The JF Tobias November Market Decode has been released, containing all the latest JF Tobias insight and analysis on fine wine market performance. It remains the best independent analysis, and helps our clients to stay up to date with what is happening in the fine wine market, and understand fine wine market performance.
- Amidst Brexit uncertainty, clients look to reduce over-exposure to wine in investment portfolios
- Offers to buy totalling £3,608,633 submitted to JF Tobias in the past 2 months; 43% up on the previous 2 months
- China – USA trade war continues to affect fine wine market sentiment
- Hong Kong market activity drops 14% on last month
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Brexit Uncertainty Shapes Decisions to Sell
In November, we have seen the fine wine market continue to be shaped by macro factors and events. Until there is a resolution to ‘Brexit’ the market will continue to be skittish.
The uncertainty around Brexit has seen merchants in the UK continuing to consolidate stock into the UK, to avoid a potential customs blockage come March. As well as this, merchants are reducing owned-stock positions to mitigate the risk of a strong sterling, the devaluation of wine prices being the likely result.
JF Tobias’ view on the long-term prospects for Sterling is that, once the uncertainty of ‘Brexit’ is no longer priced in, the currency will start to appreciate. This tends to place a downward pressure on wine prices. Subsequently, clients are looking to sell rather than purchase.
Fine Wine Market Performance Slows in Hong Kong
The Chinese retail market drives purchasing in Hong Kong, the largest market in the world for fine wine. As with last month, the retail market remains slow, as the China-US trade war continues. As a result, the fine wine market has also slowed.
A planned meeting between Xi and Trump, during the G20 summit at the end of November, may signal a thaw in relations, and a way out of the trade war. This would only be good news for the Hong Kong wine market, and any movement towards a deal is likely to see an increase in global wine market performance, and activity, in response.
Worryingly, however, both the stock and property markets in China have also slowed. For the first time in two years, the property market shrank, by 0.01%. With fine wine a luxury product, when these markets are down, the appetite for fine wine falls. The knock on effect can be drastic, and the global market is slow in response.
‘Super Seconds’ and Right Bank Bordeaux Struggle
The ‘Super seconds’, such as Cos d’Estournel, Ducru Beaucaillou, and Leoville Las Cases, have all struggled in recent weeks. The Second Growths, still with premium price tags, have been caught between the cheaper alternatives lower down the classifications, and the big brands of the First Growths, which represent a safer bet in a slow, and price-sensitive market.
Right bank Bordeaux has also seen marked signs of slowed activity. Although Pomerol continues to perform strongly, with the cult wines of small production sites such as Le Pin still trading easily, St Emilion has shown signs of weakness, especially those outside of the top classification of Premiers Grands Crus Classés A: Angelus, Ausone, Cheval Blanc, and Pavie.
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At JF Tobias, we pride ourselves on being the best independent port of call in the fine wine market. If you have any questions about the market report, or would like to talk to someone regarding it, please contact us, and a member of the team will be delighted to assist.
