The Fine Wine Market Factors That Will Come into Play in 2012

Recently a number of research papers have been released by specialist organisations denoting the Fine Wine Market outlook for 2012, which highlight a number of challenges and opportunities that face the market. Some of these elements are external economic factors, to which a market has no control, and some of these have been internally created and now investors of the Fine Wine Market will respond accordingly.

The global Fine Wine Market is worth approximately US$4bn; throughout 2009 and 2010 the market made a stunning recovery, which came to a sudden halt in August 2011. There are a number of reasons for the decline in prices. Primarily the dramatic halt in auction house sales of premium wine was due to the escalating European debt crisis and an increasingly gloomy market sentiment.

There has been reference to 2011 ‘as the year that the wine bubble burst’ however the concept of a bubble generally refers to a market segment that has been flooded with capital beyond its worth and therefore prices become drastically overpriced. This is not the case for the Fine Wine Market, however it is clear that some form of pricing correction occurred amidst external economic conditions that could not be foreseen.

There is a resilience to the leading wine producers in this market segment that distinguishes it from equities, structured products or the art market, (which could potentially be seen as more closely aligned).  An interesting feature of the wine market is that generally market-leading wines have not just lead for decades but hundreds of years. 

History shows us that every time there has been a correction these leaders have fallen for the period of the crisis, only to regain their former glory when the waters have calmed. The Wine Yields 2012 Fine Wine Outlook purports that periods of exuberance and correction have generally coincided with macroeconomic crisis including 1974, 1997 and 2008. The important thing to note however is that the wine market rarely loses its grasp on true value as seen in other segments.

An interesting trend is the demand we are seeing from China and Hong Kong where the rising upper middle class now have a taste for the investment. Last November an auction held in Hong Kong saw 145 world record prices set. This recently awoken demand favoured the small supply of Burgundy’s rather than the previously untouched Bordeaux. In fact, 2010 Bordeaux suffered its worst market fall in three years.

There is much speculation around the price fall of Bordeaux wines and their relation to the ‘En Primeur’ debacle that has come about. Historically Bordeaux has sold its most sought after wines in the futures market in a campaign called ‘en primeur’ which translated means ‘in first position’. Traditionally these wines have been sold to investors at a reasonable price mitigating the risk for the producer to sell their entire vintage at a price less than they perceive the value.

In 2009 the vintage was deemed to be extraordinary and therefore value for the price investors paid. Then in 2010 the en primeur tastings proclaimed that this vintage was again extraordinary.  This was an embarrassment to the validity of the judgement of the wines as the 2010 vintage was at least the ‘fourth vintage of the century in just 11 years’.

The pricing of Bordeaux wines was therefore impacted. This then had repercussions for the entire Fine Wine Market quite simply as Bordeaux constitutes approximately 95% of secondary trading. We are seeing new world wines from Australia, New Zealand and the USA come into the market at a premium level which leaves some investors questioning whether the premium price for Bordeaux is still justified.

In summary the Fine Wine Market has begun 2012 in a state of unrest due to macroeconomic conditions and internal factors affecting the international stage. While history can never be seen as a precedent for future success, it tells us that an alternative investment such as wine does not directly correlate with equities. This can therefore be seen as an alternative investment for those looking to diversify their portfolio.

Source: Wine Yields 2012 Fine Wine Market Outlook

What Alex Mac Drank

I was talking to my good friend David about my blog the other day.  I mentioned how I found it difficult to remember all the different types of wine that I tried and what I thought of them. He made a brilliant suggestion that I am now bringing into reality. Each time I drink a wine going forward I will photograph the label and write a short blurb on it. The name and variety, what it was like, how I drank it and how much it cost. 

I won't bore you with every single wine that comes across my path but ones that particularly strike a chord I will let you in on.

Over the last few weeks I have drunk some delicious wines over some lovely occasions spent with my friends and family as always. Give them a try if they take your fancy.

Oldbury  Southern Highlands  Pinot Noir 2010 Delicious light cherry character wine. Cold climate wine. Drank it with my friend David over a dinner of spaghetti and meatballs with toasty sourdough and rocket salad. 8/10 Yummies $25 a bottle	Torbreck Barossa Valley 2010 Cuvee Juvenilles Unusual mix of red grape varieties. Easy drinking heavier style. Drank it with a friend over dinner. Definitely worth a try though. 6/10 Yummies $25 a bottle	SHW  Southern Highlands Chardonnay Dry and crisp. Classic French style of Chardonnay. Drank it at a summer BBQ on a sunny balcony in Bronte with some new friends. 7/10 Yummies $20 a bottle
Wolf Blass   Clare Valley Eden Valley 2011 Riesling Regions famous for producing Riesling with delicate fruit and floral characteristics. Clean, crisp and perfect with light food. Drank this with 3 girls I lived with in Paris. We celebrated the engagement of Louise whilst eating yummy home made Vietnamese rice paper roles by the pool on a summer afternoon. 6/10 Yummies $25 a bottle	Annie’s Lane Clare Valley 2011 Quelltaler Riesling German style Riesling. Very crisp, lovely wine that can be drunk with or without food. Drank this at the Gourmet Traveller Wine Riesling Rampage event at Doltone House with Papa Guigs last Monday night. The winemaker was a lovely man who spoke genuinely about his wines and I was charmed by his passion. 7/10 Yummies $25 a bottle	Pewsey Vale  Eden Valley 2011 Riesling Cooler climate Riesling that is just a pleasure to drink. This wine was the absolute star of the Gourmet Traveller Wine show. Drank it will Papa Guigs whilst overlooking the view of the beautiful Sydney Harbour. 8/10 Yummies $17 a bottle

Invivo Wine Nights at Helm Bar

Since commencing this journey of wine appreciation, I have started to be invited to a few little wine functions here and there. The most recent event that I attended was the launch party of Invivo Wine Nights at Helm Bar Darling Harbour, and it was fantastic!


To be perfectly honest I had never been to Helm bar. Darling Harbour has always seemed the place to go for tourists. However, since moving to my current residence China Town and Darling Harbour are right on my door step. My eyes have been opened up a whole world of opportunities in Sydney that one might miss out on if one simply resides in just one neighbourhood. Another thing that I hadn't realised was that now that many of the large enterprises are located in the South end of the city, which has given the area a great afterwork vibe during the week.

By way of introduction, Helm Bar is situated next to the Sydney Aquarium. It is an open space balcony that has recently been renovated. The outlook offers patrons a beautiful view of Darling Harbour catering to all weather rain, hail or shine. This comfortable space has teamed up with the fashionable kiwi wine brand Invivo and are celebrating by offering premium wines at the super cheap price of $5 per glass for Helm Bar members every Thursday night for the next five weeks.

Tim, Tim and Rob of Invivo Wines

Having over done it somewhat with sauvignon blanc when it was at the height of fashion, I am not generally not a fan. I often find that the unbalanced levels of acid pucker the sides of my mouth and result in unpleasant indigestion. The first wine that we tasted at the launch party was just that, a sauvignon blanc from Marlborough. Despite that Marlborough is actually one of the best regions in the world for sauv blanc, like most Australians I was complacent about what we were going to taste. The thing that did prick my ears, was when Invivo wine maker Rob Cameron said that the 'Bella' brand was low calorie.


We tasted the wine and were very impressed. Invivo 'Bella' is the first wine produced in New Zealand to be made in this style and has been a run away success. The wine itself is light, crisp and easy to drink. It is a sauvignon blanc but does not have any of the extreme characteristics that we sometimes associate with the style. It is simple, easy drinking and you wouldn't know that there were 30% less calories.

The bartenders at Helm aren't bad either

The way that they make the wine with less calories is to reduce the alcohol content. This is a dream for ladies who like to have a glass of wine when our male counterparts have a beer, and for those who enjoy a day at the races. Have you ever wondered why it is so easy to overdo it with wine? Wine ranges between around 11%-15% alcohol where as a beer or cider usually sit around 5%-6% which essentially doubles your alcohol intake in a serve that is half the size of a beer. By drinking a low calorie wine you will be able to indulge in that glass at the work lunch without fear that you will be asleep at your desk by 3:00pm.


The only thing to be careful with when drinking a low calorie wine is to think that just because you are drinking fewer calories and alcohol that you can have twice as much. This is a common trap that people fall into when eating low fat food.


If you prefer your wines in the traditional winemaking style then Invivo has one to suit almost every taste. We also tried the regular Sauvignon Blanc, Pinot Gris, Rose and Pinot Noir. All the wines are priced around $40 per bottle at Helm Bar or $9 per glass. If you want to try some delicious award winning wines for just $5 per glass make sure you sign up for membership at Helm bar and attend the wines nights over the next five weeks. http://helmbar.com.au/


At the end of the tasting one of the friendly Invivo guys asked me which wine I preferred and whether he could buy me a glass. Surprising even myself as the words came out of my mouth, "Yes please. My favourite was the Sauvignon Blanc. I would love another glass".


Until next time, have a glass for me! Alex Mac


http://www.invivowines.com/invivo.php