Liv-ex indices rising, led by Lafite

Just a few years ago, fine wines investment was considered a niche market, with very few investors. However, the global financial meltdown has seen more investors scrambling to find safer investment opportunities and, in the process, have started investing more heavily in fine wines. Many sceptics thought that this wouldn’t last. But in an unexpected development, fine wines have continued to outperform stock indices in both the UK and the US.

According to the Liv-ex fine wine index, the Liv-ex 100 saw an appreciation of 4.6 per cent and the Liv-ex Claret Chip increased by 5.9 per cent in August 2009, the biggest monthly increase since 2008. Overall, prices increased between 10-13 per cent from January to August. According to Liv-ex director Andrew della Casa, “This return has been achieved with very little volatility – seven of the eight months have seen positive returns.”

The escalating price trend is being led by Lafite Rothschild, with heavy demand in the lucrative Far East markets, particularly Hong Kong and China. The 1982 vintage was selling at a staggering £24,000 a case and the 2000 vintage for £12,500 a case. This in spite of the fact that August usually sees a slowdown in the fine wine trade. The combination of rising prices and robust trading on the Liv-ex Fine Wine Exchange is an encouraging sign for the market.

It is not just Lafite that was pulling in buyers, many of its Bordeaux peers were also in heavy demand. If the trend seen so far continues, there’s no doubt that the second half of 2009 could be an encouraging one for fine wine and fine wine investments.

What is remarkable is that the index is now only 14% short of its all time record high, set in June 2008. The collapse of Lehman Brothers saw prices slump by over 25%, but have since partially recovered. The past five years has seen the index increase 133%, a performance unmatched by any other asset indices, not even by gold, normally the perennial favourite.


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