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Global interest for fine wine

In document Investment in Wine 08 (Sider 51-54)

5.   Analysis of price development

5.2.   Global interest for fine wine

Fine wine does no only depend on wealthy individuals it also depends on the interest for fine wine. The aim of this section is to estimate the current trends for wine and fine wine, by using search data from Google Trends.

Google Trends shows the relative popularity of a search term in a value between 0 and 100. Meaning that it shows the terms strength compared to the total number of searches done on Google, at the same time it compares the search terms to the historical activity. Therefore the results show relative strength, not absolute, meaning that the declining trends can be increasing in absolute terms and visa versa. It is assumes that the results from Google can be used to generalize for the whole market since Google has a market share around 67% on the search engine industry. Other search engines, Baidu, Bing, and Yahoo, has below 10% each (Searchenginewatch.com, 2014).

The search term “Red Wine” had an increasing interest throughout the last 11 years. Which indicates that more people search for red wine, either for getting knowledge or shopping. Figure 5-1 shows the 1-month

moving average is peaking every December, assumable because of gift giving and consumption for the Christmas holidays and the New Year, which makes December the busiest month in the wine retail industry.

Likewise the 12-month moving average has been increasing every year except between 2007 and 2008. The data includes the words for “red wine” from the following languages: English, Danish/Norwegian, Portuguese, Spanish, French, and Chinese.

Figure 5-1 Google search for ”Red Wine” 1M MA and 12M MA

The search term “red wine” does not give significant information about how the market for investment in wine has emerged, like the search term “car” would not give an indication of the market for luxury cars.

Therefore the trend of several other fine wine related search terms is analyzed. The first figure compares the 12-month moving average for the search terms “wine investment”, “wine auction”, and “wine collection”.

Due to lack of data the graph for “wine investment” and “wine collections” starts later than “wine auction”.

The graph shows a significant declining trend in the search for “wine auction” is felt from around 53 in primo 2008 to 18 in end 2014, this is surprising since wine auctions broke several records during the period, however the public seems to loose interest in the topic. The term “wine collection” has been relatively stable throughout the period, with a steady declining trend, the highlighted news flow about “wine collection” has mostly contained both the term “wine collection” and “wine auction”, however their trends are very different. Finally, the volume for the term “wine investment” is lower than the two others, it peaked in 2011, where the Lix-ex also peaked. From there on it declined from approximately 15.5 to 8.5, meaning that “wine investment” is losing relative strength on the search engine.

20 30 40 50 60 70 80

Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15

Red Wine 1M MA Red Wine 12M MA

Figure 5-2 12M MA for ”wine investment”, ”wine auction”, and ”wine collection”

The trend of the five first growth producers obtains information about the relative popularity for the fine wines from Bordeaux. The graph below shows the search development on a 12-month moving average. All five producers are in a downwards-sloping trend, however Chateau Lafite Rothschild had a significant spike at the end of 2010, when it was published that the 2008 edition would have the Chinese symbol for eight on the label. Chateau Lafite Rothschild is the most popular compared to the four others, with a significant higher search volume throughout the whole period, followed by Chateau Mouton Rothschild and Chateau Margaux, the latter surpassed Chateau Mouton Rothschild at the end of the period. The least popular are Chateau Haut-Brion and Chateau Latour.

Figure 5-3 12M MA for the five first growth 0

10 20 30 40 50 60

Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15

wine investment wine auction wine collection

10 20 30 40 50 60 70

Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15

Chateau Mouton Rothschild Chateau Lafite Rothschild Chateau Latour

Chateau Haut-Brion Chateau Margaux

The final graph in this section compares the search results for different regions, in order to obtain information about the trending areas. It compares “Bordeaux wine”, “Burgundy wine”, and “Napa Valley AVA”. It shows that all three areas are in a downtrend and that “Bordeaux wine” is considerably more popular that the two other regions. This confirms the previous assumption about Bordeaux is the main market for fine wine due to size and volatility.

Figure 5-4 3M MA for “Bordeaux wine”, “Burgundy wine”, and “Napa Valley AVA”

The Google Search data shows that term “Red wine” is rising in popularity due to the upwards-going trend.

However, all search terms related to fine wine and investment in wine are in a downwards-going trend indicating that the relative interest for investment in wine and fine wine is declining. The search term “red wine” is very fluctuating, with high peak in every December, demonstrating that it is driven by consumption and gift giving for the December holidays. Investment in wine should not have seasonal peaks hence it is a long-term investment, if any, the peaks should be in the spring when the tasting and the pricing of the En Primeur takes place. The 1-month moving average for the five first growths shows peaks in December, likewise does the 1-month moving average for “wine collection”, however the 1-month moving average for

“wine investment” does not show any seasonality (Appendix E). In conclusion, the search terms indicates a relative decreasing interest for fine wines and investment in wine although the term red wine is in a relative rising trend.

In document Investment in Wine 08 (Sider 51-54)