Liv-ex Article: Fine Wine and Billionaires in 2013

James and I read this blog from Liv-ex, the London-based wine trading company, and he thought it had a lot of resonance for Asia, particularly China. Yes, billionaires do not make the market in Hong Kong, or China. And the fact that Hong Kong auction revenues in 2012 were down underlines this. The blog (below) makes you think about this.

-KS

A couple of weeks ago Forbes published its annual rich list. The list shows that the number of billionaires has risen from 1,226 in 2012 to 1,426 in 2013 – an increase of 16%.

In the past we have noted the correlation between the number of billionaires and the Liv-ex Fine Wine 100 Index, with demand for fine wines – and other alternative assets – closely linked to wealth creation. Yet in 2012 we noticed this correlation slipping, and in the last year the gap between the two has widened further: the number of billionaires has continued to rise despite the fine wine market’s downturn. This can be seen from the chart below, which tracks Forbes data against the Liv-ex 100. (We have converted the Liv-ex Fine Wine 100 Index to dollars to remove the effects of currency movements.)

With China one of the biggest drivers of the fine wine market, we took a look at the number of Chinese billionaires over time. Once again, the correlation that we have previously seen has weakened. Despite the rising number of Chinese billionaires – up 28% on 2012 – wine prices have fallen. Perhaps unsurprisingly, it would seem that billionaires cannot sustain the wine market alone.

Be sure to visit Liv-ex at www.liv-ex.com and their blog at www.blog.liv-ex.com.