Fine wine investment has changed so much over the past ten years or so, but there is still plenty of potential in Bordeaux investment. And it looks as though the 2020 vintage could be up there among the best in the history of the region’s wines.
Despite endless disruptions and uncertainty due to the global pandemic, it seems that there is plenty of life left in Bordeaux wine investment.
How has Bordeaux investment remained popular?
The Bordeaux En Primeur event continues to be one of the most important events of the fine wine year. And for the past two seasons, it has had to be flexible in the face of unprecedented challenges caused by the fallout from COVID-19. However, Bordeaux has continued to supply outstanding wine for investors and collectors alike.
Last year’s vintage appears to have produced some truly excellent wine with substantial potential. However, there is always the need to remain selective among different producers and terroirs. The quality can vary and even when dealing with high-quality vintages, it’s a good idea for the investor to be careful in selecting.
En Primeur events give consumers the chance to get an idea of the new vintage, but in order to make truly strategic investment decisions it’s wise to consult experts in the field. By benefiting from the specialist knowledge that experts can provide, investors make better choices and are likely to make higher returns.
Third consecutive high quality vintage for 2020
Reports show that last year’s vintage looks like it will be the third consecutive high quality successful vintage from Bordeaux. And the virtual format of the En Primeur event this year contrasted well with last year’s uncertainty and scramble. Regardless of this uncertainty, the 2019 En Primeur campaign was able to come through in a successful way, showing judicious flexibility in prices and the format.
By discounting the 2019 vintage prices by up to 30%, the region was able to remain the stalwart global wine benchmark that it has been in the past. The 2020 Bordeaux tastings are now over, and you can read more detail about the results here. You’ll see that the vintage has received glowing reviews by critics around the world. This has increased prices over 2019’s discount releases. However, it’s likely that prices will still be lower than pre-pandemic vintages. This will obviously be a big draw for investors and buyers alike.
The Liv-ex Bordeaux 500 index, which is the standard measure for the market in the region, saw a return of 8.77% in the 12 months leading up to 31 March 2021. The question now is how high the prices can reasonably be pushed up by producers without forcing the market to backslide. We think the most likely scenario is that the prices for the 2020 vintage will be lower than prices before the pandemic.
Bordeaux flourishing for the secondary investment market
The secondary investment market for leading Bordeaux wines is also doing well this year. This applies to mature and newer vintages alike. Over the last six months in particular there has been significantly more, and Bordeaux holds its own in a diversifying investment market.
While it’s true that Bordeaux doesn’t occupy the position that it did just over ten years ago, this is more about other regions becoming more prominent rather than investors going off the region. This is an important distinction to understand, as it’s clear that Bordeaux is still a major player in fine wine investment.
Overall, the whole fine wine market is far more diversified than it used to be. But despite this competition, Bordeaux has been trading higher over the past few months in particular with the 2015, 2016 and 2018 vintages particularly in demand.
Interest in En Primeur is still high, but the stronger demand right now can be seen in older vintages.
Releases of EP at the right price and at the right time will always lead to decent returns for investors, but new releases should always remain a part of a diversified portfolio. One of the best things about fine wine investment in today’s market is that it’s possible to build an eclectic portfolio across different regions and using different strategies.
No asset class offers 100% certainty, but Bordeaux as a region offers a relatively stable choice. And, of course, wine is not a short-term investment and it’s difficult to imagine losing money on Bordeaux vintages over the next five years.
