The fine wine market has outperformed all the major equity markets such as FTSE 100 and Dow Jones so far this year. As our Q1 2022 report pointed out, leading indices such as the Liv-ex Fine Wine 100 and Fine Wine 1000 have hit new record highs more than once.
The Liv-ex indices are calculated in Sterling and as such exchange rates can dictate whether fine wine prices look more or less favourable for buyers in different currencies.
The chart below shows the Liv-ex Fine Wine 100 measured in different currencies. Although it may appear positive, the spike in Yen actually shows how much more expensive fine wine prices (priced in Sterling) have become for Japanese buyers as the Yen has weakened against the British currency.
By contrast, the US Dollar, Euro and Swiss Franc have strengthened against Sterling recently, making fine wine prices more attractive for buyers.
The US Dollar in particular is at its highest level against Sterling since September 2020. This can be seen from the chart below, showing the performance of major currencies relative to the value of Sterling over the past decade.
The Dollar’s recent ‘turbo-charged performance’ has led to good momentum in the secondary market as collectors take advantage of their increased buying power. Buyers from the US have been active this year, accounting for 22% of total trade by value at the end of April.
The strength of the Dollar could potentially shift the dynamic of the market going into the Bordeaux En Primeur campaign too.
The table below shows how the exchange rate has affected the same ex-négociant Euro price for Château Batailley in other currencies from last year to this year.
The Sterling and Euro exchange has not changed too much. But there is a lot of volatility in Sterling at present which may affect how buyers consider each release if release prices generally remain at the same level they were last year.
By contrast, buyers in currencies such as the US Dollar may take a more positive view of releases given the more favourable exchange rate.
If so, they may consider it a good opportunity to stock up on Bordeaux 2021 wines – where they offer Fair Value.
See the marketplace for all LIVE opportunities
Our Bordeaux En Primeur 2021 page contains everything you need to know about this year’s campaign. You can also sign up for our daily En Primeur email alerts using the form below.
Liv-ex analysis is drawn from the world’s most comprehensive database of fine wine prices. The data reflects the real time activity of Liv-ex’s 560+ merchant members from across the globe. Together they represent the largest pool of liquidity in the world – currently £100m of bids and offers across 16,000 wines. Independent data, direct from the market.
