Burgundy Hike Linked to Shift of Equity Profits to Liquid Assets

(Bloomberg) -- A surge in Burgundy prices may be partly due to wealth generated in the stock market trickling down to the fine wine trade.

The Burgundy 150 Index, which tracks the prices of the most actively traded wines from the French region, climbed 19 percent last year. This is in line with the S&P 500’s 19 percent advance in the same period.

A Feb. 8 report by London’s Liv-ex wine marketplace said there could be a relationship between rising stock markets and Burgundy prices. The analysis also highlighted smaller harvests are causing prices to climb.

Tommy Keeling of industry research company IWSR said the apparent correlation may be due to buyers of expensive Burgundies having significant wealth in the stock market -- “When it is doing better, they feel richer.”

If this is correct and last week’s equity selloff resumes, Burgundy might take a hit. “Prices could fall after a delay, as investors won’t necessarily be rushing to sell their wines,” said Keeling.

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