Last week’s art auction results made headlines around the world. Francis Bacon’s ‘Triptych’ (pictured) achieved the highest ever price for a work by the artist ($86.3 million) with Lucien Freud’s ‘Benefits Supervisor Sleeping’ breaking the record for a living artist ($33.6 million).
The press has made much of the art market’s resilience to the credit crunch; a number of recent sales in the wine market have also seen records tumble and similar conclusions drawn. As the Evening Standard reported last week, there is an increasing number of investors who have ‘gone liquid’ and are now looking to put their money in new areas: ‘This group of entrepreneurs, hedge fund operators, private equity players and the occasional celebrity are driving up prices in alternative asset classes. So traditional investments such as equities and property stall or wilt altogether but values in other areas such as art, jewellery and wine keep on climbing.’ And that’s not to mention the number of billionaires who simply want the best art on their walls and the finest wines on their table (it has been suggested that the buyer of the Bacon and Freud was none other than Roman Abramovich).
However, a number of respected titles – such as The Economist and the in the International Herald Tribune – have suggested that beneath the headlines the art market is showing some significant signs of weakness, particularly at the lower levels of the market. James Suckling of the Wine Spectator has also commented on the matter on his blog.
So where art goes, does wine follow? Despite a gentle slowdown since last summer we are yet to see this move into a reverse (see the Liv-ex 100 for details) and prices on the exchange have remained strong at all price levels. There is also no evidence that the art market is highly correlated with that of fine wine.
What this does highlight, however, is that those wishing to invest in wine should stick to the basics – which is to buy the better wines from the better vintages – if they wish to reduce their risks. That means wines with a strong track record of aging potential and an active secondary market – basically limiting you to the better wines of Bordeaux, Burgundy, Champagne and Italy. (Although that still gives you a hell of a lot of wines to choose from).
Beyond the broader outlook there is one other connection between the recent auction results and the fine wine market. Bacon’s ‘Triptych’ was sold by the Moueix Family, owners of Bordeaux's Petrus and California's Dominus as well as a host of other vinous interests.It is unclear if Abramovich buys wine from them as well…