Bordeaux Index urges caution over second growth wines

Published: 03 March, 2011

Fine wine investors are being urged to exercise caution when buying "less prestigious second growth" wines, given the large volumes available and lack of growth in emerging markets, says Bordeaux Index.

Gary Boom, the firm's founder and managing director, said: "Though the market for the less prestigious second growths is almost as buoyant [as first], much of the heavy lifting is still being done by buyers from the UK."

He warned: "With eight times the volume of wine available as for the first growths - and some genuinely idiosyncratic buying habits - the case for gains in this sector being underwritten by sales growth to the emerging markets looks far from a done deal."

Fine wine is continuing its strong start to 2011, with prices up 3.7% in February ? returning gains for investors twice that of other equities, said Boom. But political unrest in the Middle East and north Africa, pushed oil int the top spot in February, with prices up 12%, while gold spiked 7.7%.

Demand for wine has remained strong throughout the world, with Hong Kong sales picking up from a slow start to the year to end on target. Boom said Mouton, Margaux and Haut Brion were all experiencing "unprecedented levels of demand."

Looking ahead to April, Boom said: "Everything we're hearing points to a small but exceptional vintage for Bordeaux. The 2010 prices could well exceed last year's records but ultimately the prices will be affected by outside, wider issues affecting a range of investment options."

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