Will Bordeaux prices crash?

Written by Axel Ritenis

Editor Connoisseur Magazinew

Connoisseur Magazine Archives -First Published on the Web 03 April,2009

“Bordeaux is France’s biggest wine exporting region, so what goes on there is closely watched by wine experts around the world. Bordeaux dominates the wine market. More precisely, the perception of Bordeaux dominates the world trade in fine wines. When people talk of wine prices, invariably they mean Bordeaux prices, because Bordeaux wines are the only wines that are truly a commodity. Old Bordeaux are sold at auctions, like paintings and rare jewels, and new Bordeaux are bought on future contracts, like wheat and pork bellies”.

 

 

Recent years (2006–2008) have seen a huge upsurge in Bordeaux prices across the board, during an unprecedented era of upward price spiralling driven by the now collapsed real estate boom, general speculation in artwork and wine, and a huge increase in demand from the newly emerging markets of China and India, in what amounts to an orgy of spendingby many in the City of London and in other markets as part of the world wide boom.

Whilst in the early 2000s, there had been predictions of a drop in French wine prices because of the Asian financial crisis, declining Japanese demand and growing competition from wines elsewhere in the world, suddenly things changed.

Bordeaux wine turned into a vehicle for financial investment big time, at a time when stocks and shares and equities were already looking vulnerable. There was a lot of “crazy money” going into wine at the end of the boom and continuing demand and from China and India.