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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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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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WineCap Wealth Report 2024: US Edition

WineCap US Wealth Report 2024

In an era of economic uncertainty and shifting investment trends, alternative assets are gaining unprecedented traction. The 2024 WineCap Wealth Report (US edition) offers a comprehensive analysis of the fine wine market, uncovering key trends that highlight its burgeoning appeal. As fine wine transitions from a passion asset to a mainstream investment, the report explores the demographic shifts, technological advancements, and the factors driving demand. 

Methodology and demographic

In April 2024, WineCap surveyed 50 US-based full-time wealth and investment managers to gauge their views and sentiments towards fine wine investment. The respondents included 35 wealth managers, eight financial intermediaries/advisers, and seven independent financial advisers. The research was conducted via an online questionnaire. For annual comparisons, the report takes into account responses from a similar survey conducted in April 2023.

Key findings

  • Changing demographics: One in three high-net-worth individuals (HNWIs) in the US now invests in fine wine. While some begin as collectors, the majority are experienced investors drawn to fine wine for its stability. 
  • Rising demand for collectibles: Fine wine emerged as the leading collectible asset. According to our survey, 84% of US wealth managers anticipate an increase in demand over the next year.
  • Enhanced market liquidity: There has been a 14% increase in investor confidence regarding market liquidity, driven by advanced technology that enhances the trading experience and security.
  • Stability: 74% of respondents see fine wine’s stability through different market environments as the top reason to invest in it.
  • Universal value: 92% of US wealth managers recognize the benefits of fine wine being an asset of universal value, not pegged to USD.
  • Diversity: Survey respondents indicated that greater awareness of fine wine’s role in diversifying traditional portfolios could attract more clients.

The 2024 WineCap Wealth Report underscores the growing sophistication and accessibility of fine wine as an investment. As new generations of investors seek diversification and stability away from traditional financial markets, fine wine emerges not only as a stable asset but also as a leader in the collectibles market. 

The integration of advanced technology, the expanding appeal of sustainable investing, and the strategic adjustments in response to economic conditions highlight fine wine’s unique position in the investment landscape.

Download your complimentary copy of the 2024 WineCap Wealth Report and discover how fine wine can enhance your investment portfolio.

Please fill in the form below to download your complimentary copy of the report.

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Special UK Report – Fine wine: the journey from passion asset to mainstream asset class

UK wine investment report
  • Our special report, entirely based on primary research, reveals wealth managers’ and financial advisers’ attitudes toward fine wine.
  • Almost all (96%) UK wealth managers expect demand for fine wine to increase.
  • Fine wine is ahead of watches (86%) and luxury handbags (80%) in second and third place respectively.

UK wealth managers see demand for fine wine comfortably outstripping other passion assets, such as watches, luxury handbags, and art. This is one of the findings in our special UK report, Fine Wine: The Journey from Passion Asset to Mainstream Asset Class.

Fine wine – the most in-demand passion asset

The report, based on a study conducted among 50 UK-based wealth managers and financial advisers who only deal with high-net worth clients (£100K+), revealed that fine wine will attract most demand from investors over the coming year amongst all leading passion assets. 96% expect demand to increase, of which three out of five (60%) said that it will increase “significantly”.

This placed fine wine comfortably ahead of watches (86%) and luxury handbags (80%) in second and third place respectively. Other well-established passion assets such as art (68%) and classic cars (62%) placed much lower in sixth and tenth place.

Fine wine in investment portfolios

The report found that fine wine is already featuring prominently in many wealth managers’ client portfolios. UK wealth managers and advisers estimated that over 40% of their high-net-worth (“HNW”) client base invest in fine wine with an average portfolio allocation of around 10%.

Fine wine’s growing prevalence among HNW client portfolios provides compelling evidence, if any is needed, that it has graduated to a genuine alternative asset, a highly effective portfolio diversifier, operating alongside other popular alternatives such as hedge funds, real assets, and private capital as well as mainstream assets such as fixed income and equities.

In common with other alternative assets, fine wine tends to feature more prominently in larger portfolios belonging to more sophisticated investors where there is a greater premium on diversification. Almost all respondents (98%) said that clients investing in fine wine are mainly experienced investors, with 62% saying they were “very experienced”.

Please fill in the form below to download your complimentary copy of the report.

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Special US Report – Fine wine: the journey from passion asset to mainstream asset class

US wine investment report
  • Our special report reveals how US wealth managers and financial advisers perceive fine wine as an investment.
  • Almost all (92%) US wealth managers expect demand for fine wine to increase.
  • Fine wine is ahead of jewelry (78%) and antique furniture (78%) in joint second.

In recent years, fine wine has grown in popularity among affluent and high-net worth individuals in the US, driven by a greater recognition of the role it can play in delivering stability, attractive returns, and diversification to investment portfolios.

To date, there has been limited research into how fine wine is perceived by the key gatekeepers to sophisticated private investors, namely wealth managers and financial advisors.

Our special US report, Fine Wine: The Journey from Passion Asset to Mainstream Asset Class, seeks to bridge this gap by drawing on independent primary research among 50 US-based wealth managers and financial advisors.

Fine wine demand to increase

Our findings revealed that fine wine will attract most demand from investors over the coming year amongst all leading passion assets, with almost all (92%) of the surveyed expecting demand to increase.

This placed fine wine comfortably ahead of jewelry (78%) and antique furniture (78%) in joint second. Other well-established passion assets such as classic cars (64%) and art (54%) placed much lower in sixth and ninth place.

Fine wine’s place in a portfolio

The report found that fine wine is already featuring prominently in many wealth managers’ client portfolios. US wealth managers and advisors estimated that almost half (45%) of their high-net-worth (“HNW”) client base invest in fine wine with an average portfolio allocation of around 13%.

Fine wine’s growing prevalence among HNW client portfolios provides compelling evidence, if any is needed, that it has graduated to a genuine alternative asset, a highly effective portfolio diversifier, operating alongside other popular alternatives such as hedge funds, real assets, and private capital as well as mainstream assets such as fixed income and equities.

The report further provides in-depth research on the most common reasons for US investors to consider fine wine, and catalysts for further growth.

Please fill in the form below to download your complimentary copy of the report.

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The pairing of old wine and new markets: demographic shifts and emerging trends

A version of this article by WineCap’s CEO Alexander Westgarth was first published in Forbes.

  • The wine investment landscape has evolved significantly, with younger, international buyers increasingly shaping the market.
  • Growing global demand has made the market more liquid, transparent and efficient.
  • New investors are exploring assets beyond traditional stocks and bonds such as wine and other collectibles.

The image of the traditional wine investor is changing. Gone are the days of gentlemen with monocles and fur coats. Today, the reality of who purchases fine wine may surprise you.

In this article, we explore the changing demographics of wine buyers and highlight modern investment trends for wealth managers looking to incorporate wine into their portfolios.

Shifting demographics: younger generations enter the market

The average wine buyer has become considerably younger in recent years. Jamie Ritchie, Head of Wine at Sotheby’s Auction House, said that in the 1990s the average wine buyer was 65. However, according to a 2021 report, only 7% of wine buyers are now over 60, while 37% are under 40. Nearly 270 millennials and Gen Zs placed the winning bid for Sotheby’s finest wines and spirits.

This shift is particularly relevant for wealth managers, as fine wine aligns well with younger investors who have long-term investment horizons. Most fine wines have potential for ageing – a good Bordeaux, for instance, can be cellared for 50+ years. This can add stability to an investment portfolio. Over the past two decades, the average price of fine wine has risen 380%, suggesting a potential for continued growth as demand increases and supply diminishes.

The liquidity challenges of wine investment

While investing in fine wine offers long-term benefits, one should not ignore the liquidity aspect. Younger investors may require quicker access to funds, which poses a challenge as wine can take time to trade. Selling wine investments prematurely may result in missing out on substantial profits. Wealth managers should, therefore, consider diversifying portfolios by combining fine wine with other liquid assets, such as cash-like securities, blue-chip stocks, and bonds. Striking the right balance between illiquid and liquid investments is key to maximising returns.

Global appeal

The international appeal of wine has grown significantly over the past two decades. According to Sotheby’s Wine & Spirits Market Report 2021 referenced earlier, North American bidders have been drawn to the market to make up nearly half of Sotheby’s new buyers.

This could be partly attributed to the power of currency. On the first day of 2021, 1 pound was worth $1.37. But by mid-December, it had zigzagged down to $1.32. As the green bills swelled in purchasing power, fine wine (usually denominated in sterling) grew increasingly tempting to U.S. investors. Today sterling continues to weaken against the dollar. As of June 7th 2023, 1 pound costs $1.24.

Additionally, Asian buyers now make up 52% of wine sales at Sotheby’s, with American investors representing 18%, and Europe (primarily split between the UK and France) accounting for the remaining 30%.

Growing global demand for wine offers some serious advantages for existing investors. As well as bringing in more potential buyers, the value of fine wine tends to rise above regional shocks. As the market base grows, the market becomes more liquid and efficient, improving price transparency.

A thirst for inflation-hedging and nostalgia

Historically, fine wine has been difficult to access. Investors needed to be deeply entrenched in elusive private markets. Owning an investment portfolio at all was generally reserved for the wealthy few.

But today, spurred by a boost in financial literacy and digital investment platforms, new groups are entering. Alongside wine, today’s digital investors are adding cultural timepieces like iconic shoes, sweaters, watches and even Legos to their portfolios. This could be partly due to nostalgia but it could also be the result of an astute investment strategy.

Historical data shows impressive returns for collectibles, with sneakers generating over 2,000% returns and Swatch timepieces delivering over 7,000%. One in-depth study found that from 1987 to 2015, Lego collectibles delivered returns of at least 11%.

Considering the anticipated high interest rates, low growth, and volatility of 2023, physical assets can serve as a hedge against inflation. While certain collectibles may be speculative, wine and art have demonstrated a history of hedging against economic downturns.

Leveraging online investment platforms and adapting to investor preferences

Wealth managers can leverage online investment platforms to access performance data, bid-ask spreads, and forecasts. They can also purchase wine directly and handle everything from storage to auctions digitally.

As the investor landscape changes, wealth managers should explore assets beyond traditional stocks and bonds. Incorporating alternative investments, such as wine, can help diversify and enhance portfolio performance. Furthermore, incorporating passion assets that resonate with younger investors, such as sustainability-focused investments and items reflecting their values, can strengthen client relationships and attract the next generation of investors.

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.