The positive consequences of Brexit for wine

Not long ago, I wrote you an article about the consequences of Brexit for French wines. It is true that such an exit of the United Kingdom from the European Union will play a major role for the viticulture of our country.

Always - or almost —, the United Kingdom has remained a major importer of French wines. It is important to note that British imports of French wine have experienced a constant decline in both value and volume over the past few years.. However, France ranks third in terms of volume, but retains its first place in value. Is Brexit going to be a problem ?

Brexit, although it could be a source of negative consequences for French viticulture, can also be seen as a source of benefits for some wine regions.

Brexi, Bordeaux sales at the highest since 5 years

While the news is rather bad for the economy of the European Union, some winegrowers toast at this British exit. Indeed, Bordeaux wine orders are at their highest since 5 years. Since the Brexit vote, the pound sterling has experienced a significant fall and many grands crus are marketed in English currency. Since the end of June, the English currency fell sharply, losing more than 10% of its value in relation to other reference currencies on the foreign exchange market. Already weakened for a few months, she has unscrewed since the end of June. The 19 November 2015, the pound was worth € 1.42 and 1,52$; the 16 August 2016, it was only worth € 1.15 and 1,30$. Between 10 to 20% recoil in 6 weeks only.

The 18 May 1152, the Duchess Alienor of Aquitaine, wife in Poitiers Henri Plantagenêt, aka Henri II, Count of Anjou. Two years later, they rule over Normandy and England. The Duchess's dowry included all of central France, as well as its south-eastern quarter and therefore its wines. Bordeaux wines will therefore meet with success in London long before triumphing in Paris.. Over the centuries, the estates of the region considerably improve the quality of their production and at the same time strengthen the reputation of their wines. And over the centuries, the estates located around the Gironde, of the Garonne and the Dordogne improve their quality and strengthen their prestige. From that moment, Bordeaux wine prices - as well as other great wines such as Champagne - remained denominated in English currency, or the pound sterling. The United Kingdom has retained its role as a marketing platform for Bordeaux wines around the world.

The fall of the pound therefore had as a direct consequence the fall in the price of bottles of Bordeaux wine.. Wine is still an investment that works well for investors, many of them naturally took advantage of the spectacular drop of almost 10 % Bordeaux wine prices.

More buyers of Bordeaux wines

With this sudden big drop, many products listed in pound sterling are impacted : North Sea oil, cacao, gold and Bordeaux wines. Le BI LiveTrade Index, which tracks the prices of bottles over 300 Grands Crus, is at its highest thanks to Brexit. Since the beginning of the year, the index has increased by more than 15 % ! This index measures the investment performance of Bordeaux wines., as well as those of Champagne. Gary Boom, PDG de BI, told the Financial Times : "We had to close some Bordeaux sales the day after Brexit", because the demand was too high. This suspension only concerned a few grands crus out of the over 300 that the BI Live Trade index takes into account. Is a financial bubble around Bordeaux wines forming? ? Certainly, a mechanical and ephemeral drop in prices that must be monitored closely.

With the severe financial crisis that shook the world in 2008, a considerable increase in the number of collectors of fine wines has taken place until 2011. The vagaries of the stock market scared away investors who fell back on other safer stocks, like great wines. In addition, sales channels have multiplied and new buyers are appearing. Thanks to the growing interest of the Chinese, Koreans and Taiwanese for wine, new new markets in Asia have opened up. This additional demand on the Bordeaux Grands Crus niche is driving up prices.

The investor opinion on Brexit

And you, What do you think ?

Do you think that rise will last ? Does it make sense to invest in these values ? Do not hesitate to give your opinion in the comments !

Jean-Nicolas Mouretin