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How to build a diversified fine wine portfolio

Fine wine investment portfolio
  • A diversified wine portfolio spreads the risk across different wines and regions.
  • Each wine region has its own unique characteristics, and its performance is largely influenced by its own market dynamics.
  • Investors can also diversify their portfolio by vintages, including older wines for stability and new releases for growth potential. 

Fine wine is a popular investment for those seeking diversification and long-term growth. However, like any investment, building a successful fine wine portfolio requires strategic planning and a thorough understanding of the market.

This article explores key strategies for creating a balanced, diversified fine wine portfolio, and why it is important to include a variety of regions, brands and vintages.

Why diversification is key

As renowned economist Harry Markowitz put it, ‘diversification is the only free lunch in finance’. 

Diversification is fundamental to risk management in any portfolio, and fine wine investment is no exception. A diversified wine portfolio helps to reduce the impact of volatility, allowing investors to maximise returns by spreading risk.

While some wines may deliver higher returns, others can contribute to portfolio stability, as different regions tend to perform in cycles. This is why building a balanced fine wine portfolio requires selecting wines from a variety of regions, vintages, and holding periods. 

Diversifying by regions

Wine regions around the world offer unique characteristics, each with its own market dynamics. Including wines from multiple regions can help balance and strengthen an investment portfolio. 

Some primary regions to consider include:

Bordeaux: Bordeaux is undoubtedly the leader in the fine wine investment landscape, taking close to 40% of the market by value. The First Growths are its most liquid wines. In general, the classified growths are a staple in investment portfolios due to their established reputation and consistent performance.

Burgundy: Burgundy, driven by scarcity and rarity, is an investors’ paradise that has been trending in the last decade. Prices for its top Pinot Noir and Chardonnay have reached stratospheric highs and the region consistently breaks auction records.

Champagne: A market that attracts both drinkers and collectors, Champagne has enjoyed rising popularity as an investment in the last five years, thanks to strong brand recognition, liquidity and stable performance.

Italy: Italy continues to provide a mix of value, growth potential, and great quality. Its two pillars, Tuscany and Piedmont, are often included in investment portfolios for their balancing act – if Tuscany provides stability, top Barolo and Barbaresco tend to deliver impressive returns. 

California: Top Napa wines are among the most expensive in the market, while also boasting some of the highest critic scores, particularly from the New World. 

Emerging investment regions: As the market broadens, wines from other well-established regions are gaining traction in the investment world. Germany, Australia, and South America are some of the countries bringing a new level of diversity that can sometimes lead to higher returns.

Choosing vintages strategically

A well-diversified investment portfolio focuses on a range of vintages, as well as labels.

While older vintages offer stability and a more predictable market performance, younger vintages have a greater growth potential as they mature.

Older prime vintages: ‘On’ vintages, specific to each region, like Bordeaux’s 2000 or 2005, tend to have stable pricing due to their high quality and reputation. Including these in your portfolio can provide a foundation of reliability.

Younger vintages: Wines from recent years with high-quality (such as Bordeaux 2019) can offer growth potential over the long-term. As these wines age, their value often appreciates, providing long-term returns for investors willing to hold them.

Off-vintages: Investing in lesser-known or ‘off’ vintages can be worthwhile, particularly if the producer has a strong reputation. These wines are often priced lower but can perform well over time. Typically though not always they have a shorter holding period.

At the end, it is always a question of quality and value for money. 

Balancing short-term and long-term holdings

Fine wines vary in their optimal holding periods. Some wines reach peak quality and market value sooner, while others require decades of ageing. Creating a mix of wines with different holding periods allows for both short-term liquidity and long-term growth.

Short-term hold wines: These are typically wines from lesser-known producers, high-demand recent vintages or off vintages bought during periods of market correction.  These wines can be sold within a few years for a quick return.

Long-term hold wines: Wines from top producers, especially those known for longevity, are best held for 10+ years. For example, a Château Lafite Rothschild or Domaine de la Romanée-Conti can offer three figure returns if held over decades.

Active management for maximising portfolio success

Diversification is just one piece of the puzzle. Regular monitoring and occassional adjustments are essential for maximising returns in a fine wine portfolio.

Market conditions and wine values change over time, so staying informed and making adjustments ensures your portfolio remains aligned with your financial goals. Using tools like Wine Track or consulting with a wine investment advisor can provide valuable insights for rebalancing and enhancing your investment strategy.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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Q3 2024 Fine Wine Report

The fine wine market continued its downward trend throughout Q3 2024, but there are reasons for cautious optimism. Our Q3 2024 Fine Wine Report highlights the main themes that shaped the market, from regional performance to specific brand successes, and provides an outlook for the remainder of the year.

Executive summary

  • Since October 2022, fine wine prices have been in consistent decline, with a 4% drop on average in Q3 2024.
  • Bordeaux experienced the steepest fall at 4.4%, while Champagne defied the trend with a modest 0.4% increase last quarter.
  • Steady demand for fine wine continues to suggest a price recovery on the horizon.
  • Certain brands have outperformed the market, including Ruinart, Taittinger, and Château de Beaucastel.
  • Krug Vintage Brut 2004 has been the best-performing wine year-to-date, up 21.6%.
  • This year has already seen several broken auction records, including for high-profile Burgundy, which points to continued interest in fine wine.
  • Nine wines received perfect 100-point scores by Jane Anson in her recent Bordeaux 2009 and 2010 vintage retrospective.
  • France’s 2024 harvest is projected to be down 22% compared to last year, and 15% below the five-year average.
  • Looking ahead to Q4 2024, the market continues to present attractive buying opportunities, especially for investors with a long-term vision.

The trends that shaped the fine wine market

Global market recovery driven by rate cuts

In Q3 2024, global markets showed signs of recovery, bolstered by central banks pivoting towards interest rate cuts as inflation began to ease. Following turbulence in early August, stock markets rebounded, setting new records by the end of the quarter. Central banks, including the US Federal Reserve, the European Central Bank (ECB), and the Bank of England, all shifted their focus from inflation control to stimulating economic growth. The Fed’s September rate cut – the first since 2020 – catalysed a surge in US stocks, and similar moves from other central banks supported this global rebound. Despite lingering concerns about a potential US recession and Japanese market volatility, the overall global outlook improved, with lower rates and better economic conditions presenting growth opportunities.

Fine wine prices fall 4% in Q3

In contrast to the broader economic recovery, the fine wine market remained bearish, with a 4% average drop in prices in Q3. The Liv-ex 100 index saw its steepest fall of the year, down 1.7% in October. Bordeaux led the decline, with a 4.4% drop, although there was a slight uptick in Sauternes prices. Champagne offered a bright spot, rising 0.4% last quarter, with brands like Dom Ruinart Blanc de Blancs and Taittinger posting strong returns (over 30% in the last six months). This mixed performance underscores the complexity of the fine wine market, where price movements can vary widely by region and brand.

New fine wine releases beyond Bordeaux

As always, autumn brought the highly anticipated La Place de Bordeaux campaign, with major New World brands such as Almaviva, Seña, and Penfolds Grange releasing their latest vintages. However, this year’s campaign fell flat, with many new releases priced similarly to last year, despite older vintages showing better value and investment potential due to price corrections. Investors may find more favourable opportunities in back vintages that boast higher critic scores at lower prices.

Regional fine wine performance in Q3

The fine wine market has now returned to its 2021 levels, with prices declining across most regions in Q3 2024, except for Champagne, which recorded a modest 0.4% increase.

Bordeaux experienced the most significant drop, falling 4.4%, driven down primarily by the Second Wine 50 index, which plunged 6.6%, and the Right Bank 50 index, down 4.6%. Many wines from the 2019 vintage, which had previously appreciated in value, have now returned to their original release prices.

Despite this trend, Bordeaux is enjoying steady market demand, taking over a third of the market by value. Moreover, Jane Anson recently revisited the 2009 and 2010 vintages, awarding nine wines 100 points – a move likely to stimulate demand and prices.

When it comes to other regions, Italy and Burgundy also saw a 2% drop in Q3. The Rhône was somewhat more resilient, experiencing a smaller decrease of 0.8%.

The best-performing wines

While the broader market continues to face challenges, certain wines buck the trend, reinforcing the importance of strategic, brand-specific investment decisions.

In Q3 2024, some brands have delivered exceptional returns. The table below showcases the best-performing wines year-to-date, with regions like Tuscany and the Rhône dominating the list.

Leading the pack is Krug 2004, which saw an impressive rise of 21.6%, reflecting the continued strength of Champagne in the investment market. Earlier this year, Antonio Galloni (Vinous) rescored the wine, giving it 98 points. He described it as a ‘gorgeous Champagne that is just beginning to enter its first plateau of maturity’.

Close behind is Domaine du Pégau’s Châteauneuf-du-Pape Cuvée Réservée 2012, which appreciated by 21.2%. Sassicaia 2011 follows with a 21% increase, while its 2015 vintage takes the tenth spot, with a 12.1% rise.

Vega Sicilia Único also features twice with its 2010 and 2011 vintages, demonstrating the increased demand for Spanish wines.

Wines from Bordeaux and the Rhône also make the list, showcasing the diversity of the wine investment market.

The most expensive wines in 2024

The world’s most expensive wines in 2024 are overwhelmingly dominated by Burgundy. At the top of the list is Domaine de la Romanée-Conti’s Romanée-Conti Grand Cru, with an average price of £221,233 per case. Following closely is Domaine d’Auvenay Chevalier-Montrachet Grand Cru, priced at £204,328.

Other notable entries include:

  • Domaine d’Auvenay, Criots-Bâtard-Montrachet Grand Cru at £141,979.
  • Liber Pater, from Bordeaux, priced at £140,009, stands out as the only non-Burgundy wine in the list.
  • Domaine Leroy, Richebourg Grand Cru, valued at £120,007, further establishes Burgundy’s dominance as a highly collectible wine region.

Burgundy producers such as Domaine Leroy and Domaine d’Auvenay appear multiple times on the list. The trend reflects how scarcity, reputation, and critical acclaim are key drivers of value, especially as the market for fine wine becomes increasingly selective in uncertain economic times.

Further entries include:

  • Domaine Leroy, Romanée-Saint-Vivant Grand Cru at £103,844.
  • Domaine d’Auvenay, Mazis-Chambertin Grand Cru at £93,818.
  • Domaine de la Romanée-Conti, Montrachet Grand Cru at £89,529.
  • Domaine Leroy, Corton-Charlemagne Grand Cru at £81,827.
  • Domaine d’Auvenay, Meursault Premier Cru, Les Gouttes d’Or at £80,715.

This dominance by Burgundy reflects its unmatched status in the global wine market, where scarcity and consistent quality continue to command premium prices.

For more information, visit Wine Track.

Fine wine news

The autumn La Place de Bordeaux release campaign

The 2024 La Place de Bordeaux campaign saw the latest releases from Masseto, Solaia, Seña, Penfolds Grange and many more. However, many of these new vintages were released at the same or slightly higher price levels as last year, despite a general market decline, making them less attractive from an investment perspective.

For instance, Masseto 2021 received a perfect 100-point score from Antonio Galloni but was priced at the same level as last year, with back vintages such as 2017, 2018 and 2019 offering better value. Meanwhile, the 100-point Solaia 2021 was released at a 15.7% premium on the 2020 vintage.

From Chile, the 2022 Seña and Viñedo Chadwick were offered at last year’s prices, but older, higher-scoring vintages such as Seña 2019 and Viñedo Chadwick 2021 remain more affordable. Penfolds Grange 2020 saw a small price increase, yet back vintages like the 100-point 2013 offer greater investment potential. Overall, back vintages, with comparable or higher critic scores, often provide better value for investors looking to capitalise on the current market dip.

Historically low yields in France

The 2024 French wine harvest is projected to be one of the smallest in recent history, with regions like Burgundy and Bordeaux experiencing significant declines due to adverse weather conditions.

Burgundy’s output is projected to be down by 25% compared to 2023, while Bordeaux is facing a 10% drop, resulting in the region’s lowest production volume since 2017.

Historically, such scarcity in Burgundy has driven secondary market price increases, as collectors rush to secure rare wines. However, the economic downturn may temper this trend, making selectivity key for investors. In Bordeaux, while smaller harvests often support price stability for premium wines, the broader market conditions may limit price recoveries, especially for mid-tier labels.

Q4 2024 market outlook

The consistent decline in fine wine prices leaves many wondering when the market will stabilise. Despite this downward trend, several factors point toward potential recovery and attractive buying opportunities in Q4.

Firstly, strong demand for select wines persists, particularly for brands that continue to outperform the market. This year has already seen several broken auction records, including for high-profile Burgundy, which points to continued interest in fine wine.

While the market as a whole is facing challenges, strategic investment in the right wines can still yield impressive returns. Investors looking to capitalise on market lows should consider brands which have consistently shown growth despite broader regional declines.

The global economic backdrop also provides reasons for optimism. Central banks, led by the US Federal Reserve, have shifted towards interest rate cuts which could stimulate further investment in alternative assets like fine wine.

In terms of regional performance, the ongoing declines in key regions may start to stabilise, as already seen in Champagne. Despite a 4.4% drop in Q3, Bordeaux remains a dominant player with one-third of the market share by value. With critics such as Jane Anson awarding nine perfect 100-point scores to Bordeaux wines from the 2009 and 2010 vintages, we may see renewed interest in classic vintages.

In summary, Q4 2024 offers a unique window of opportunity for long-term investors. With the current decline, strategic investments in high-performing brands and undervalued vintages could offer substantial returns on the road to recovery.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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How different bottle sizes impact your wine investment returns

Luxury fine wine labels different size bottles
  • Larger bottles have a longer shelf life, meaning that there is more time for price appreciation.
  • They are also available in smaller quantities, adding an element of rarity that drives up demand and price.
  • Champagne and Bordeaux are the regions leading the investment market for big bottles. 

When choosing a wine for investment purposes, the region, producer reputation and vintage quality are among the first things to consider. However, one factor that is often overlooked but can have a significant impact on the investment value is the bottle size.

Investing in larger wine bottle formats can enhance the longevity and quality of the wine, and lead to higher returns compared to standard bottles. Below we explore the reasons why size matters in the world of wine investment.

How bottle size affects wine investment

The science behind bottle size and wine quality is well-established. Larger bottles have a smaller surface-area-to-volume ratio, meaning less exposure to oxygen, which slows the wine’s ageing process. This slower ageing allows the wine to develop more complexity over time, preserving its character better than smaller formats.

This benefit makes large-format bottles, such as magnums and jeroboams, highly sought-after. Not only can these bottles offer superior quality, but they also come with a scarcity factor that often results in significant price premiums. The rarity of these formats adds an element of collectability, making them a lucrative investment option.

The price performance of larger bottles

Larger bottles have enjoyed a growing demand in the wine investment world. The two main regions that dominate this market segment are Champagne and Bordeaux. 

During Champagne’s recent bull run (2021-2022), secondary market trade by value of big bottles rose from 7% to 15%, which in turn impacted prices. The average value of a magnum case rose an impressive 78%. 

Magnums of Louis Roederer Cristal 2008 saw a 54% premium over standard bottles, while Dom Pérignon 2008 magnums commanded an 18% price uplift. Larger formats like Methuselahs (6 litres) of Cristal 2008 enjoyed a staggering 175% premium. 

Meanwhile, some of the most sought-after Bordeaux wines in large format include the First Growths Château Lafite Rothschild and Château Mouton Rothschild, the latter of which has highly collectible, vintage-specific artist labels.

From Burgundy, Domaine de la Romanée-Conti produces large bottle formats that make them a prime choice for high-end collectors. Other in-demand large format bottles from the rest of the world include Penfolds Grange and Opus One. 

Size options and investment opportunities

Wine bottle sizes graphic

While standard bottles are more commonly traded, investing in magnums and larger formats offers several advantages. For example, three magnums of Pétrus 1995 traded for £17,200 in July this year, yielding a 16.5% premium compared to their 75cl counterparts.

Rare formats like Balthazars and Nebuchadnezzars can fetch even higher premiums due to their scarcity, particularly for sought-after vintages and regions.

Why larger formats can lead to better returns

There are several reasons why larger bottle formats can offer better investment returns. 

Slower ageing process: Larger bottles slow down the wine’s exposure to oxygen, allowing for better preservation and longer ageing. This makes the wine more desirable over time.

Rarity and collectability: Large-format bottles are often produced in smaller quantities, adding an element of rarity that drives up demand and price.

Increased longevity: Investors can hold onto these bottles for longer periods without worrying about the wine deteriorating. This allows them to take advantage of market peaks and secure higher returns.

Visual appeal: Large-format bottles make a statement at auctions or in private collections. Their grandeur and rarity often make them more attractive to high-end buyers.

Timing is everything

Given the current market conditions, larger formats are particularly attractive. Prices for these bottles are often discounted during dips in the market, making them an affordable entry point for investors looking to capitalise on future growth. As demand for rare and collectible wines continues to rise, investing in larger formats now could pay off significantly in the long run.

If you’re looking to diversify your portfolio, now may be the time to consider going big on bottle sizes.

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What factors affect fine wine prices?

Domaine Romanee de la Conti wine bottles
  • The most important factors that affect fine wine prices are production costs, climate change, market demand, and economic conditions.
  • Market demand is influenced by critic scores, rarity, producer reputation, vintage quality, and geopolitics.
  • Understanding the factors that affect fine wine prices is key to making smart investment decisions.

Fine wine is more than just a luxury product – it is an asset class, a status symbol, and for many, a serious investment. While buyers might be aware of the rising value of sought-after labels, understanding the factors that drive these prices (upwards or downwards) is key to navigating the fine wine market. 

In this article, we explore the primary factors affecting fine wine prices, including production costs, climate change, market demand, and broader economic conditions.

How production costs shape fine wine prices

At the heart of fine wine pricing are the production costs. The making of a high-end wine is a meticulous, labour-intensive process that is inevitably reflected in the price. So are the land costs, which can reach astronomic heights in famous fine wine regions like Burgundy, Napa or Bordeaux. 

For instance, the luxury conglomerate LVMH recently acquired 1.3 hectares of Grand Cru vineyards on the Côte d’Or for 15.5 million euros. The purchase includes half a hectare each in Corton-Charlemagne and Romanée-Saint-Vivant, as well as 0.3 hectares in Corton Bressandes.

Besides land costs, manual labour and vineyard management can further affect release prices. The more human intervention required – whether in the vineyard or the winemaking process – the more costs add up.

Finally, many fine wines are not ready for release for several years after production. Extended ageing means producers incur additional costs, which in turn drives up prices for wines that are stored for longer periods before hitting the market.

The impact of climate change on fine wine pricing

In many traditional wine regions, unpredictable weather patterns, such as frost, heatwaves, and hailstorms, have resulted in lower grape yields. For example, the devastating frost in Burgundy in 2021 significantly reduced production, leading to a scarcity of wines from that vintage. 

When yields are lower, the limited supply pushes prices higher, especially for in-demand producers. This scarcity effect can be seen in top wines like Domaine Leflaive or Domaine de la Romanée-Conti, where a challenging growing season can result in soaring prices.

Additionally, climate change is affecting the style of wines being produced. While some regions like Bordeaux are adapting to these new conditions, climate volatility has added another layer of unpredictability to wine prices. It has also facilitated the emergence of new wine regions, leading to a more competitive landscape.

Market demand and the rise of fine wine investment

Market demand is perhaps the most significant factor affecting fine wine prices. The most sought-after bottles usually rise in value, as quality improves over time and supply diminishes.

Producer reputation, vintage quality and scores from major critics like Robert Parker and Neal Martin play a key role here, informing buying decisions and pricing strategies. A 100-point wine often commands a significant premium to a 99-point wine. When it comes to the Bordeaux First Growths, for instance, the average difference between a 99-point and a 100-point wine is over £350 per case.

Market demand is also shaped by geopolitical factors. The global nature of wine trading platforms means that market sentiment can affect wine prices faster than ever before. Demand from China largely contributed to Bordeaux’s pricing surge in 2011, and today interest is moving towards Burgundy and Champagne.

Economic forces that influence fine wine prices

While the fine wine market generally operates with its own dynamics, macroeconomic factors such as inflation, currency fluctuations, and recessions can all have an impact.  

In times of economic downturn, discretionary spending often decreases, which can lead to short-term drops in wine prices. However, fine wine has historically shown remarkable resilience due to its tangibility, rebounding after economic dips. 

Currency fluctuations also play a role; for instance, a weaker euro might make European wines more attractive to international buyers, spurring demand and increasing prices in markets like the US or Asia.

Changes in trade policies and tariffs can also have an impact. The Trump tariffs on European wines in 2020 temporarily raised the prices of French and Italian wines in the American market. While these tariffs have been reduced, ongoing changes in trade regulations can create volatility in wine pricing, particularly for internationally traded wines.

Understanding price fluctuations within fine wine

Fine wine prices are influenced by a complex interplay of factors, from the inherent quality of the wine itself to broader market forces and economic conditions. Understanding these factors is key to making informed decisions and maximising returns on investment.

Want to learn more about fine wine investment? Download our free guide.

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What is a market dip, and how can fine wine investors take advantage?

High end wine label bottles
  • A market dip is a temporary decline in prices, caused by economic or market-specific factors.
  • Buying the dip is advised when the underlying market fundamentals are favourable.
  • This is arguably the best time to invest in fine wine in a decade.

A market dip is a temporary drop in prices. This is often caused by economic or market-specific factors. In the fine wine market, these dips are less frequent and less volatile compared to traditional financial markets like stocks or bonds. While the fine wine market has been bearish three times since the turn of the century, global mainstream markets have experienced many more significant crashes. 

However, when a dip does occur, and provided that the fundamentals are strong, it can present a unique opportunity for buyers. Investors can enter the market, adjust their allocations or expand their portfolios with high-value brands and rare vintages at discounted prices. Sellers may look to liquidate their stock, offering rare and premium wines from regions like Bordeaux, Burgundy, and Champagne at more attractive prices.

Currently, the fine wine market is benefitting buyers. While the temporary drop in prices might raise concerns on the surface, those who adopt a long-term, strategic approach can reap significant rewards by buying the dip.

Buying the dip when the fundamentals are strong

According to Sir John Templeton, the best time to invest is during ‘points of maximum pessimism’. With fine wine indices down over 20% from their 2022 peaks, this moment presents one of the best opportunities to buy in the last decade.

Fine wine fundamentals remain intact: wines improve with age, and become rarer over time as bottles are consumed. The market’s appetite for older vintages is still strong, and regions like Burgundy, Bordeaux and Champagne continue to break pricing records at auction.

Fine wine indices performance 2024

Current macroeconomic environment and its impact

The global economy is currently facing several challenges – rising inflation, high interest rates, and geopolitical tensions, all of which have contributed to the recent dip in fine wine prices. 

Despite these macroeconomic factors, fine wine remains less volatile than traditional markets. During times of economic uncertainty, fine wine’s tangible nature and intrinsic value have helped it weather storms better than more speculative assets like equities or cryptocurrencies. 

Additionally, the growing demand for luxury goods continues to support the fine wine market. This demand will likely drive the next phase of growth once global economic conditions stabilise.

Historical fine wine market rebounds

Another reason for confidence is that the fine wine market has consistently rebounded after periods of economic downturn. During the 2008 global financial crisis, the Liv-ex 100 index fell by 25% but had risen over 60% by mid-2011. 

20 year performance of Liv-ex 100 and Liv-ex 1000

Similarly, Bordeaux’s peak in 2011 was followed by Burgundy’s rise, showing that demand for fine wine remains strong even if it shifts on a regional basis. This is why diversity is key. 

The market is no longer dominated solely by top Bordeaux, and spreading your allocations across key wines and vintages can balance an investment portfolio and maximise returns.

How to take advantage of the dip in the fine wine market

For investors looking to capitalise on the current market dip, the strategy is clear: buy low and hold for the long term. 

Focus on proven performers: Wines from top regions like Bordeaux, Burgundy, Italy and Champagne have historically demonstrated resilience. Investing in top vintages and estates offers a measure of security.

Take advantage of fear-driven selling: As some sellers look to exit the market prematurely, investors can acquire undervalued wines with strong growth potential.

Diversify your portfolio: Spread your investment across different regions, producers, and vintages to mitigate risk and maximise returns.

Get in touch to discuss your allocations or to start building your fine wine collection. Schedule a consultation.

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Profiling the fine wine investor in 2024

London city high net worth individuals
  • Nearly 30% of the UK’s high-net-worth (HNW) investors incorporate fine wine into their portfolios.
  • They tend to be cautious, but in 2024, investors with balanced risk profiles are increasingly dipping into the world of drinkable assets.
  • Since last year, the demographic has shifted a little towards less experienced investors, indicating that new HNWs could be getting involved with fine wine.

Fine wine, historically a passion-driven investment, has predominantly attracted older, seasoned investors interested in both enjoying and preserving their wealth. However, recent trends indicate a shift as younger, less experienced investors in the UK are increasingly drawn to fine wine for different reasons – not least because the fine wine market has become more accessible.

Fine wine allocations in investment portfolios

In 2024, nearly 30% of the UK’s high-net-worth (HNW) investors incorporate fine wine into their portfolios.

66% are allocating up to 10% of their portfolio to fine wine, with the remaining 34% reserving over 11%. In 2024, 2% are allocating over a third of their portfolio to fine wine. This trend reveals a more polarising wealth distribution, considering that last year just half of wealth managers kept fine wine allocations under 10%, but none invested over 30% of their wealth in fine wine.

Investors’ risk profiles

Fine wine investors tend to be the cautious type. According to our 2024 wealth management survey, 88% of respondents incorporate fine wine into portfolios for investors with a ‘somewhat cautious’ or ‘extremely cautious’ risk tolerance. As fine wine can help provide stability, it can have a calming influence on overall performance. 

Cautious investment portfolios also generally contain a greater proportion of bonds and cash-like assets. The inflation-resistance of wine can help to buffer out some of the risks this can present over the long term. 

The remaining 12% tend to use wine for balanced portfolios (compared to 10% last year). None of the respondents use the asset for clients with higher risk tolerances.

In 2024, around 2% of respondents are using fine wine for ‘somewhat aggressive’ portfolios. As fine wine has historically exhibited strong growth during recessions and periods of high inflation, it could easily be used to diversify high-risk portfolios. 

Fine wine investment risk profile UK 2024

Investment experience

In line with this trend, over the past 12 months, fine wine has started to move beyond the realm of ‘very experienced’ investors. The slow spread towards ‘experienced’ and ‘somewhat experienced’ investors suggests that fine wine is becoming a more mainstream asset. 

This move could be prompted by the demand to invest in sustainable and low-carbon assets. As this trend is particularly strong with younger investors, it fits that they could have less experience. 

This year, 52% of UK wealth managers rated their investment clients as ‘very experienced’ with fine wine, compared to 62% in 2023. Meanwhile, clients with medium or limited experience grew their fine wine investments.

Fine wine investment experience UK 2024

Fine wine has long been perceived as an exclusive, somewhat intimidating investment, traditionally reserved for a privileged few. But as our recent research indicates, attitudes are slowly changing.

For more information on the changing fine wine investors’ demographics, read our exclusive Wealth Report 2024: UK Edition.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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Top reasons to invest in fine wine in 2024

  • Stability, sustainability and increased market liquidity are the key drivers of investment interest in fine wine. 
  • UK investors are also attracted by the tax advantages of fine wine, which is classed as a ‘wasting asset’.
  • Meanwhile, passion investing is on the rise in the US, seeing an 8% uptick since last year.  

Our recent survey among UK and US wealth managers revealed the top reasons why investors are choosing fine wine in 2024. 

While there are differences in their motivations based on demographic, sustainability, stability through different economic environments, and increased liquidity came at the forefront in both markets.  

Fine wine’s stability during market volatility

In uncertain times, investors often seek tangible assets that offer stability. As WineCap’s CEO, Alexander Westgarth puts it, ‘In times of hardship, people want something solid. Literally. Tangible assets like property, gold or fine wine tend to feel more precious during market downfalls’. 

With US market sentiment being one of fear, according to the Fear & Greed index, 74% of US wealth managers chose stability as their top reason to include fine wine in client portfolios, marking a 6% increase from last year.

US investor motivations for fine wine

In the UK, stability came as the second most important factor driving demand for fine wine. It was cited by 56% of our survey respondents, up 16% since 2023. High inflation, slow economic growth and various macroeconomic headwinds have solidified fine wine’s position as a ‘safe haven’ asset, preferred by UK investors. 

Sustainable investing on the rise

Sustainability was the number one reason to invest in fine wine for UK wealth managers, and the second most important factor in the US. 

As we recently explored (‘The growing importance of sustainability in fine wine investment’), there has been a broader global trend where environmental, social, and governance (ESG) factors are increasingly shaping investment strategies across various asset classes, including fine wine.

Research from Morgan Stanley shows that more than half of individual UK investors plan to increase their allocations to sustainable investments in 2024, making fine wine a great investment option. 

According to our survey, 68% of UK investors invest in fine wine because of its low-carbon benefits, with many fine wine producers leading the charge in sustainable viticulture. 

Improved liquidity

Investors in both the UK and US recognise that the fine wine market is becoming more liquid. Advances in technology have opened up new avenues for investors, simplifying buying and selling processes, improving price transparency, and shifting perceptions of fine wine as an “illiquid liquid.”

As a result, UK investor confidence in the market’s liquidity has increased by 32% in 2024. As for the US, there has been a 14% increase from 2023. 

UK tax benefits

UK investors benefit from fine wine’s status as a ‘wasting asset’ making it a more tax-efficient investment. As of April 2024, UK investors pay up to 28% tax on profits over £3,000. Pre-2022, investors paid tax on anything above £12,300, but the past few years have seen the threshold slashed in a bid to plug the ‘fiscal black hole’. 

As a ‘wasting asset’, the HMRC does not consider fine wine an investment where the profit should be taxed. Investors recognise this benefit, with 90% of our survey respondents noting that the CGT changes will increase the attractiveness of fine wine.

Tax efficiency was the fourth most important reason for UK investors, cited by 38% of the respondents.

UK CGT changes and fine wine investment

The overlap between collecting and investing in the US

Fine wine, long seen simply as a passion asset, has managed to rebrand itself as a sound alternative investment choice. UK investors today focus less on ‘passion’, a motivation that has seen a 16% dip since last year. 

Still, in the US, many investors start out as collectors. ‘Passion investing’ has been on the rise across the pond, with 24% of the survey respondents being motivated by earning a profit and enjoying the experience that comes with owning a fine wine collection. 

For the full breakdown of the reasons why investors choose fine wine in 2024, read our UK and US Wealth reports.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

 

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How technology has democratised fine wine investment in 2024

Wine investment technology
  • Technology has democratised fine wine investment by opening new avenues and making the asset more accessible to novice investors.
  • Since last year, there has been a 32% increase in UK investor confidence in the market’s liquidity – a shift partly driven by technology.
  • 80% of UK investors believe that technology like blockchain will create more security and confidence in the sector.

In the world of fine wine, exclusivity has long defined the industry, which has historically attracted seasoned aficionados and connoisseurs with extensive resources and specialised knowledge.

In recent years, technology has democratised the sector, opening new avenues and making fine wine appeal to a more diverse investor demographic. 

According to our 2024 UK Wealth Report, technological advancements have contributed to fine wine going mainstream and thus expanding the market’s appeal to a broader audience, in particular, less experienced investors. Technology has simplified buying and selling processes, enhanced pricing transparency and improved the market’s overall liquidity.

Technology leads to an increase in investor confidence

Since last year, there has been a 32% increase in UK investor confidence in the market’s liquidity – a shift partly driven by technological advancements. In the US, this number is 14%. 

An increasing number of fine wine investors are leveraging data and technology to inform their buying and selling strategies and track the value of their portfolio.  

Online platforms, like WineTrack, have made it easier to identify investment opportunities, compare prices and critic scores and track a brand’s historic performance all in one place. Meanwhile, fine wine indices like the Liv-ex regional indices can help investors compare the performance of different regions and identify market trends.

UK Wealth Managers 2024 Statistics

Advanced technology’s role in fine wine trading

According to our survey, investors and wealth managers are increasingly receptive to new developments, like the use of blockchain technology, in the fine wine investment landscape.

80% of UK investors believe that technology like blockchain will create more security and confidence in the sector, up from 56% last year. In the US, 76% of investors recognise its benefits, up from 54% in 2023.

52% of the UK survey respondents think that blockchain will make reputable releases, such as En Primeur offers, more accessible for investors without using a third party. Still, 6% of them remain sceptical about how this would work in practice.

Meanwhile, 46% of US wealth managers think that blockchain will bring greater transparency in the supply chain, and further boost investor confidence.

As a growing number of new investors consider fine wine for its unique benefits diversifying traditional portfolios, technological innovations continue to redefine their overall experience and industry standards. 

From blockchain contributing to supply chain transparency to online wine investment platforms shaping decision-making, these technological advancements are evening out the playing field by creating new opportunities in the market and appealing to a broader audience. 

For those interested in exploring this trend further, WineCap’s 2024 Wealth Report offers an in-depth look into the top motivations for investing in fine wine, the trends shaping the market, and investor sentiment.

Download your complimentary copy here. 

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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Q2 2024 Fine Wine Report

Chateau Leoville Las Cases

Our Q2 2024 report has now been released. The report examines the macroeconomic factors affecting fine wine prices, the Bordeaux 2023 En Primeur campaign, the best-performing wines, industry news and an outlook for Q3.

Executive summary

  • The second quarter built on the successes of the first, with risk assets delivering another set of positive returns to investors.
  • Global equity markets were buoyed by resilient economic growth and rising investor confidence.
  • UK investment sentiment also improved after a landslide election win for the new Labour government.
  • The fine wine market remains a buyers’ market, with Burgundy and Champagne priced down the most in Q2. 
  • Bordeaux back vintages enjoyed rising demand and prices, following the 2023 En Primeur campaign.
  • The best-performing wine in Q2 was the 100-point Château Léoville Las Cases 2016.
  • This year’s En Primeur yielded mixed results with few great successes despite the general price cuts. 
  • Some of the best releases included the First Growths and their second wines, Beychevelle, and Cheval Blanc.
  • In other news, Sotheby’s Burgundy sale smashed wine auction records and Marchesi Antinori took full ownership of the Washington State winery Col Solare.
  • In buying opportunities, Latour 2009 offers perfect scores at the best possible price on the market.
  • Looking ahead, we anticipate the autumn La Place de Bordeaux campaign following a short summer lull.

The trends that shaped the fine wine market

Economic resilience boasts global markets

The second quarter delivered positive results for global equity markets which were buoyed by resilient economic growth, and supportive earnings and sales expectations. This strong economic foundation has allowed equities to advance, even as stubborn inflation poses potential challenges. Bond markets also appeared attractive; however, the same economic resilience that benefitted equities introduced near-term risks for fixed-income investments.

UK investment sentiment also improved following a landslide election victory for the new Labour government. The British pound, which has been the strongest major currency against the dollar this year, nudged higher when the scale of Labour’s victory became clear. The UK-focused FTSE 250 share index, which has outperformed the more global FTSE 100 year-to-date, rose to its highest level since April 2022, reflecting renewed investor confidence in the country’s economic prospects.

Fine wine – a buyer’s market

Meanwhile, fine wine prices continued to decline. The Liv-ex 1000 index, the broadest measure of the market, is currently at the level it was in August 2021 (388.28). Despite falling prices, trade volumes are higher than this time last year, suggesting that buyers are seizing opportunities to acquire wines at more favourable prices. Moreover, some of the best-performing wines this quarter rose as much as 20% in value. There are opportunities to be had if one follows closely.

En Primeur and Bordeaux’s falling prices

Some of these opportunities arose during the 2023 Bordeaux En Primeur campaign. The best new releases offered a compelling mix of quality and value, with a significant potential for future price appreciation. These included Beychevelle, Cheval Blanc, and the First Growths’ Grand vins and second wines – still, few and far between given the scale of the campaign. In the secondary market, Bordeaux prices fell 1.8% in the second quarter, making back vintages even more attractive. The only index that rose in value as the campaign concluded was the Bordeaux Legends 40 – exceptional older vintages that enjoyed rising demand. 

Regional fine wine performance

Liv-ex regional indices performance chart

As the market’s focus shifted to new releases, prices in the secondary market fell in Q2. The broadest measure, the Liv-ex 1000 index, dipped 2.4%. It was led lower by the Burgundy 150 (-3.9%) and the Champagne 50 (-3.7%). The Rest of the World 60 and the Italy 100 indices experienced the smallest declines of 1.1% and 1.2% respectively.

As the chart above shows, Italy has shown relative resilience in the current bearish market. Despite broader market uncertainties, some Italian brands have even recorded positive movement in the last six months as high as 15%.

In June, the Bordeaux Legends 40 index recorded its first positive movement in almost a year, rising 0.3%. The index tracks the performance of a selection of 40 Bordeaux wines from exceptional older vintages (from 1989 onwards). As we have previously highlighted, older vintages can often be a lucrative investment prospect, offering a combination of quality, value and bottle age. 

The best-performing wines in Q2

Best performing wines Q2 2024

The best-performing wines this quarter were a diverse mix from Bordeaux, Burgundy, Piedmont, the Rhone and Champagne. Leading the charge was the 100-point (WA) Château Léoville Las Cases 2016, with an impressive 19.4% increase. William Kelley described it as ‘one of the high points of this great vintage’. Close behind was Château Angélus 2019, which saw a 19.1% rise.

From Burgundy, Domaine Bonneau du Martray Corton-Charlemagne Grand Cru 2020 came third, up 15.2%. Other wines from the region that rose in value included Domaine de la Romanée-Conti La Tache Grand Cru 2017 and Coche-Dury Meursault 2018. 

Dom Pérignon Rosé 2009 also made the rankings, with a 9.6% rise this past quarter. On average, prices for the wine have risen 83% in the last decade.

Fine wine news

Sotheby’s Burgundy sale smashes records

On July 5, 2024, Sotheby’s conducted its first exclusive single-owner Burgundy sale, breaking eight world records and achieving €2 million ($2.1 million). Held in the historic Caves du Couvent des Cordeliers in Beaune, the auction featured over 175 lots from Taiwanese entrepreneur Pierre Chen’s cellar.

Top highlights included six bottles of Chevalier Montrachet d’Auvenay 2009, which fetched €106,250 (£89,915), and 12 bottles of Domaine Armand Rousseau Chambertin Clos de Bèze 1990, sold for €100,000 (£84,630). Among the record-setting sales were three bottles of 2005 DRC Échezeaux at €10,000 per bottle and a magnum of 2005 DRC La Tâche at €35,000.

Last month, Chen’s collection of fine and rare Champagne achieved €1.35 million (£1.14 million) at Sotheby’s in Paris, with notable sales including three magnums of Salon Le Mesnil Blanc de Blancs 1990 for €25,000 (£19,600) and a magnum of Dom Pérignon P3 1966 for €23,750 (£20,100), both setting new records.

Sotheby’s expects Chen’s collection to fetch a record $50 million (£39.2 million) by the series’ end, with upcoming auctions in New York and Hong Kong.

Antinori expands into Washington

Marchesi Antinori, one of Italy’s oldest family-owned fine wine producers, has taken full ownership of the Washington State winery Col Solare, which was established as a joint venture in 1995 with Ste. Michelle Wine Estate (SMWE). The acquisition includes the winery, the estate vineyard spanning 12 hectares planted primarily with Cabernet Sauvignon, and the brand, which produces around 5,000 bottles annually. Piero Antinori, president of Marchesi Antinori, expressed admiration for Red Mountain AVA’s unique terroir, emphasising the challenge and excitement of producing high-quality Washington red wines.

Juan Muñoz-Oca, COO of Antinori USA, highlighted the significance of this acquisition, reflecting Washington’s growing reputation for luxury wines. This move follows Antinori’s 2022 acquisition of Napa’s Stag’s Leap Wine Cellars, transitioning from a 15% to 100% stake after SMWE was sold to Sycamore Partners for $1.2 billion in 2021. Besides Stag’s Leap, Antinori owns Antica, a 200-hectare estate in Napa Valley, as part of their expansion in the states.

Buying opportunities: Latour 2009

Chateau Latour 2009 wine prices

Château Latour 2009 currently represents a combination of perfect scores and perfect timing. The highest-scoring wine ever at the annual Southwold tasting, Latour 2009 is now at the best price it has been in almost a decade. 

The recipient of no less than five perfect scores from Robert Parker, Lisa Perrotti-Brown MW, Jeff Leve, James Suckling, and Falstaff, Latour 2009 is a stand-out wine among critics. Hailed by Robert Parker as the greatest vintage he’d ever tasted, more recently Neal Martin described it as ‘outstanding’ and a ‘Latour firing on all cylinders’.

Latour is also the highest-scoring 2009 Bordeaux on Cellar Tracker, where it’s also the second-highest-scoring wine of the entire decade, beaten only by Petrus 2000 at more than six times the price.

In terms of price performance, Latour has outperformed all the other First Growths over one, two and five years. 

The 2009 vintage, which is currently available at one of the lowest price points ever, offers value among other prime vintages. Its scores match the 1982 and 1961, both of which come at a significant premium.

It is more affordable than the 2010 as well as the 2000 and 1990 vintages but with superior scores than all of them. The 2009 Latour is a hidden gem that seems particularly good to seek out now.

Outlook for Q3

With the onset of the summer lull, the market is expected to experience a temporary slowdown as usual. Despite this seasonal dip, numerous opportunities remain available. The market for collectibles, including fine wine, is gaining popularity among new investors looking for diversity and uncorrelated market returns.  

Over the next two months, the fine wine market will shift its focus to wines from around the globe as the autumn La Place de Bordeaux campaign takes centre stage. Esteemed producers such as Almaviva, Opus One, Vérité, Seña, Catena Zapata, Masseto, and Solaia will unveil their latest vintages on the international stage, accompanied by numerous other exciting releases.

As the campaign expands to include New World wines, the category is expected to see a surge in secondary market demand, potentially driving up prices. We will continue to spotlight the best investment opportunities where exceptional quality and brand prestige meet attractive pricing.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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The rising demand for collectibles

Fine wine collectible
  • The impending largest intergenerational wealth handover is driving the expansion of the collectibles market.
  • Demand is rising among younger investors looking to diversify their portfolios with assets that offer uncorrelated market returns. 
  • Fine wine is the most popular collectible among UK investors, followed by luxury handbags and jewellery. 

From luxury handbags to fine wine and whisky, the collectibles market is expanding and attracting rising demand from investors that is set to continue. 

This shift is driven by the onset of the largest intergenerational wealth handover in history and a growing appetite among younger investors to diversify their portfolios with assets that offer uncorrelated market returns. 

The evolution of the collectibles market

The allure of collectibles as investments is not a recent phenomenon. Historically, items like fine art, rare coins, and vintage wines have been appreciated for their aesthetic and cultural value. During periods of economic uncertainty, tangible assets like these often retained their value better than traditional financial instruments. For example, during the Great Depression, art and rare coins rose in price, providing a hedge against financial market volatility.

In the post-World War II era, the collectibles market began to gain more structure and legitimacy. Auction houses such as Sotheby’s and Christie’s played pivotal roles in establishing benchmarks for the value of fine art and antiques. The rise of specialised indices, such as the Mei Moses Art Index, helped quantify returns on art investments, further opening the market.

The collectibles market has further evolved in recent years with the help of technology. Technological advancements have democratised access to market information and trading platforms, making it easier for investors to track market trends and make informed decisions. Indices like Wine Track help prospective investors see the average price of a wine, critic scores and investment returns over different time periods for free and at a glance. 

A testament to the rising demand is the expansion of the market. According to investment bank Nomura, the art and collectibles category is now larger than private assets ($1.6 trillion) and more than twice the size of private debt markets ($0.8 trillion). 

The most wanted collectibles for portfolio diversification

Among collectibles, fine wine is king. 92% of UK wealth managers anticipate demand to increase in the next year. Compared to other luxury assets, the fine wine market is more established and less volatile, offering increased liquidity and price transparency.

The second most popular collectible in 2024 is luxury handbags, with 86% of wealth managers expecting demand to rise further. As recently explored, interest in handbags as an investment has grown in line with rising prices in the primary market. For instance, the price of the Chanel medium classic flap bag is up close to 553% since 2005, and 4,809% since 1955.

Jewellery is the third most popular collectible in 2024 for 84% of wealth managers, followed by coins (82%). The fifth spot is shared by watches and rare whisky at 78%.

When it comes to the latter, fine wine investment companies are already capitalising on this trend by branching out into spirits. While its secondary market is still in the early stages of its development, rare whisky has already set pricing records.

Earlier this year, a 30-year-old bottle of The Emerald Isle by The Craft Irish Whiskey Co. sold for a staggering $2.8 million, breaking the world record for the most expensive bottle ever sold. The previous record was held by a 1926 Macallan bottle priced at $2.7 million. These figures dwarf the record for the most expensive fine wine ever auctioned, the 1995 Domaine de la Romanée-Conti Grand Cru, which fetched $558,000. 

Collectibles vs mainstream investments

The rise in demand for collectibles comes at a time when traditional investments, like stocks and bonds, are facing heightened volatility and lower returns. Collectibles offer a unique proposition: they are not directly correlated with financial markets, providing a hedge against market downturns.

Moreover, collectibles have an intrinsic value tied to their rarity, cultural significance, and aesthetic appeal, which can appreciate over time independently of market conditions.

The stability and growth potential of these assets make them attractive alternatives to traditional investment avenues, and investors are increasingly perceptive of these benefits.

As the market for collectibles continues to evolve, clients are likely to find new and exciting opportunities in this dynamic sector.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.