Floods, gales, earthquakes and sub-zero temperatures, 2023 has had them all and the year is as yet, but a new born. I sit in my familiar seat in my garden shed swathed in scarf and overcoat and wish for spring and the new sailing season. Excitingly, the Düsseldorf Boat Show, after 2 years absence, occurred and the voyage towards normality in our industry continues.
2021 was of course the year to beat all years for sales results for the Berthon Sales Group as the dash to get out on the water saw yachts selling in numbers never before seen. In last year’s forecast we predicted a slow down for 2022. Although it seemed to us to be a more normal cycle our numbers replicated 2021, albeit with different yachts sold; so another exceptional year, as the traditional sailing centres internationally heaved with yachtsmen getting into the thick of it and enjoying all that our sport has to offer.
Activity in the racing yacht market was a little more muted, but in this segment growth comes from the grass roots and we predict that the success of classes like the Cape 31, will be the precursor of larger racing yacht fleets starting to develop once again. We expect a resurgence of competitive sailors who want to dive into the wonderful experience that is offshore yacht racing.
Last year when we predicted for the year just closed, the conflict in Ukraine was just beginning. Who could have expected that this situation would be ongoing in 2023 or that the West would have pulled together so seamlessly to defend our way of life? Who also could have predicted the number of super and mega yachts tied to the dock as assets of oligarchs were seized, and that massive new build programmes would screech to a halt? Everyone in yachting is aware of the sanctions lists and we observe them to the letter.
Of course, Mother Nature abhors a vacuum, so yachts and build programmes where possible have found new owners and the world of yachting continues to turn. As time goes on, the local difficulties and problems with arrested yachts will unravel and new owners will enjoy these leviathans of the sea.
We touched on the rise in energy prices but not the scale of the difficulties across the planet. The human race is adaptable and we have learned to value power more than before. At our sister company, Berthon Boat Company, a full appraisal of the energy usage in the yard has been managed to provide the savings needed to remain competitive and to deliver the best possible value to clients. Even the mighty boot Düsseldorf is going easy on the central heating – it’s an overcoat and walking quickly between its massive halls – no problem we adapt…
Covid has not left us, but we have learned to live with the virus assisted by the jab, and even in China, eradication has finally been replaced by herd immunity as the silent protests grew. This interesting change we see as a positive for us all and we look forward to seeing this vast new market open as this remarkable nation decides, we hope, to take to the water. The legacy of Covid for us has been a large new client base who are now massively committed to yachting, who have understood the importance of the work life balance and this will not change. The Berthon sales team couldn’t wait to get back to the office and back onto the water as soon as we could in 2021 and 2022. Last year clients wanted to touch and feel, and to experience their chosen yacht, and the work from home syndrome has been left behind except for the most part, I think, in Whitehall. Let’s hope that they catch up soon! Waiting for months (not weeks or days) for various licenses is pretty poor service, since we pay twice, once in tax and then in fees!
Supply chain issues did not go away in 2022. As we predicted, they got worse. As we go into 2023 we see a logjam in new yacht production which is not going to go away. This is not helped by higher interest rates and inflation, which put pressure on manufacturers holding stock they cannot complete and sell whilst having to satisfy contracts to end owners at hard prices that do not allow for the inflationary pressures that they are experiencing. For the buying department it is not a question of the best price – it is a question of locating the part, machinery or whatever and to a great extent, it costs what it costs.
These pressures are also felt by new yacht distributors whose costs have risen as a function of inflation and energy costs. They can’t get yachts to sell and if they can in some cases they are delivered in an incomplete state. Stocking them until sold is becoming more expensive and they then have the next challenge that, because of the supply issues and inflation, prices for new yachts are ramping and delivery times are moving out through 2024 to 2025. It is not cool.
We said that for 2022, brokerage prices would remain constant but that they wouldn’t be as frothy as in 2021 and this has been the case. Yacht buyers have not been prepared to pay any price to get out on the water and yacht owners have been wise to accept sensible market value. However, despite the terrible political and economic situation, we haven’t seen fire sales, big price drops or the normal signs of a market in decline. In fact, we still have the 2021 problem of yacht shortage in the segments that are hot – recent, quality and production yachts in great condition.
This year, as we have returned to normality, we have seen a number of serious refits passing through our hands including a truck to keel refit of a Spirit 70 by our service company at Berthon Spain to an Oyster 56 originally sold to a Berthon USA client whilst in our UK Shipyard that was shipped from the Caribbean in Berthon UK for refit Now that the immediacy of Covid (must get out and do it now) abates, people want to invest in their yachting freedom and are more open to buying yachts which need refit as the world is now turning and the world is open to yachtsmen to cruise in all its oceans.
Whoever you are on Planet Earth, the call for the need to be greener is becoming a shout. Yachting as we predicted has engaged with this – we have the awesome Spirit 65 DH SPIRIT OF JOSEPHINE for sale that is super carbon friendly with her twin Ocean Volt electric drive, recycled sails and Ligne decks. Our friend and colleague Marko Pas who designs the Pegasus 50 with which we are involved has so far delivered four of his excellent carbon 50 footers with electric drives. We expect to see these technologies become more mainstream in 2023.
So, what are our picks for 2023?
The crystal ball has never been so challenged with Ukraine, energy, inflation, massive political upheaval in many parts of the world and an eye watering debt owed by us all as a result of the cost of shutting down and staying safe over Covid. Higher taxes, lower growth and the dive into recession are all on the cards this year, unless inflation lessens. Despite this, our clients are keeping calm and carrying on and whilst we see turbulent waters ahead particularly in some segments, we feel that the market will hold this year and that savvy yacht buyers will still be in the market place where they see value.
We predict that it will be tough for some of the new yacht manufacturers, caught in a maelstrom of cost, lack of materials and kit, and inflation. Those who are over extended will be vulnerable and we would caution that you look carefully at who you are buying from in this segment. Likewise, for the distributors caught with big stocking commitments and big bills on their floor plans. As always, it is a very good idea to read the small print and to treat your yacht purchase like a capital purchase in your business.
For the brokerage market, we are used to some yacht buyers who assume that there will be harassed and desperate sellers at all turns. They ignore the supply problem in the market and the fact that a serious seller can still sell well and that for the rest, inflation is a wonderful tonic and so fire sales will not be on the cards this year.
Positioning your yacht is key for many to take advantage of events, the possibility to enjoy a double season and to cruise in the area that you had always dreamed of, or indeed to fulfil a regatta programme. For some there is the time to make the trip by sea or to have the yacht delivered on her own bottom. For the rest shipping is the best option. We predict that the higher costs of this service is here to stay and that we will need to dig deep and understand this particular cost of yachting is higher post-Covid.
VAT will of course continue to baffle us but we predict that the ship of grandfathering pre-Brexit yachts has well and truly sailed, and that the status quo that now exists is what we have. We also feel that ex-tax yachts that can be enjoyed outside the EU or UK and where the status is delightfully straight forward will become more attractive. Those areas that insist on collecting their 20% + will find yachtsmen cruising outside their regions as yachts become more capable and cruising grounds elsewhere more accessible, with flights and access gradually improving.
In our world, yacht financing has been rather like the curate’s egg – good in parts but difficult to find. Those who offer this service now have a sensible and understandable offering and we predict that we will see more financing in the next years as yachtsman want to live the dream now and not delay in a world where goodness know what crisis will befall us next. Life plans and the need to go cruising before children fly the nest or the knees start to creak will trump stock market movement and financial planning.
As for our little Sales Group Ship, she sails on, still with her same crew, although for 2023 will have new recruits at Berthon Spain service as the scale of operation increases with turnover up by 33% in 2022. Their Big Blue Shed is full of technicians, craftsmen and new kit to make your yachting turnkey in the Mediterranean, mirrored by our own Big Blue Sheds in the UK where numbers of skilled staff and apprentices continue growing, currently delivering a 20%+ increase in productive hours. Elsewhere we have strengthened our support in Berthon Spain Sales and Berthon Scandinavia as Nathalie and Anna join us. We also welcome Sophie Kemp back to Lymington HQ after maternity leave to work on marketing and supporting the Team.
Our barometer of the market remains Berthon USA and after a good year the team are busy finding listings in a market where quality brokerage listings are scarce. Moody sells well and we are successfully introducing Solaris to American waters, expecting the brand to shine there as it is for the UK market with seven Solaris in build for Brits as I write this.
Berthon France is in for a big year delivering new Pearls into the South of France and with a facelift to go with the huge opportunities in Europe’s ultimate yachting playground.
Berthon Scandinavia grew exponentially in 2022 and the mix of an experienced team who know everything about yachts that are born on the island of Orust, and a supply of cherished yachts who overwinter snug and warm inside, means that 2023 is set to be huge too.
Which leaves the Mother Ship in the UK where we will deliver updated websites and a new system for monitoring the marketing of the yachts that we are selling, this year, as well as masses more moving imagery. With more brokerage yachts at our Lymington base than for the past four years, and a revolving Customs Warehouse door as yachts join and leave us, we expect to be busy.
It is risky to predict weather but impossible to avoid talking about it if you are British. Last year we predicted that it would be no worse than 2021, and of course it was extraordinary. So we predict that there will certainly be weather in 2023.