Market Report April 2014

Following a stabilisation of the market over the last 16 months, there are grounds for optimism. 2014
has begun with a degree of positive New Year sentiment which follows the brightening economic
outlook. The Liv Ex indices have edged a fraction downwards in recent months, but this should not
detract from the overriding stability of the market. Within the trade there is a sense that the ship has
steadied.
In general, prices have settled at an attractive level. When considering the values of more mature
vintages of the worlds finest wines (such as the best years from 80s and 90s), the potential for
significant growth is clear.
Strengthened economies, increased confidence and the ongoing development of international markets
would suggest that now and over the next 12 months may be a good moment enter the market or
consider further purchases. A longer term outlook is essential however with a minimum investment
term of 5 years, the ideal being 8-10+ years.
The 2013Bordeaux en primeur campaign has only just begun and we are expecting a very busy month
of releases. The quality and pricing of this vintage remains largely unknown to us, but indications are
not of a top vintage. It may be a year of most interest for those looking to purchase for future
consumption. Pricing will be key, and some surprises may yet await us. Only time will tell.

In the absence of an excellent en primeur vintage, the focus may remain upon past vintages. The
recent great vintages of 2009 and 2010 may appear fully priced in relation to todays market, but
they remain vintages which no portfolio should ignore. Cases can in some instances be purchased for
less than their initial release and those with a longer term outlook should find security here. 2010 is a
vintage for classicists, searching for the ultimate archetypal Bordeaux experience, whilst 2009 offers
opulent, ripe, layered wines. Both vintages will form the mainstay of connoisseurs cellars for decades
to come.
Looking further back to the best years which will soon enter their prime drinking windows, the
vintages of 1996, 2000 and 2005 are equally attractive. In many instances, current pricing seems to
offer real value given their additional age which means they will be consumed more quickly,
restricting supply. Our thoughts are echoed by the market, with increased interest in these past
vintages, although values are yet to move significantly. When the market does begin to move, it may
be that these are the vintages to move first as they do look to be undervalued when compared to more
recent years.
The great advantage of Bordeaux is its worldwide popularity and the resulting ease of trading. Global
demand may have cooled over the past few years amid an uncertain market, but the market seems
poised for new impetus, likely over the coming 12 months. Fine Bordeaux should remain the primary
focus of investment cellars.
However, the market is now broader than ever in terms of choice and interest in the worlds finest
wines. Away from Bordeaux, there have been many other attractive releases over the recent past.
Amongst the highlights are: the 2010 Super Tuscan releases Tignanello, Sassicaia, Ornellaia,
Masseto et al; the luxury and icon range from Penfolds (following last years 100 point endorsement
of 2008 Penfold Grange); Champagne releases from Dom Perignon, Krug, Bollinger and Cristal; and
the long awaited 2004 release of Vega Sicilia Unico. The growing interest in fine Burgundy is also
worthy of a mention, in particular the best 1er Cru and Grand Cru wines.
There has been much comment in the market regarding alternatives to Bordeaux for investment.
Portfolio diversification achieved by adding Super Tuscans, Champagne, Burgundy and the iconic
New World wines (amongst others) is very sensible. It has always held true that a diverse portfolio
spreads risk and can also maximise returns. However, the exit strategy from these alternatives is not
yet fully proven, with the markets for them naturally being more specialised. Ease of selling is key
and the secondary for these wines is not as established, and their long term performance less certain.
Nevertheless, as markets continue to mature and evolve, interest is likely to continue to grow. Whilst
such wines should not form the mainstay of your strategy, they could account for up to 30% of your
holdings.
There is much to consider in this broadening and ever changing market. Please do contact your
Private Account Manager if you have any queries regarding your portfolio and possible additions for
the future.
To speak to a member of our fine wine team, please contact www.finewine@bbr.com