Bordeaux is still the dominant force in the wine investment world but other regions are eating into its market share.

By Don Kavanagh | Posted Thursday, 18-Dec-2014

The market for fine wine has endured a harsh three years, but the signs are positive for next year, with an upturn in prices in the second half of 2014. The Liv-ex Fine Wine 100 index has seen a positive change in fortunes, rising for each of the past four months, after 16 months in freefall. In the first half of the year the index fell by 9 percent, but it then rose by 2 percent. That broke the pattern of the past three years, when the index rose in the first half of the year – driven by the en primeur campaigns – and fell in the second half. Market shares for regions beyond Bordeaux and Burgundy have risen for the fourth year in a row, with Italy and the Rhône showing solid improvements to account for 5.3 percent and 3.6 percent of the market, respectively. Bordeaux's share has fallen from 93.2 percent at the mid-2011 market peak to just 78.9 percent.

Bordeaux has shown some signs of life, however, with all the sub-indices showing second half growth this year, apart from the headline Liv-ex Fine Wine 50 index, which remained flat after a brief August surge.

Several sub-indices of the broad Liv-ex Fine Wine 1000 index have made good comebacks in the second half of the year, but the standout performer was the Rest of the World 50, which finished the year 2.8 percent ahead of where it ended last December. The other sub-indices, including the Burgundy 150 and the Champagne 50, all finished the year at a loss.

The Rest of the World index was helped by strong performances for U.S. wines, particularly Dominus, which features three times in the top five performing wines. The 2004 Dominus was the best-performing wine overall, clocking up a 48.3 percent rise in value over the year. It started the year at a case price of £772 ($1208) and finishing at £1145 ($1791). The 2001 vintage rose in value by 40.4 percent and the 2003 by 31.7 percent. Bordeaux wines did feature in the top 10 best-performing wines, but only four made the list this year, including Château Montrose, which rose sharply after receiving a 100-point score from The Wine Advocate.

Liv-ex expects more rises in 2015, with Bordeaux likely to recover its mojo in the wake of a harvest marked by both quality and quantity, although the en primeur campaign is likely to be crucial.

"Increasing market shares for regions beyond Bordeaux points to a healthier, broader market," according to the Liv-ex end of year report. "It remains to be seen whether breaking the cycle of the previous three years will lead to a longer term change in direction, but sentiment certainly feels a great deal more positive than it did going into 2014."

http://www.wine-searcher.com/m/2014/12/fine-wine-market-shows-signs-of-life