Wine Market as Bubble Meter

I previously pointed out that the Art Markets can signal the phases of a bubble cycle here and here

The wine markets appear to be manifesting some signs too. That’s according to this report from Bloomberg,

Surging demand for Chateau Lafite and other French trophy labels, especially from Asia, has pushed both prices at auction and wine futures to records. Not all wine dealers are happy.

The prices for some of the most expensive bottles are starting to discourage even billionaire collectors, said dealers -- some of whom had warned in January of a bubble that could burst in 2011. Chinese and other buyers balked as some Bordeaux producers raised prices as much as 80 percent last month for the new vintage offered “en primeur,” when it is still in barrels.

“En primeur sales have halved,” Simon Staples, fine wine and marketing director of the London-based merchants Berry Bros & Rudd, said in an interview. “It’s a combination of high prices and the fact that the chateaux released less than last year.”

Sales growth is also slowing at auctions. Takings at the biggest three wine auction houses in the first six months of 2011 were up by 46 percent on the same period in 2010, according to Bloomberg calculations, down from the 88 percent sales increase in 2010…

Chinese consumers continue to spend millions on older vintages in bottles at specialist auctions. Sotheby’s (BID), Christie’s International and Acker, Merrall & Condit took a record $258.3 million in wine sales in 2010, more than double 2009. About two-thirds of the most expensive lots were selling to Asian bidders, according to both Christie’s and Acker.

Wealth from globalization is one thing. Conspicuous consumption from boom bust cycle is another. One would know the difference ex-post or after the bust.

(hat tip: Dr. Antony Mueller)