A strange title, but as I sit here in Monaco with The Grand Prix just around the corner,I am already seeing renowned luxury retailers struggling for business. Will the South of France really pay for the lack of Russian free flowing cash seeping into its economy?
Wealthy Russians have always spent like there was no tomorrow and now that ‘tomorrow’ has come, the impact is going to be felt here sharply along with all the playgrounds of the rich and famous Russians.
Boat International has reported a dramatic fall in the super-yacht brokerage market, losing almost half its value in one month. So, can the ‘Russian factor’ have a similar effect on value in the fine wine market?
We all know Russians love their vodka and increasingly their top end French wines. At Vin-X, we always look keenly at the influences on price performance, and with the Liv-ex 1000 up 24.6% on the year, will we see the current bull run, now in its second year, meet a similar fate to that of the super-yacht market ?
My view is not and let me explain why…
The straightforward and transparent economics of fine wine allow us to understand the finite production of investment wines each vintage. For example, if Chateau Lafite Rothschild lost Russian custom, the small percentage of their average annual production of 16,000 cases sold to Russian Oligarchs and the like, to enjoy on super-yachts in Monaco or ski chalets in Courcehvel, will no doubt find homes in their traditional markets along with the ever increasing Far Eastern fan base.
Understanding wine investment performance
The secondary market in investment wines is enjoying its fastest ever period of growth, it is more accessible to investors and more liquid than ever. As such, the wine investment market is increasingly diverse and robust in terms of the wines being traded and by the number and location of market participants.
As a wine investment specialist, Vin-X concentrates on the wines of the top forty or so producers around the world and with over one million Chinese millionaires it’s not difficult to imagine that even without the super wealthy Russians flocking to The Med this summer, the fine wine market is well positioned to lose the Russian spend……. I just hope the French Riviera will cope as well!