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Fine wine investors have little to toast to this year, as the price of fine Burgundy and vintage Champagne plummets as demand from Chinese buyers dries up.
Burgundy prices fell by 14.4% by the end of November this year, according to the Bourgogne 150 Index of wine exchange LiveX. Vintage Champagne fell 9.8%, while the Bordeaux composite index fell 11.3%.
The decline marks the second consecutive difficult year for the fine wine market, with interest rates traditionally set to rise in 2023 (making non-yielding assets such as wine less attractive to investors). It was hit by a decline in demand from Asia, which used to be a major buyer of French wine. red wine.
“It’s been a very difficult situation,” said Gregory Swartberg, chief executive of Cru Wine, a London-based wine investment company. “November 2024 was one of the worst months of the year. We are not out of the woods yet.”
The overall Liv-ex Fine Wine 100 Index is down 9.2% by the end of November this year, while global stock prices have risen 20% in the same period.
The losses are in stark contrast to the market’s boom during the coronavirus pandemic. Restaurants were closed during the lockdown, but individual investors with savings and time on their hands flocked to the market.
Unusual weather patterns related to climate change (warm weather early in the growing season followed by severe frosts that killed buds) also limited the supply of new wine.
This increase has meant that prices for vintage Champagne and Burgundy have sometimes outpaced returns from the stock market and high tech stocks.
But some in the industry believe prices are rising too quickly and the market could fall.
“This bear market was a long-awaited correction following the unprecedented bull market during the pandemic,” said Callum Woodcock, CEO of wine investment platform WineFi.
The market has also been hit hard by a drop in demand from Chinese buyers, who have been hoarding high-end Burgundy wines in recent years but are now curbing spending due to the domestic economic downturn.
Tom Gearing, chief executive of investment firm Cult Wines and a former UK finalist, said investors who had bought alternative assets such as wine in recent years as a way to diversify their portfolios were uncertain. He said that he is becoming more risk-averse due to the favorable economic outlook. Apprentice version.
Among the famous wines that have struggled this year is Château Lafite Rothschild’s Caruades de Lafite, whose 2021 vintage has fallen 29% this year to £1,640 for 12 cases, according to LiveEx . The 2012 vintage fell 42% to £1,740.
Within Burgundy, Domaine Georges Roumier’s Bonne Mar Grand Cru 2020 fell by 44% to £11,529 per case. Champagne house Louis Roederer’s 2015 vintage is down nearly 17%.
Worse could happen. Some industry insiders point to sales by Asian collectors, arguing that this is further pushing down prices in the region. Many European producers fear that President-elect Donald Trump will impose trade tariffs, as he did on some European wine imports during his first term in office.
Moreover, the Bordeaux wine industry’s so-called en primeur campaign, an annual spring festival in which new wines are scored by critics and available for purchase before they are bottled, has largely failed. That’s because buyers realized that, rather than essentially buying future wine, they could buy mature wine already bottled on the secondary market for less.
Producers in the region now face the challenge of how to price next year’s en primeur campaign, which will feature the 2024 vintage. Tom Birchfield, head of market intelligence at Liv-ex, said the unfavorable combination of mold, heavy rain and colder temperatures made this year the “worst vintage overall”. .
Michael Saunders, CEO of Cotley Holdings, which owns wine distribution company Ray & Wheeler and wine warehouse Cotley Volz, was recently meeting with growers and distributors in Bordeaux. He said so. teeth. “
Despite the gloom pervading much of the industry, some investors are using this year’s price declines as an opportunity to buy higher-quality vintages at knockdown prices.
Swartberg of Cru Wines said he has purchased Krug 1996 and Dom Pérignon 1996 and is advising his customers to buy them. He says these are “phenomenal vintages” of Champagne and he believes they will do well due to the lack of supply.
In Bordeaux, we purchased wines from the 2000, 2005, and 2009 vintages from Château Angelus and Château Cheval Blanc, as well as recent Burgundy from Domaine Romanée-Conti, Rousseau, and Dujac.
“More people are starting to make the most of the current market situation,” he says. “Being able to buy these wines at these prices was unheard of two years ago.”