordeaux at the end of 2015. Sentiment was supported by Sterling weakness in the run up to the UK referendum, and Brexit proved to be the trigger that pushed prices even higher.
All of the Liv-ex indices made gains in 2016. The Fine Wine 100 – the industry benchmark – has risen for an unprecedented fifteen consecutive months and outperformed a number of other global indices.
Although the fine wine market received a significant boost after the UK voted to leave the EU, this was flattered by a weaker Sterling, as the chart below shows. Returns have been less exciting in US dollar terms.
Liv-ex Fine Wine 100 Index (Sterling, Euros and Dollars)
Conversely buyers from Dollar-based markets are in a stronger position heading into the 2016 campaign. The US Dollar has strengthened by almost 10% against the Euro since last May. Equivalent releases will be around 10% more expensive for Sterling buyers this year.
These currency movements are taking place in the context of significant global political shifts. The results of the upcoming French election are likely to impact exchange rates further, adding sensitivity to the timing and prices of releases.
Bordeaux has undoubtedly been the main driver behind the broader market recovery. With early feedback suggesting that 2016 could be another high quality vintage, En Primeur may be an important factor in determining the direction of the market in 2017.