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Navigating the 2023 fine wine market: the rise of Bordeaux amid global risk aversion

  • 2023 marks a notable slowdown in the fine wine market, with price corrections shadowing the bullish trends of previous years.
  • Burgundy and Champagne which led the market to its peak in 2022 are suffering the most.
  • Bordeaux has become a beacon for investors, gaining renewed interest due to its stability and reliability.

As the 2023 Liv-ex Power 100 unveils, a significant shift is evident in the fine wine market. This year marks a notable slowdown, with price corrections shadowing the bullish trends of previous years. Amidst this changing landscape, Bordeaux emerges as a beacon for investors, gaining renewed interest due to its stability and reliability. This article delves into the dynamics of the 2023 fine wine market, highlighting the rise of Bordeaux against a backdrop of global risk aversion.

Understanding the 2023 market slowdown

The fine wine market in 2023 has departed from the spirited activity of past years. After prices across many regions reached stellar levels in 2022, 2023 was a year of corrections. Trade by value and volume also fell, according to the 2023 Liv-ex Power 100 report. Despite more wine labels being traded, the overall number of individual wines traded (on a vintage level) has seen a decrease. This trend points towards a strategic shift towards higher quality wine investments, reflecting a more discerning market behaviour.

The softening of the fine wine market in 2023 can be attributed to a range of factors. Economic uncertainties and global financial market fluctuations have instilled a sense of risk aversion among investors. Inflationary pressures and rising interest rates have also played a role, impacting disposable incomes and investment capabilities. This economic climate has prompted a more cautious approach in luxury investments like fine wine. Additionally, changing consumer behaviours and preferences, along with geopolitical tensions and trade disputes, have further contributed to the market’s softening.

Regional patterns in 2023

In 2023, regional patterns in the wine market have become more pronounced. Burgundy and Champagne, which previously led the market to its peak, are now facing significant corrections. Burgundy has seen a reduction in its presence in the Power 100, while the Burgundy 150 index has fallen 15.4% year-on-year. Similarly, Champagne’s market has also softened, with the Champagne 50 index dipping 19.4%.

The rankings reveal a trend towards stability, liquidity, and relative value, which are prominently found in Bordeaux. This region has emerged as a beacon of resilience in the fine wine market, adding five wines to the Power 100 and benefiting from its reputation for consistent quality and reliable investment.

Conversely, California, while losing five wines in the ranking, managed to maintain its trade share, indicating a selective but sustained interest in its wines. This shift reflects a broader market inclination towards established regions and brands, suggesting a cautious approach by collectors and investors in a turbulent market.

As market dynamics evolve, regions like Italy and Spain are gaining traction, with brands like Vietti and Dominio de Pingus showing positive growth, further diversifying the landscape of investment-worthy wines. These regions are increasingly seen as offering valuable investment-worthy wines, attracting attention for their unique qualities and potential for growth.

The most powerful brands of 2023

In the realm of individual brands, certain names have demonstrated remarkable resilience and adaptability amidst the market downturn. Bordeaux’s Château Climens, for instance, has made an impressive leap in the rankings, rising from 353rd place in 2022 to 98th this year. This is a testament to its successful brand repositioning under new ownership.

Similarly, in California, brands like Opus One and Screaming Eagle continue to hold strong positions. Opus One, in particular, has risen dramatically, from 82nd in 2022 to 4th this year, signifying continued interest in top-tier wines from this region despite broader market challenges.

Despite facing a pullback Burgundy still has powerful players like Kei Shiogai, which took the top spot in terms of price performance, with its Market Price rising 185.7% year-on-year.

The strength of these brands lies not just in their historical significance or quality but also in their ability to retain high liquidity and trading volumes, essential in a market that is increasingly focusing on safer investments. This trend suggests that while the market is retracting in some areas, there remains a robust demand for wines that represent the pinnacle of their respective regions.

Adapting to the evolving wine market dynamics

As we navigate through the evolving dynamics of the fine wine market, it is clear that understanding and adapting to these changes is crucial for future investing. The trends of 2023, from the renewed interest in Bordeaux and the resilience of powerful brands, provide valuable insights into the market’s direction.

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 impact of Mouton Rothschild’s artist labels on market value

  • This Friday will see the artist label announcement of Château Mouton Rothschild’s 2021 vintage.
  • Over the last ten vintages, the average price increase in the month following the announcement has been 5%, signalling a potential investment opportunity.
  • The 2000 vintage illustrates the power of the special label, perfectly weathering market downturns.

Every year, Château Mouton Rothschild commissions a different artist to produce the label for their Grand Vin. The tradition began in 1945 when Baron Philippe de Rothschild decided to celebrate the end of World War II by creating a special label featuring a ‘V’ for victory, designed by Philippe Jullian. Since then, the list of alumni has included the likes of Salvador Dalí, Pablo Picasso, Joan Miró, Andy Warhol, David Hockney, Jeff Koons, Anish Kapoor, Lucien Freud, and Wassily Kandinsky. This Friday will see the label reveal of the 2021 vintage.

How has the label announcement impacted prices?

Over the years, this innovative approach has turned the Mouton Rothschild labels into a fusion of fine art and fine wine, making each bottle a highly desirable collector’s item. What’s more, prices for Mouton Rothschild have consistently increased in the month following the announcement.

The increase averages just under 5% over the last ten vintages. The 2012 vintage, with a label by Miquel Barcelo, rose the most, up 14.9%, followed by the Xu Bing’s 2018, up 12.6%. Last year’s label reveal of the 2020 vintage drove prices 8.6% higher in a month. There has been only one exception to this pattern with the 2015 vintage, down 4.3%. However, the wine is still up 11% since release.

In the last decade, prices for the brand, represented by our Mouton Rothschild index, have risen 44% on average.

Which are the best value labels today?

While there is a strong investment case for the Grand Vin, which vintages offer the best value today? The 2020 boasts 100-points from The Wine Advocate and is 13% cheaper than the other 100-point 2016 vintage. Its price rose 8.6% after the label announcement, which was designed by Peter Doig.

The 2021 is the most affordable recent release with a current Market Price of £4,400 per 12×75. However, given the trend of price rises post-announcement, one can expect potential changes.

Otherwise, buyers might wish to look back at the 2019 vintage, which received 100-points from Lisa Perrotti-Brown MW (The Wine Independent) and 97 points from Neal Martin (Vinous). The wine’s label, ‘The solar iris of Mouton’, was created by Olafur Eliasson.

The case of the 2000 vintage

If there is one special bottle that illustrates the power of art driving prices, it is that of the 2000 vintage. The bottle itself features an intricate gold engraving of the famous ram (Mouton) of the Rothschild coat of arms and stands out for its elegance and symbolic significance.

Mouton Rothschild 2000 weathered the Bordeaux market downturn of 2011-2014, when prices for the other First Growths fell sharply. The label continued to enjoy heightened demand in the Asian market, which only increased in 2015 – the year of the sheep, according to the Chinese zodiac. The wine has risen close to 750% in value since its release – an investment case that speaks for itself.

The innovative tradition of artist-designed labels by Château Mouton Rothschild not only merges the worlds of fine art and winemaking but also significantly elevates the market value, making them coveted treasures for collectors and investors alike.

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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Price ratio: comparing regional First Growths

  • We compare the price performance of Château Lafite Rothschild to other regions’ respective ‘First Growths’.
  • The rising ratio highlights the increased value to be had in the Bordeaux First Growths.
  • Today, one can get 29 bottles of Lafite for the price of Romanée-Conti and almost five for Pétrus and Screaming Eagle.

How many bottles of Château Lafite Rothschild can one get for the price of other regions’ respective ‘First’ wines?

With changing market dynamics at play that have seen the balance between Bordeaux and other regions change, we examine the price ratio between some of the most popular investment-grade wines.

Below we compare the performance of the Bordeaux First Growth Château Lafite Rothschild to Burgundy’s highest echelon Domaine de la Romanée-Conti, the Super Tuscan Sassicaia, the Right Bank Château Pétrus, the Californian cult wine Screaming Eagle, and the most in-demand Champagne, Dom Pérignon. These are all wines that symbolise and even transcend their geography.  In the same way that Lafite has long been the mainstay of Bordeaux, the other wines are bellwethers for their regions.

The ratio between these wines is somewhat reflective of broader trends within their respective regions. Over the last decade, the ratio has risen consistently, highlighting the increased value to be had in the First Growths, as other regions gather momentum.

How many bottles of Lafite for the price of DRC?

Today, one can get on average 29 bottles of Lafite Rothschild for the price of Romanée-Conti. The ratio has risen considerably since 2013 when one could buy just 14 bottles of Lafite for one DRC. It peaked in December 2022, when it stood at 30:1.

As the chart below shows, the Domaine de la Romanée-Conti index hit a record high in December last year. Meanwhile, the Lafite index has not seen any of the price volatility witnessed by DRC. Year-to-date, prices for both labels have dipped but the fall has been sharper for DRC.

The DRC:Lafite price ratio is somewhat reflective of broader trends within their regions. In the last decade, Burgundy emerged as Bordeaux’s main contender. After Bordeaux peaked at the end of the China-led bull market in 2011, buyers started to seek out other corners of the fine wine world and it was Burgundy that attracted the greatest attention. The allure of rarity and quality meant that demand quickly outstripped already tight supply. Prices for Burgundy peaked, while Bordeaux ran quietly in the background.

For Bordeaux, the period between 2013 and 2015 saw contraction at the tail end of the Chinese correction. The market turned again in October 2015, and since then, Lafite Rothschild has been the second-best-performing First Growth, with some vintages doubling in value. However, it has not managed to catch up with Burgundy’s stellar rise.

Left vs Right Bank

It is also interesting to compare performance within Bordeaux’s Left and Right Bank. Today 4.6 bottles of Lafite gets you a bottle of Château Pétrus, up from 3, ten years ago.

As the chart below shows, Lafite and Pétrus have followed a similar trajectory up to September 2021, when prices for the First Growth flattened while Pétrus continued its rise.

Similar to Burgundy, rarity plays a key role in Pétrus’ appeal and investment performance. Pétrus is produced in much smaller quantities (around 3,000 cases per year) compared to Lafite (around 25,000 cases). Despite commanding a higher price tag, the wine has considerably outperformed Lafite in the last decade.

Dom Pérignon vs Lafite Rothschild

Recent years have seen a surge in Champagne’s market share and price performance. This has been reflected in the performance of its most traded label – Dom Pérignon.

Produced in much larger quantities than Lafite and more widely available, Dom Pérignon has started to catch up with the First Growth. In the last decade, the ratio between them has doubled – from 0.2 to 0.4.

Champagne prices, with Dom Pérignon at the helm, have made considerable gains since the early 2020s. In the last decade, our Dom Pérignon index is up 120%, compared to 20% for Lafite.

Sassicaia vs Lafite Rothschild

Similarly, the Super Tuscans have been getting more expensive. The most liquid and heavily traded group of Italian wines, their performance has been further boosted by critical acclaim and brand strength, with Sassicaia at the helm.

The ratio between Sassicaia and Lafite has risen from 0.2 ten years ago to 0.42 today.

As the chart below shows, Sassicaia has seen stable and consistent growth. 2019-2022 was a period of upheaval for the brand, which benefited from excellent vintages that captured investors’ interest.

Screaming Eagle vs Lafite Rothschild

The price ratio between Screaming Eagle and Lafite Rothschild tells a story of increased volatility, which can largely be ascribed to the Californian cult wine. Screaming Eagle has seen bigger price rises, followed by sharper falls.

Today one can now get 4.8 bottles of Lafite for the price of Screaming Eagle, up from 2.7 a decade ago. The ratio peaked in February 2022, when it stood at 5:1.

California has enjoyed serious investment interest which has been reflected in its market share. Today the region holds around 7% of the fine wine trade by value and is the most important New World player.

While Lafite has come to represent better value when compared to other top wines, this is largely due to shifting regional market dynamics. The First Growth continues to entice buyers with brand strength, high-quality releases and returns on investment.

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 rise of fine wine as a stable and sustainable investment

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

  • A popular alternative investment, fine wine can plug the gaps left by struggling assets, helping to steady and raise performance across a whole portfolio.
  • As a tangible asset, fine wine delivers stability in uncertain times.
  • Part of the rising demand for fine wine can be attributed to environmental factors.

Between April 2020 and September 2022, the average bottle of fine wine rose 43.5% in value. While the fine wine market has dipped and corrected since, the general trajectory has historically pointed upwards.

Since 2004, Liv-ex data shows that the average bottle price tag has risen by 329.9%. While it can be a good investment, better still, fine wine is a great means to plug the gaps left by struggling assets, helping to steady and raise performance across a whole investment portfolio. Earlier this year, WineCap conducted a survey where we found that 92% of U.S. wealth managers believe demand for fine wine will increase over the next year. This is for three main reasons, and below we outline how to best take advantage of this asset’s potential for stability, sustainability and profitability.

Stability in uncertain times

We live in uncertain times. In the last year, businesses have had to cope with rocketing energy bills, inflation and interest rates. In times of hardship, people want something solid. This is why tangible assets like property, gold or fine wine tend to feel more precious during market downfalls. WineCap found that 56% of wealth managers invest in wine to add stability to portfolios across different market conditions.

It is not only wine. Across the entire investment landscape, there is an increased demand for reliability. In the past few months, gold prices have been rallying too. When the gold prices go up, this often indicates that investors are looking to preserve their wealth and shield it from market shocks.

At the same time, investors have been shying away from bullish investments like technology stocks. Apple, for example, has suffered significant dips. Microsoft shareholders have endured wobbly turbulence (though, at the time of this writing, the company is beating financial expectations). Likewise, the tech-heavy Nasdaq Composite has been on a rocky ride over the past months.

As the choppy waters continue, many investors want steady ships to ride out the storm – not fancy speedboats. With its historically low volatility, fine wine delivers just that. Unlike stocks or bonds, fine wine prices do not tend to fluctuate massively as the market operates with its own dynamics. Regions like Champagne are currently seeing high levels of demand, not only because of the quality of the wines but the stability the region has historically offered.

Similarly, wines from Bordeaux, Tuscany and the Rhône may be more solid. However, not all fine wines are made the same. Extremely rare and highly coveted wines from Burgundy, for instance, can make a great investment but remain a riskier asset if stability is what you are after.

Demand for environmentally friendly assets

Our survey also found that investors are prioritising environmentally friendly assets, and 56% say they invest in fine wine because it is a sustainable asset class with a low carbon footprint. This trend is hardly surprising; 2023 has been the hottest summer on record.

Dozens of wildfires are actively blazing through the USA. Meanwhile, elsewhere, the excess water caused by melted ice caps means that flooding and torrential rains are washing away entire communities. In August, flash floods tore through Pennsylvania, killing five people. Naturally, investors are keen to put their money into assets that will mitigate some of the climate risks.

Part of the interest in fine wine can be attributed to environmental factors. Vines promote healthy soil quality and nourish pollinators, which are essential for biodiversity. A hector of vineyard soaks up a respectable 2.84 tonnes of carbon every year. The best winemakers use age-old sustainable practices. Many will even opt for a pony and cart rather than disturb the terrain with a tractor.

Some well-known organic producers include Burgundy’s Domaine Leflaive and the Bordeaux Fifth Growth, Château Pontet-Canet. While not officially certified, Burgundy’s Domaine de la Romanée-Conti also follows organic and biodynamic guidelines. Meanwhile, some producers are reducing bottle weight in pursuit of sustainability such as Burgundy négociant Albert Bichot, which has reduced the weight of their bottles from around 700 grams to 450 grams.

Climate-conscious investors can keep an eye out for wineries investing in a greener future.

Strong returns

According to our survey, almost half of the investors choose fine wine because they want strong returns. Historically, fine wine has offered generous returns over long periods without sacrificing quality or environmental qualities. Access to historical data, critic scores and current prices can help an investor identify whether a wine represents a good opportunity. Things to look out for include brand prestige, price per point, investment appreciation over different time frames and drinking windows. One can also get help from experts who understand the intricacies of the market, utilize the latest technology and closely follow the trends.

Stability, sustainability and profitability

Today’s investors are looking for stability, sustainability and profitability. Different from last year, they are often less prepared to invest in edgy technologies for the future. Instead, many are looking for solid investment results – ideally, ones they can hold. Fine wines fit this demand well. Although it already features in 45% of HNW portfolios, with average allocations of 13%, fine wine looks set to become even more popular. Like a classic vintage Champagne, the market is ready to pop.

Thanks to its diversity and growing attention from experts, producers and enthusiasts, fine wine could be well-placed to meet investors’ changing priorities 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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Jeb Dunnuck’s top-scoring Southern Rhône releases

  • Jeb Dunnuck recently reviewed two vintages from Southern Rhône – the 2021 in bottle and 2022 in barrel.
  • He described 2022 as a ‘clear step up over 2021’.
  • Château de Beaucastel’s Châteauneuf-du-Pape Roussanne Vieilles Vignes 2022 received 100 points from the critic, and prices for the label have risen 60% in the last five years.

Last week, Jeb Dunnuck released his latest Southern Rhône report, reviewing the 2021 vintage from bottle and the 2022 mostly from barrel.

The critic observed that ‘the time of truly bad vintages is mostly over’ given ‘the advances in viticulture and winemaking’. This is especially true for ‘a region like the southern Rhône, which has so much flexibility with grape varieties and different terroirs’.

2021 – drinking rather than collecting

The 2021 Southern Rhône vintage was marked by devastating springtime frosts, which dramatically reduced yields. A cool, rainy year led to ‘forward and charming [wines], with mid-weight, linear, fresher profiles,’ according to Dunnuck.

Dunnuck said that ‘2021 is not a great vintage’ when tasted next to a top 2019, 2016 or 2010. While he commended the accessibility and finesse of the wines, which would be ‘loved by sommeliers’, the critic noted that ‘it’s not a vintage to seek out or buy in massive quantities for the cellar’.

2022 – checks in ‘behind the greats’

Dunnuck described the 2022s as ‘a clear step up over 2021s’. He noted that the vintage bears some similarities ‘to 2020 and 2011, if not a more linear, mid-weight version of 2009’. For him, ‘2022 looks to check in behind the greats of 2019, 2016, 2010, and 2007’.

However, the critic concluded that ‘the divergent styles throughout the region make 2022 a difficult vintage to describe in broad statements, so it’s a vintage that readers will need to approach on an estate-by-estate basis’.

Dunnuck’s top-scoring wines across both years can be seen in the table below.

Across both years, Jeb Dunnuck found perfection in one wine – Château de Beaucastel’s Châteauneuf-du-Pape Roussanne Vieilles Vignes 2022. Awarding it 100 points, he called it ‘pure Beaucastel magic’. Average prices for the label have risen 101% over the last decade, and 60% in the last five years.

The Rhône’s investment performance in 2023

Prices for the top Rhône labels have been falling this year. Across the Liv-ex 1000 regional sub-indices, the Rhône 100 has experienced the biggest decline, down 18.1%.

However, young vintages like 2019 and 2020 have been in demand. Moreover, some wines from Southern Rhône such as Château de Beaucastel Châteauneuf-du-Pape Blanc have been on an upward trend, rising 32.8% on average.

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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Cautious optimism for Australian wine amid tariff review

  • Australia and China have agreed to a suspension of their ongoing dispute over the steep tariffs imposed on Australian wine since November 2020.
  • The tariffs had a profound impact on demand and price performance of Australian wine.
  • Australia’s best price performers have risen over 40% in value in the last year.

Australian wine tariffs under review

In a significant shift that could redefine trade relations between Australia and China, the two nations have agreed to a suspension of their ongoing dispute over the steep tariffs imposed on Australian wine since November 2020. This development comes ahead of Australian Prime Minister Anthony Albanese’s forthcoming trip to Beijing, marking a potential thaw in the trade tensions that have severely impacted Australia’s wine industry.

While the Chinese government has consented to an expedited five-month review of the punitive duties, which have plummeted Australia’s wine exports from over $1 billion to a mere $12 million, there remains a cautious optimism. Despite this progress, industry experts predict that even if the tariffs are promptly revoked, the Australian wine sector, which has undergone substantial restructuring in response to the lost Chinese market, would still require approximately two years to recuperate and effectively redistribute its current surplus.

Impact on Australia’s wine investment market

The Chinese tariffs, ranging from 180% to 200% on Australian wine imports, had a profound impact on Australia’s budding secondary market. The country has historically been the second most important fine wine player from the New World after the U.S., enjoying greater demand than South Africa, Chile or Argentina.

After a record-breaking year of trade in 2020, Australia’s investment market shrank in 2021. The number of different Australian wines traded on Liv-ex declined 32.2% year-on-year, as demand decreased.

Fewer wines from Australia made it into the rankings of the most powerful brands in the world. Australia’s leading label, Penfolds Grange, dropped in the 2021 Power 100 rankings, from fifth in 2020 to 45th place in 2021. In last year’s edition of the rankings, the wine fell further – from 45th to 55th place, while Henschke exited altogether. Part of the reason is that Penfolds has historically been heavily reliant on the Chinese market. In an attempt to rebuilt tariff-hit business, earlier this year Treasury Wine Estates, owner of Penfolds, announced the introduction of its first China-sourced premium wine.

Australian wine price performance

Since the tariff introduction, prices for some of the top wines have dipped, creating pockets of opportunity. For instance, the average price of Henschke Hill of Grace is down 4% in the last year; similarly, Penfolds Bin 707 is down 9%. While their trajectories are different, the long-term growth trend remains, with over 90% rise in the last decade.

Some Australian brands have seen impressive price performance despite the ongoing trade tension. The table below shows the five best performers on Wine Track in the last year, which have risen between 31% and 41% on average. Clarendon Hills Brookman Syrah leads the rankings, with an average price per case of £1,042. Two Hands Aphrodite has been the second-best performer, up 39%.

The cautious optimism for Australian wine will likely affect its secondary market performance. As demand rises, so will prices. It remains to be seen if a potential tariff suspension will bring back the momentum to a region that has quietened down in the last three years but nonetheless remains an important New World representative.

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 2023 Fine Wine Report

Our Q3 2023 report has now been released. The report examines mainstream market performance, the best buying opportunities in fine wine, releases from La Place de Bordeaux and the latest industry news.

Report highlights:

  • Investors leaned towards liquid assets like cash amidst the struggle between the Federal Reserve and inflation, contributing to an environment steeped in risk and uncertainty.
  • Q3 witnessed a marked slowdown and potential bottoming out of fine wine prices, with the Liv-ex 100 index showing modest signs of recovery.
  • The fine wine market morphed into a buyer’s market due to stock availability and dipping prices, especially visible in regions like Champagne.
  • The La Place de Bordeaux campaign, amidst an eleven-month market decline and global economic uncertainties, mirrored the earlier En Primeur campaign in its inability to energise the market, with offerings often misaligned with trade expectations.
  • Wines like Almaviva 2021 and Masseto 2020 stood out, providing relative value for money and showcasing a strong price performance history.
  • Investors should be looking at ‘pockets of opportunity’ where there is brand strength, value and liquidity.
  • Demand is likely to pick up in Q4 with Christmas around the corner and exciting vintage releases on the horizon.

Click below to download your free copy of our quarterly investment report.

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Key trends that shaped the fine wine market in Q3

The following article is an extract from our Q3 Fine Wine Investment report, which will be published next week.

  • Ongoing inflation and interest rate hikes led to increased volatility in mainstream markets.
  • The fine wine market in Q3 was a buyer’s market for two main reasons: availability of stock and falling prices creating value.
  • Two of the best value La Place releases were Almaviva 2021 and Masseto 2020.

High interest rates rattle global markets

Mainstream markets experienced a turbulent third quarter, mainly due to a marked rise in borrowing costs coupled with a substantial increase of nearly 30% in oil prices. As a major input in several industries, rising prices for crude oil led to overall increase in production costs, impacting profit margins and, ultimately, reducing stock prices. These developments created a challenging landscape for stocks and bonds, with investors opting for more liquid assets like cash that tends to be a safer short-term bet. This inclination towards liquid assets illustrated the unresolved struggle between the Federal Reserve and inflation, leaving investors navigating a path marked by heightened risk and uncertainty.

Fine wine’s downturn slows

Fine wine prices fell in Q3, but their declines gradually became smaller. For instance, the Liv-ex 100 index recorded dips of 3.1% in July, 1.3% in August and 0.1% in September, showing humble signs of recovery. The broader Liv-ex 1000 index dipped 3.9% in Q3. Italian wine fared well, thanks to strong performance from Tuscany and Piedmont, as well as older Bordeaux vintages which experienced slight rebounds. Global trading activity increased suggesting that interest is there for well-priced stock.

A buyer’s market

The fine wine market in Q3 was a buyer’s market for two main reasons: availability of stock and falling prices creating value. This was particularly noticeable in regions like Champagne. Some of the top and most desirable brands, which have an impressive mid- to long-term performance saw small declines in Q3. Buyers took advantage of this opportunity and demand increased. Such is the case with Dom Pérignon 2013, which has fallen 7.1% in value since its release in January but has been the most traded wine this year. The brand’s overall trajectory is upwards, with Dom Pérignon prices rising 64% on average in the last five years, and 133% over the last decade.

Assessing the La Place de Bordeaux campaign

Over 110 fine wines were released through La Place de Bordeaux this September. The overall pricing strategy bore similarities to Bordeaux En Primeur earlier this year: price increases that failed to take the current market environment into account. Some critics expressed the opinion that there weren’t ‘as many hits as usual’. Two wines that stood out as good value were Almaviva 2021 and Masseto 2020; the latter immediately generated trading activity above its release price.

Over the last decade, Almaviva prices have risen on average 167%, while Masseto is up 107%.

Stay tuned – our Q3 Fine Wine Investment report will be published next week. The report contains further analysis on the best-performing and most in-demand wines, and Q4 investment outlook.

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Examining the investment potential of Salon 2013 amid heightened demand

  • Salon Le Mesnil Blanc de Blancs 2013 has enjoyed heightened demand shortly after release.
  • The 2013 offers good value compared to similarly scored back vintages, which come at a significant price premium.
  • Salon has delivered higher returns (71%) than the Champagne 50 index (62.8%) over the last five years.

The latest release from Champagne house Salon has already been met with heightened demand. Salon Le Mesnil Blanc de Blancs 2013 came to the market at the end of September, and featured among the most traded wines on Liv-ex shortly after. Below we examine the reasons behind this increased interest and the wine’s investment potential.

The ‘magnificent’ 2013 Salon release

The 2013 was the first vintage release following two unusual releases: the 2012 which the Champagne house initially said they would not offer, and the 2008 of which only 8,000 magnum bottles were released (about 1/3 of their normal production).

The wine received 99-points from Antonio Galloni (Vinous), who declared it ‘the most powerful, dense young Salon I have ever tasted’. The critic further noted: ‘Champagne of mind-bending complexity, the 2013 possesses tremendous mid-palate intensity and power from the very first taste’.

Meanwhile, the Wine Advocate’s Yohan Castaing awarded the wine 97-points, saying that 2013 is ‘more complex and incisive than the 2002 and exhibits similar power to the 2012 at this early stage’.

In terms of value, the 2013 stands out among other Salon vintages available in the market today. The only higher-scoring scoring wine is the 2008 at nearly twice the price. Other similarly scored back vintages such as the 1996, 1995, and 1990 also come at a significant premium to the 2013.

Salon brand performance

Perhaps the most coveted of all Champagne brands, Salon is certainly one of the rarest. Only around 50,000-60,000 bottles are made in most years, and fewer than 50 vintages in the last 100 years.

Salon is a wine defined by its singularity, representing a single vintage expression from one grape and one village. The wine was originally conceived as a private label for the consumption of its founder Eugène-Aimé Salon at a time when the making of Champagne was characterised by blending.

Salon’s exclusivity has been reflected in its investment performance. The wine has delivered higher returns (71%) than the Champagne 50 index (62.8%) over the last five years.

Even in the current climate that has seen prices fall across the board, Salon has fared better than average, down 7% compared to a 12.9% decrease for the broader index, which includes the likes of Krug and Cristal.

The long-term prospects for a wine as rare and highly regarded as Salon are more than promising. There is significant space for Champagne prices to rise in the medium term, and a wine like Salon is especially well placed to benefit.

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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Differences and similarities between the fine wine and financial markets

  • The fine wine market is not correlated with mainstream markets yet there are some notable similarities and differences between them.
  • Global events and the law of supply and demand affect both the fine wine and financial markets.
  • Some of the main differences are tangibility, liquidity, the impact of time and factors influencing their performance.

The world of fine wine and the broader financial market might seem like distinct universes at first glance. However, there are intriguing similarities and differences between the two, which we examine below. 

Similarities between fine wine and financial markets

Both fine wine and financial markets provide lucrative opportunities for investors. While the latter showcases a plethora of options like stocks, commodities, and currencies, the former provides an alternative avenue for diversification, offering tangible assets, valued not just for their financial potential but also their historical and cultural significance. In stark contrast to the complexity and varied strategic approaches inherent in the financial markets, the wine market is more straightforward, predominantly guided by a ‘buy and hold’ strategy. Moreover, the universe of investable wines is notably narrower, typically centering around a select group of regions and producers.

Driven by demand

The laws of supply and demand are central to price determination in both markets. A rare vintage from a renowned vineyard or a wine produced in small quantities can fetch astronomical prices due to limited supply, mirroring the price surge of a high-demand stock or asset. For instance, Hubert Lamy Saint-Aubin Premier Cru Derriere Chez Edouard Saint Aubin has risen 189% in value over the last year due to low supply. The singular wine comes from a tiny plot of 0.7 hectares in Derrière chez Edouard, which was planted 20 years ago at 30,000 vines per hectare. At such a density, the entire plot only yields enough juice to fill the contents of a single barrel. In the world of stocks, demand has played a key role too. Nvidia – the company of the AI-fueled market rally – has been the best-performer in 2023, up 198%.

Impact of global events

Economic downturns, political events, and global crises can influence both the fine wine and financial markets. However, fine wine is less susceptible to global crisis. In fact, events that induce uncertainty usually drive investors towards more stable, tangible assets, which can include fine wines.

For instance, the fine wine market hit new heights during the Covid-19 pandemic, which saw a shift away from risk assets. Prices rose due to heightened demand for fine wine, which demonstrated remarkable resilience during the pandemic.

Expert valuations

Just as financial analysts predict stock performances, wine experts gauge the potential value of wines, guiding investors’ decisions. Investors can also follow the historical performance of their wines of interest with tools like Wine Track, which shows the performance of different brands over various time periods, as well as average prices and scores.

Differences between the fine wine and financial markets 

Tangibility

Investing in fine wine is an investment in tangible assets. The very bottle that appreciates in value over the years can be held, showcased, and ultimately consumed. Contrarily, financial investments, such as stocks or bonds, epitomise intangible assets, wherein the investment is in a concept or a digital representation.

Liquidity

The fine wine and financial markets have different levels of liquidity, which are rooted in their inherent trading characteristics. Fine wine tends to be less liquid, due to its tangibility, with transactions often slowed by factors such as the necessity for physical transport, authentication of products, and a comparatively limited buyer market. Additionally, investment-grade wines often necessitate longer holding periods to realise their gains, further reducing their liquidity. Meanwhile, the financial market is commonly cherished for its high liquidity, with assets like stocks and bonds that can be rapidly traded on large-scale platforms, accommodating a broad, active base of buyers and sellers.

The impact of time

The relationship between wine and time also sets these markets apart. While fine wine can age (which impacts its quality and value), financial assets do not inherently bear such physical transformations. However, their value may be just as susceptible to the passage of time and shifts in market dynamics.

Storage and maintenance

Fine wines require specific conditions for storage to retain or enhance their value, incurring additional costs. In contrast, stocks or digital assets don’t require such maintenance.

Factors influencing performance

In the wine investment landscape, several factors, including vintage quality, expert reviews, provenance, and global demand, play pivotal roles in determining a wine’s value and investment potential. Often burgeoning markets exert a profound influence, dynamically shaping global demand and investment flows, like China’s love affair with Bordeaux.

On the other hand, the financial market is steered by economic indicators and central bank policies, technological advances and corporate actions, such as mergers and acquisitions. Each factor, be it micro or macro in scale, casts its influence over the market’s performance, underscoring the multifaceted nature of financial investments.

Investor profiles

Fine wine appeals to a myriad of audiences, including collectors, connoisseurs, and institutional investors seeking diversified, alternative investment portfolios. The allure of tangible, appreciative assets, coupled with a penchant for oenology, makes this market a vibrant tapestry of participants.

Conversely, the financial market is frequented by a diverse mix of retail and institutional investors, brokers, and analysts. The widespread availability of resources, platforms, and instruments in the financial domain makes it accessible to an extensive demographic.

While the fine wine market and the financial market operate in distinct realms, the parallels and contrasts between them offer valuable insights. As with any investment, potential investors in either market should conduct thorough research and seek expert advice. 

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.