Tag: Global fine wine market

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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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The state of the fine wine market so far in 2024

Chateau L'Eglise-Clinet vineyard
  • Fine wine remains a buyer’s market in 2024.
  • Burgundy prices have fallen the most, while Italy has been the most resilient region. 
  • Some wines have outperformed the market, such as L’Église-Clinet 2012.

The fine wine market remains a buyer’s market in 2024. All fine wine regions have experienced declines, with prices for Burgundy, Bordeaux, and Champagne falling the most. 

Still, some wine brands have outperformed the market by far – such as Henri Boillot Chevalier-Montrachet Grand Cru, which is up 23% since the beginning of the year.

Regional wine performance so far in 2024

The fine wine market’s downturn has continued into 2024. The broadest measure of the market, the Liv-ex 1000 index, is down 4.9% year-to-date. Within it, Burgundy (-7.0%) and the Rest of the World (-4.8%) sub-indices have fallen the most. 

The Champagne 50 index is also down 4.5%. However, the index rose 0.9% last month, buoyed by Dom Pérignon 2006 and 2012, Louis Roederer Cristal Rosé 2008 and various vintages of Pol Roger’s Cuvée Sir Winston Churchill. 

Liv-ex regional wine indices 2024

As we have previously explored, Italy has been the most resilient fine wine region, down 2.3% year-to-date. Its performance has been stabilised by brands from Piedmont, specifically Barolo and Barbaresco. 

The Rhône 100 index, which has been the perennial underperformer over the long term, has also experienced lesser declines this year, falling just 3.2%. Outside the Liv-ex 1000 index, the California 50 is down 3.8%. 

The biggest risers this year

Despite broader market uncertainties, some brands have risen by close to 30% in value since the beginning of the year (as of August 1st).

With an average case price of £720, Delas Hermitage Domaine des Tourettes Blanc is up 26% this year. It has been followed by a high-profile Burgundy – Henri Boillot Chevalier-Montrachet Grand Cru, which has risen 23%. 

The most expensive wine on the rankings, Domaine du Comte Liger-Belair La Romanée Grand Cru, has enjoyed an 11% rise. 

Best performing wine brands H1 2024

The best performing wines

When it comes to the best performing individual wines, Bordeaux leads the way with L’Église-Clinet 2012, up an impressive 38%. It has been followed by Cheval Blanc 1998, up 27%. 

Another top Bordeaux comes fourth – Gruaud Larose 2018 (19%). Sweet Bordeaux also features in the table with two vintages from Suduiraut, 2019 and 2010, and Climens 2015.  

Meanwhile, Champagne’s best performer is the ‘gorgeous’ (AG 98 points) Krug 2004, up 26%. 

Best performing wines H1 2024

While the fine wine market has continued to face declines across most regions in 2024, presenting great opportunities for lower-than-average prices, some wines have shown remarkable resilience. Even in a buyer’s market, excellence prevails.   

For more on the state of the fine wine market, read our latest quarterly report. 

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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Bordeaux 2023 En Primeur: an overview of the current campaign

Cos d'estournel bordeaux wines
  • Three weeks into the Bordeaux 2023 En Primeur campaign, we examine the pricing trends of the releases so far.
  • In many cases, the current price cuts have highlighted the steady ascent of En Primeur release pricing in recent years.
  • The Bordeaux 2023 vintage is characterised by diverse critic scores and some high achievers.

This year’s Bordeaux En Primeur campaign kicked off early and rapidly gained momentum. The first 2023 releases landed in the last week of April, shortly after trade professionals had returned from the region and before the publication of most critic reports.

Pricing, as always, remained a central issue. Questions arose about whether châteaux would consider the current market conditions, whether anticipated price reductions would drive interest, and ultimately, whether the Bordeaux 2023 vintage would prove a worthy investment.

Three weeks into the campaign, several major châteaux, including First Growths like Haut-Brion, Mouton Rothschild, and Lafite Rothschild, have already launched their 2023 wines.

With most critic assessments now available and pricing trends becoming clearer, we delve into the details of the campaign so far.

Noteworthy releases

Château Léoville-Las Cases’ 2023 release marked a promising start to this year’s En Primeur. On April 30th, the wine was offered at a 40% discount on the previous year’s release. However, some older vintages still presented better value.

The first ‘great value’ release came from Château Lafite Rothschild in the same week. Its second wine, Carruades de Lafite, represented the lowest priced offering from the estate on the market today, playing on En Primeur’s original premise.

Similarly, Mouton Rothschild and Petit Mouton presented attractive opportunities for investors, released at 34.6% and 25.1% discounts on last year’s offerings respectively.

As a result, Liv-ex reported that both Château Lafite Rothschild 2023 and Château Mouton Rothschild 2023 have made their way onto the secondary market – although they have traded below their original release prices.

In many cases, the current price cuts have highlighted the steady ascent of En Primeur release pricing in recent years.

The average price cuts so far have been 21.5% compared to last year, with reductions ranging from 40% to none. Despite these cuts, many older vintages remain more affordable and often boast similar or better ratings, including those from 2019, 2017, and 2014.

Diverse scores and high achievers

The Bordeaux 2023 vintage has received a wide array of scores from leading critics, demonstrating a spectrum of quality across various appellations and estates.

Château Margaux consistently received high acclaim, with scores of 97-100 from both Antonio Galloni and William Kelley, and 99-100 from James Suckling. Neal Martin rated it as his second- highest wine of the vintage.

Another high achiever, Le Pin, received top marks with a perfect 100 from Peter Moser of Falstaff and 99-100 from Suckling. Château Montrose is also noteworthy, with a barrel range of 97-100 from Kelley and 99-100 from Suckling.

The critical consensus indicates a preference for wines from the Left Bank, which are noted to have fared better overall. The vintage is characterised by wines that lean towards a classic style, marked by their freshness and moderate alcohol content.

Despite the mixed nature of the vintage, there are several standout wines that show considerable promise. These wines are not only great for adding to a collection due to their potential to appreciate in value, but they also offer the kind of quality that makes them worth seeking out for those looking to enjoy fine wines in the years to come.

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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Chinese Wine Imports on the Road to Recovery

Chinese wine buyers, tasting wine

Chinese wine imports have begun their revival as borders reopened to international travel following three long years of Covid restrictions that isolated the world’s most densely populated country.

As families reunite and look forward to a much needed period of recovery, the wine trade breathes a collective sigh of relief after surviving 2022, the year that saw the wine industry “hit rock bottom in both import and domestic market[s]”

An article, published by China’s leading wine news site Vino Joy News, examines the potential for a rebound in Chinese wine imports which dropped significantly in 2020 due to the successive lockdowns of the pandemic. The decline in corporate activities and cultural gatherings which usually drive crucial sales peaks saw revenues affected drastically. Experts are positive that the recent lifting of Covid restrictions will rejuvenate the market akin to the swift recovery of the restaurant industry since December’s relaxation of pandemic constraints.

The key factor driving this optimism is the increased demand for better quality wine from China’s increasingly affluent middle class. This is set to be further boosted by the recent relaxation of import tariffs, making wine more affordable for Chinese consumers. This year’s Spring Festival has seen revenues spike which suggests that other events like the Mid-Autumn Festival and National Day will have a similar effect.

Though there is a potential for the relaxation of Chinese food and beverage standards this is unlikely to affect the fine wine market, and overall the long-term outlook for Chinese wine imports remains very promising.

A key indicator of the market’s recovery will be the upcoming Chengdu wine fair in April, an event considered “a bellwether of China’s drinks industry” and likely a strong reflection of the country’s enthusiasm for fine wine.

With any luck, this will be the year that sees this major player in the fine wine market return to form.

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Increased Global Demand for Fine Wines

Joseph Phelps bottles

Global wine sales are on the up as large retail outlets in Asia and the USA have begun purchasing a wider array of sought-after fine wines and distributing and selling them throughout their sites.

In Asia, South Korea’s Lotte Department Store has, according to local news outlets, started hiring world-class sommeliers who are buying fine wines from traditional wine regions. What’s more, its sommeliers are curating these selections to offer a point of difference to the wines usually available to buy on the domestic market. With mid-priced wines having had to make way for more premium ones, the department store chain announced that its wine sales grew over 20% in September. 

Shinsegae Property, the property arm of the Korean-based luxury company, purchased Napa’s Shafer Vineyards in February earlier this year, as well as  the nine-hectare Wildfoote Vineyard in the Stags Leap District of Napa Valley in August. Shinsegae’s aim is to supply fine wines from boutique producers to its Shinsegae Department Store.

Similarly, the Hyundai Department Store has created Vino H, with the objective of sourcing, importing and distributing premium organic wines from around the globe especially for the South Korean market. 

According to a new report created by Rabobank, it predicts that super premium wines in the USA should weather a recession. Stephen Rannekleiv – Rabobank’s global strategist for beverages – commented that while his ‘expectation is that demand for super premium brands will soften notably in Q4 and turn noticeably negative in 2023 … we believe that the long-term growth trend of super premium brands remains intact.’

Rannekleiv also highlighted that, in the USA, merger and acquisitions have been rapidly taking place and, for the most part, this is in the premium tier. Some of the recent acquisitions include LVMH buying Joseph Phelps Vineyards and Treasury Wine Estates’ purchase of Frank Family Wines. 

With the global appetite for fine wines accelerating, more and more corporations are on the lookout to purchase these highly sought-after wineries and vineyards. In the USA, it’s rumoured that the amount paid to acquire estates’ recently has been incredibly high.

Want to learn more about the growing US market? Read our United States Report to find out the top regions, producers and wines to look out for.