Wine Market Update - Spring Cleaning

Wine Market Update - Spring Cleaning

Spring is a great time to review the market and determine which wines in your cellar are ideal to sell and which should be acquired

The wine market has seen ups, downs and uncertainty in recent years. However, 2015 showed to be much steadier both at auction and in the trading markets like Liv-Ex. The end of 2015 was a bit soft, but sales bounced back in the beginning of 2016.

Wine auctions for top Bordeaux and Burgundy have been very encouraging thus far with a February sale at Hart Davis Hart Wine Co. showing a 100 percent sell rate, with more than 50 percent of lots beating high estimates. Burgundy saw its best hammer prices since early 2015, and top Bordeaux is at its best since October of 2014, giving hope that 2016 may be the turning point for the fine wine market.

The 2015 vintage in France is creating a tremendous amount of buzz. When the tasting occurs in early April, results may help jump start the market. Spring is a great time to review the market and determine which wines in your cellar are ideal to sell and which wines should be acquired. By summer, auction season and overall market activity slows down.

Bordeaux

Bordeaux has historically been the bellwether of the wine market, but has slowly lost its dominance as other regions like Burgundy, Italy and Napa have entered the spotlight. However, Bordeaux is still the most traded wine in the world, and after its sharp fall in 2011 has finally shown signs of stability. It is a great wine right now both for buying and for selling.

BUY/HOLD More recent vintages from the first growths, as well as secondary wines like Lynch-Bages, Pavie and Montrose.

SELL Older vintages of top wines as they begin to move past their peak window and will begin to lose value. Off-vintage Bordeaux that will most likely not appreciate soon.

Burgundy

Burgundy took advantage of the wine market after the decline of Bordeaux in 2011. Burgundy has much smaller production than other wines, and prices rose and remained steady until Q3 of 2015 when the market plateaued. Recent auctions show that trend may only be temporary as Burgundy has been strong so far in 2016.

BUY/HOLD Burgundy has shown strength in 2016, so adding wines from the better-known producers such as Ponsot, Leroy and Rousseau is a safe bet as the quality and longevity are excellent.

SELL Positions in Domaine Romanée-Conti and older vintages of well-known producers. Domaine Romanée-Conti wines are in high demand and become rarer each year with low production compared to Bordeaux. This may be a good time to diversify and sell at what are still very high prices historically.

Italy

Much like Burgundy, Italy profited from the decline in Bordeaux, proving to be a wine with high quality and longevity. Super Tuscans have taken the spotlight with wines like Masseto, Sassicaia and Ornellaia. Barolo and Barbaresco are also gaining in popularity.

BUY/HOLD Wines from the Piedmont, such as Barolo and Barbaresco. These wines are long-lived, and have shown strong appreciation with better known producers such as Giacomo Conterno, Giuseppe Rinaldi and Pio Cesare. Super Tuscans are still strong and can be held until the market shows a definitive downturn.

SELL Super Tuscans have seen a strong upturn in recent years, and wines like Masseto are selling at high prices. This may be good time to sell and diversify.

Champagne

Champagne has shown continued strength in the market, offering good buying opportunities.

BUY/HOLD Newer vintages, such as 2007 Cristal or the just released 2002 Krug score high, but come out at reasonable prices. Champagne becomes rarer more quickly and prices rise. Producers such as Dom Pérignon, Krug and Salon are good bets.

SELL Older vintages have appreciated well as they become rarer in the market. Champagne does not have an annual vintage like most wines, so it becomes rare faster, creating demand for the better Champagne in the market. Sell a portion, and then purchase newer releases with higher scores that show promise to appreciate.

Napa, CA

Opus One and Dominus still dominate the secondary market overall for Napa wines. However, brands like Scarecrow are making a big splash and prices are appreciating. Cult wines like Harlan, Sine Qua Non and Screaming Eagle have begun to peak, and now may be a time to cash in part of a position to purchase quantities of less expensive, but highly rated Napa wines.

BUY/HOLD Newer vintages of high quality, limited production wines, like Scarecrow, Abreu and Colgin, along with the steady performers like Opus One 2012 vintage. Also focus on the better known vineyards, such as any of the Beckstoffer properties. New great quality wines, like Memento Mori and Kata offer opportunities to enter the market.

SELL Portions of big name cults, such as Harlan, Sine Qua Non and Screaming Eagle. Prices have reached a peak, and it may be a good time to diversify and purchase more recent, less costly wines with high quality and scores.

Spring is a great time to update your inventory and appraisal, organize your cellar and make sure your records for provenance are in order and that your wine is properly insured. So far this year shows promise in the market across several regions, offering great opportunities to diversify by selling wines that may have peaked and by purchasing those that are showing signs of strength.

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