The last fifteen years in the market for top Bordeaux wines have been fascinating. A boom, a bust, a bigger boom (perhaps even a bubble) and another bust kept market participants on their toes or in some cases brought them to their knees. The period from mid-2011 to mid-2014 represented one of the most prolonged slumps in the prices of classified growth Bordeaux ever seen. But the quality of these wines, the most famous wines in the world, fully justifies, more now than ever before, their reputation as the elite of fine wines. If the world fell out of love with Bordeaux for a while, it would have been foolish to believe that this was going to be permanent. Watermark was established in 2014 to reflect the view that a recovery in trading volumes and prices was imminent.
As we enter 2017 the conditions could not be more encouraging. The frenzied buying in Asia seen in the late noughties has now been replaced by a steady consumption-based demand which is more informed, considered and stable. The major chateaux have put in place global marketing strategies to reinvigorate their brand. Wine forgery has been tackled in earnest, the perpetrators have been prosecuted and measures to combat fraud are becoming standard in the bottling and packing process. Over the last two years, prices have indeed recovered significantly in GBP (boosted by the weakening of GBP after the Brexit referendum) but current levels are still proving irresistible to buyers particularly in the US and Asia where collectors have enthusiastically turned back to Bordeaux.
We have built up significant stocks of those wines which we believe represent the best value and have already enjoyed healthy returns enhanced by our strategy of actively trading our holdings to take advantage of particular opportunities as they arise. However the recovery is only just getting started and the next two years look full of opportunity.