Are you interested in fine wine investment but unsure where to start? Then the Power 100 of 2020 report on the fine wine industry should be your go-to reference for investment options in 2021. The annual rankings of the year’s most powerful fine wine brands are published by Liv-ex (The London International Vintners Exchange), the global wine trade marketplace, in association with The Drinks Business. Based on the performance of the fine wines traded on Liv-ex during the year, these rankings can serve as a useful guide for your buying and selling decisions.
The 2020 Power 100 list reveals a couple of clear winners and indicates some key trends in the market.
- Domaine Leroy emerged as the most powerful wine brand, ranking in the top 50 in all categories, bar volumes traded. The brand has now ranked in the overall top five for the third consecutive year, displacing tough competitors like the Domaine de la Romanée-Conti and Bordeaux first growths. The fact that the other four brands in the top five are new entrants is a sign of the churn in the market, and cause for investors to be on alert.
- The fine wine market continues to expand, growing from 996 brands and 6,367 wines in 2019 to 1,420 brands and 8,734 wines traded in 2020. Investors can take heart that despite the upheaval caused by the COVID-19 pandemic, the wine investment market has held strong.
In its year-end report for 2020, Liv-ex concluded that not only had fine wine prices risen steadily, but the market had also outperformed some of the top industry benchmarks, offering stability in a year of volatility. In the Power 100 rankings, the top price performers have registered price growth between 12% and 30%.
- Among major wine-producing regions, Italy has cemented its superior position in the secondary market, reflecting a gradual shift in the market landscape. The country registered the largest gain in brands, adding nine brands to its repertoire of total 17 entries among the Power 100. Among these are four of Italy’s cult labels – Gaja, Sassicaia, Ornellaia, Masseto – which ranked among the top ten in the list.
- There has also been a general shift in regional market share by value, with Bordeaux and Burgundy slowing, and Italy, Champagne, United States, and Rest of the World picking up the pace. The growing momentum of these regions have added to the diversity of the market. In fact, the Power 100 of 2020 is one of the most diverse lists in recent years, with new entries from emerging markets like Spain, Germany, and Australia recording high ranks. This offers investors the opportunity to find continued performance amidst the dynamic landscape.
- Nonetheless, the top brands of Bordeaux continue to be powerhouses, with its share of trade currently over 42%. Three Bordeaux first growths – Lafite Rothschild, Mouton Rothschild, Margaux – and the Right Bank Petrus dominate the rankings on total value traded, and deliver liquidity to a fine wine portfolio. Look out for the growth potential that some of these first growths will offer in the coming year.
- The other major takeaway here is the importance of regional diversification in planning your fine wines portfolio. The Power 100 report is a helpful indicator for selecting wines that can deliver good returns based on individual performance rather than current market trends.
Keep an eye on the top brands from Italy and Champagne in particular – these are priced for growth, deliver performance and liquidity, and offer you the option to diversify your portfolio with relative ease.