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Wine prices following the financial crash

Hi All,

I rate the community advice highly on many things related to wine.

There are some people here who have tasted some absolute gems of wine over the years. I love hearing about each and every tasting :slight_smile:

So my question is, to those whose buying history predates the 2009s how does wine buying and prices change during down turns? Any tips for us?

My view being from current volatility levels, we will have a downturn from this situation bigger than the financial crash, dot com bubble etc. Just my opinion…

Here’s my other comment
https://community.thewinesociety.com/t/bordeaux-2019-ep-when-will-it-be-released/6797/3?u=wine.arbitrageur

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Definitely agree that the overall downturn will be worse than dotcom or credit crunch - this is truly global and effects every sector directly or indirectly.

I expect that there will be a general lack of demand for anything high production and high cost (eg top end BDX, prestige champagne), but that might not filter through to massively reduced release prices as many owned by luxury goods groups who may have the firepower to throttle supply to ride it out. However, take a look at 2008 BDX EP prices, six packs of 1st growths were ~ 800 GBP. 2009 was through the roof from there but had a bumpy ride up and down over the past decade.

On the other hand, I can’t really see release prices on small production wines (eg top Burg) reducing at all, it is all over-allocated anyway and a great deal cheaper than the secondary market.

I guess auction prices and broked prices of back vintages will be the place to pick up bargains (cf today’s market), but always need to be careful trying to catch a falling knife. If buying for drinking soon you don’t need to worry what will happen to prices after you have consumed.

Don’t underestimate currency effects, UK stored wine that is IB looks cheap to the rest of the world right now, but prices will go up when a merchant must restock later vintages at current FX rates.

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6 packs of 1st Growths (1995) vintage were about £250 when those vintages launched a few years later. Last time I bought any… 6 Latour + (2 Mouton, 2 Haut Brion, 2 Margaux). The prices got so ridiculous I sold them all for over £350 per bottle…

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No impact on high value wines as in most financial “re-alignments” the super rich aren’t affected (sometimes even profit!)

prices - we’ve seen recently the bizarre pricing strategies and whilst there are stocks of the last few Bordeaux vintages readily accessible, I don’t see this years EP showing decreased prices.

For areas of small production…see paragraph one…the rich stay rich !

My strategy for such occasions - enjoy wines from 5 euros to 500 euros and spend according to means ! and buy to drink…not to get (super) rich

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I have a bit of wine at Berry’s and get notification of price offers and lowest selling price on their brokerage with comparative prices from wine searcher and Liv-ex. The numbers seem to be dropping already on BBX (although this may be panic selling) and faster than the prices quoted in the wider market.

I think that the supply of cheap money might keep prices artificially high (credit agricole bank has kept bordeaux going since the crash imo) but it’s a very long road that the fine wine market is on to squeeze supply sufficiently to keep prices high, I have a feeling they won’t get to the end of it.

And these things tend to end with a bump (i.e. the 70s) as rich folk don’t like to get poor so tend to bury their heads in the sand and just keep assuming what they have to sell is worth what it was last year. I think it is this that leads to the nonsense of the ep bordeaux campaigns after the crash.

I noticed that one of the big merchants was bragging about the value of it’s stored wines (was it £300 million? or £700 million?) I wonder how the banks will look on it if it suddenly turns out to be worth only half, or a quarter of that. A few big funds get panicky, a few collapse and things will look very different.

God I sound gloomy. Chin up Goth, might never happen!

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Financial crashes seem to afford a good opportunity to buy top EP wines like highly rated first-growths if the vintage is a good one. EP prices can be lower and the top-rated wines more readily obtainable.
With Chinese buyers driving the market in recent years, keep an eye on economic developments there as well.

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I will have a wager with you that the prices will be up this year !

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But buyers will be down.

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That seems an unusual take. Any chance you could elaborate?

have read several pieces saying not to expect a price drop and 5% might be a fairly standard increase

Im hoping they are wrong but…

buyers have been down for a few vintages…

https://www.wineowners.com/blog/Wine-Market-Investment-Report-March-2020/pid/77582/

Was an interesting take

“Overall, the wine market is going to struggle this year and I would predict mainline prices, i.e. liquid Bordeaux and expensive Burgundy will be up against it. There will be lots of opportunities however and I do not expect a sudden crash, as we would have seen that by now. In a normal market 2016 Piedmont would have been extremely difficult to buy but, as it is, it is proving a joy. This will not be the case when the dust settles and as there’s very little to go around, I repeat my buy recommendation.”

I must admit I have put in for some barolo ep despite saying I wasnt going to…

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Would say it is highly unlikely.
Bdx have had a string of good vintages, inventories and the pipeline are full, some of the major buyers (eg in the Far East) will be suffering an economic shock followed by the prospect of deep recession in the west.
If prices are up, buyers will hold back on the volume of EP purchases and simply wait for lower prices in future.

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I agree especially as there is now consistent proof that predicting what will reliably out perform its opening price from Bordeaux EP is near to impossible. If it becomes seen as a casino investment people will stop using it as a financial instrument and there will be a correction, albeit a slow one. I do think there are consistently good value Bordeaux reds in the £85/6 to £150/6 IB range on EP offers and these might go up a bit - but at this end of the range the pricing largely reflects production costs more than market sentiment so that would be in the normal run of things. And again, there are still plentiful back vintages - not a TWS wine but Ch Grand Village gets very good ratings on a regular basis and most recent vintages available at close to EP price.

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The macro economic situation does not have a precedent. It is not part of the normal financial cycle. Governments are printing money on an unprecedented scale. The immediate future of the virus is uncertain. In this scenario I would be circumspect regarding any postulation regarding future prices in a niche market such as wine.

As a consumer (I assume you are not part of the wine industry) you will be the last to find out what is happening. It is impossible to accurately predict the top or the bottom of a market. You can though develop several mathematical indicators which might help you to identify after the event when a top or bottom has been reached.

Remember that when prices are falling buyers are deterred. When prices are increasing sellers are deterred. Do not buy if prices are still falling.

There is one reason to buy wine. As opposed to stocks, bonds, gold, currency etc. you can drink and get value from it regardless of what the price does. It will not become worthless. If money starts to lose its value then all commodities become attractive.

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Agreed. Those chateaux that are just below the radar are worth buying EP as you often don’t get a chance to buy them at a later date.
Not TWS wines, I know, but many from Denis Durantou like Montlandrie, Les Cruzelles & La Petite Eglise and Villa Bel Air from the Lynch Bages stable, are good value. Also Ch. Capbern & Ch. Meyney have had good recent vintages too.

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