The Wine Collector

The turmoil in fine wine markets since September 2008 created a need for better tools to track wine price trends than the limited options which exist today.  Therefore, Vinfolio decided to develop a series of nine wine price indexes utilizing auction data from our WinePrices.com site (read today's press release). 

Auction data is an ideal resource as a basis for price indexes for several reasons:

1. Fine wine auctions are recognized as the industry standard for fine wine pricing trends as historical press coverage from wine publications demonstrates.
2. Auction prices (inclusive of buyer's premium) represent completed transactions, not merely asking prices.
3. Pricing data is derived from global auction activity - i.e., not solely from the UK, US, or any other single geography.  As I have written before, fine wine prices are driven by global supply and demand.

March 2009 index results indicate fine wine prices are rebounding

If one reviews the summary results page for the WinePrices.com indexes, you'll note that seven of the nine indexes have positive YTD results with the median YTD performance being a 4.1% gain whereas the median year-on-year performance is a 25.9% decline. In particular, the three indexes with the most auction activity -- the Fine Wine 100, Fine Wine 250, and the Bordeaux First Growth 100 - were up from 2.1% to 5.0% in March and from 4.1% to 7.8% YTD.

Consumer confidence climbing

As further evidence which correlates with the positive price trends, The Conference Board's Confidence Index increased almost 50% in April to 39.2 (1985=100), up from 26.9 in March (see April 28th press release The Conference Board Consumer Confidence Index Increases in April for more details).

Wine investment opportunity?

With wine prices having declined 25% in the past year and now showing consecutive monthly increases in the most frequently traded investment-grade wines, maybe it's time for collectors to resume buying and/or investing. 

In addition to our wine investment service, Vinfolio happens to be offering a new pristine 31 OWC (original wood case) parcel from a single private collector with 10 cases of 100-point Parker-rated wine available for $185,000.  Call Vinfolio if you are interested in learning more (415-946-1300.

I'm pleased to announce that Vinfolio's free Wine Prices app for the iPhone has now had more than 10,000 downloads from 53 countries in the 43 days since its launch.  About 64% were from the U.S. and here are the top 10 other countries (4 of which are Asian even without mainland China which is not yet selling the iPhone):

Bottom line: The app is free so visit the App Store on iTunes and download it to join the growing user base.

P.S. Also see recent related posts about the iPhone app in the software category of this blog.

As a follow up to my prior post, Bordeaux futures: Why bother?, it's now clear that en primeur pricing for the 2008 vintage is going to be in the "reality zone." But as further evidence of the buying opportunities which can arise by waiting until wines are bottled, read this Decanter.com story titled "Merchants: Low Bordeaux 2008 prices 'destroy' value of past two vintages." 

Buying opportunities for the patient

As seems to be the norm, most retailers aren't able to sell all of their Bordeaux futures and are often forced to wait until deliveries occur 18-24 months later to have a second crack at clearing them.  Even then, collector interest has moved on to newer vintages so they can be a tough sell (even without the collateral damage created by fairer pricing of a new vintage).

The Decanter story quotes several prominent U.S. retailers either selling remaining 2006 Bordeaux at half price (losing money in the process) or devaluing remaining stocks of 2006 and 2007 Bordeaux.

Bottom line: Patience can be rewarding.

The 2008 Bordeaux en primeur tastings are under way and, not surprisingly, trade attendance is down almost 10% (see Decanter.com story) and this year has its own issues as the market struggles to adapt to the realities of the current economy (see NY Times story).

Why should collectors bother to buy Bordeaux futures this year?

They shouldn't.

Here are the typical reasons cited to buy futures, none of which apply at the moment:

1. Secure your supply - Your favorite wines won't sell out in this economy and with an average vintage. Availability of different bottle sizes later shouldn't be an issue either.
   
2. Obtain better pricing by buying early - All signs are that the chateaux are going to set unrealistically high prices.  Wait it out; they'll come down later.  Moreover, why tie up capital for 18 months when you can buy other (better) vintages, all of which have suffered price declines in the past 6 months?
3. Ensure perfect provenance -They'll be plenty of original wood cases to buy later as soon as the wines are bottled that come straight through the distribution chain to you.

Moreover, why take the risk that your retailer, or someone in their supply chain, goes out of business in the 18 months to 2 years before you take delivery?  Anything can happen in the current environment. 

Bottom line: Ignore the 2008 Bordeaux futures campaign.

P.S. For prior posts on related topics, read Fixing the Bordeaux futures market and Wine futures and pre-arrivals: what's the difference?