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19/12/2016

Investment Update - 2016

by Investment Team

Given the tumult and upheaval that repeatedly touched 2016 it is perhaps as surprising as it is pleasing that we can look back on such a positive investment year. With the BI LiveTrade Index sitting 22% higher year to date it is the strongest performance since the China-led reflationary boom times of 2010. Clearly the travails of GBP following the Brexit vote is an important part of the explanation but it is worth noting that nearly half of the year’s appreciation came from before the referendum and in the Nov/Dec period when GBP rallied a little. All of which is to say that the currency play was an accelerator more than a transformer of market activity.

Leaving the details for the New Year, it was again a year in which the big names (Lafite, Mouton etc.) and the big vintages (2009, 2005 etc) took the lion’s share of trade as the UK-Asia supply route harked back to the halcyon days of 2008. Almost every month of saw a new record set in the falling ratio of UK storage vs Export., itself probably the key factor in bringing about the supply squeeze that really characterised the year. Mention should also be given to a satisfactory En Primeur campaign back the spring which saw healthy demand for some excellent wines at fair prices (and some very fortunate pre-Brexit timing). A simple formula but one that has been sadly missing in several recent instalments.

Looking to 2017 and beyond there seems little on the horizon to fundamentally alter the current benign direction of travel. Indeed with supply still tight and costs of trading falling (see our recent Mouton Parcel offer as an example of what’s to come – more on this below) the outlook is healthy for stock-holders and new entrants alike.

 

Top 5 best-selling LiveTrade wines of 2016

1.       Lafite Rothschild

2.       Mouton Rothschild

3.       Haut Brion

4.       Petrus

5.       Margaux

 

Top 5 best-selling LiveTrade vintages of 2016

1.       2009

2.       2006*

3.       2005

4.       2010

5.       2000

*significantly driven by Dom Perignon 2006 – excluding this, each wine from 3-5 moves up one place with 1996 taking 5th.

 

The Launch of a New Trading Product

Customers always ask us when the right time to invest is, what to buy, and what the trading costs are. Well, now is the right time – we’re very bullish. Thanks in part to the weakness of sterling, demand from Asia for fine wine has exploded with record volumes being exported to Hong Kong, Singapore and beyond. This physical demand has pushed our LiveTrade Index, which is the product of real trade on the LiveTrade screen, up over 22% this year giving early investors strong absolute returns in no time at all. With an outlook of historically stretched inventories, continued low interest rates and potentially further GBP frailty the prospects for the year ahead are, to say the least, positive.

As with any investment there is merit in achieving some diversification, to which end we have launched our first trading product – a LiveTrade Parcel based on the wines of Mouton Rothschild.

Mouton Chai Picture

This 5-case Parcel is a one-stop opportunity to instantly take a firm position in fine wine investment. It provides a 7-year spread of Mouton vintages: 2005, 2008, 2009, 2010 and 2012. This spread of vintages helps to smooth out any minor ups and downs within the individual wines.

Mouton is the right brand as it doesn’t get any hotter at the moment: prices for post-2000 vintages of Mouton are the second fastest rising of the First Growths (+28.7% in 2016) behind only Lafite – which has by far the smallest pool of buyers, unlike Mouton which is traded all over the world. As for trading costs, we’re guaranteeing just a 5% spread on exit.

But how is this Parcel different to simply buying 5 cases of wine?

In reality what you are buying is exactly the same – 5 full, physical cases of wine – but the structuring of the purchase is what makes this opportunity different. For too long the spreads on fine wine have been too wide to really appeal to those used to trading other commodities. The Mouton Parcel guarantees an improved bid-offer spread of just 5% making this a more compelling opportunity than anything we have offered before. To view the parcel and its current price simply click here to visit the product page.

 

Terms and conditions apply. The cases purchased in this parcel must be traded together as a parcel in order to guarantee the 5% spread. The cases must be kept in a BI Reserves account in our bonded warehouse. The cases will appear in your reserves as individual cases with the standard single case bid and offer prices – but the live prices for the parcel can always be seen on the LiveTrade landing page https://www.biwine.com/livetrade If any cases are sold individually, all bid and offer prices on remaining cases from the parcel will revert to the standard single case prices. If you wish to take delivery of any of the cases, Duty and VAT must be paid on those cases and all bid and offer prices on remaining cases from the parcel will revert to the standard single case prices.