By mid January the wine index Liv-Ex was reporting and up trend of 1.8% on record volumes for the exchange. Traders and wine experts were quick to spot the weakness of the Euro and a busy market ahead of the Chinese New Year as contributing factors together with a sense that there is some value in the fine wine market at those levels.
At the time, Liv-ex reported that: “Although the index is calculated in Sterling the recovery is perhaps better understood when viewed in Euros and Dollars. While prices have risen in Sterling they look cheaper still in Dollars bringing American and Asian buyers back into the market.”
The dollar has strengthened to €1.135 from the time of the last en primeur in May when it was trading at €1.35. “So the Euro’s down 17% on the world’s biggest currency. The equivalent gain for Stirling is around 10% which should stimulate interest in the UK – still one of the principle buyers of en primeur and undoubtedly the biggest when it comes to private collectors
Liv-ex have been looking at exchange rates as one reason why the fine wine market is showing distinct signs of life after an unprecedented four years of decline. Confidence in the market appears to be returning with the Liv-ex 100 increasing for 6 months in a row since its low in July.
The Liv-ex Fine Wine 100 Index is the industry’s leading benchmark. It represents the price movement of 100 of the most sought-after fine wines for which there is a strong secondary market and is calculated monthly. The majority of the index consists of Bordeaux wines – a reflection of the overall market – although wines from Burgundy, the Rhone, Champagne and Italy are also included. The index is calculated using Liv-ex Mid Prices and is then weighted to account for original production levels and increasing scarcity as the wine ages. As such, the index is designed to give each wine a weighting that corresponds with its impact on the overall market.