Despite the challenges faced by some sectors of the wine market this year, there are signs of a change in market sentiment as confidence begins to return.

2023 has been somewhat of a bumpy ride for many wines and regions but the resulting market correction has uncovered some great opportunities for growth as we moved into firm ‘buyers market’ territory.

The wine investment market has grown rapidly in recent years, mainly due to the growing affluence of global consumers in previously untapped corners of the world.  We’re seeing growing demand from parts of Southeast Asia, Singapore and the Philippines for example.

What’s even more interesting is these new consumers don’t have the same loyalties as previous generations and are much more willing to enjoy wines from outside of traditional regions such as Bordeaux.

Regional Strength

Over the last quarter, Italy has been one of our particular areas of focus and this has been reflected in some of the last quarter’s best-performing wines.  Tuscany’s Fontodi, Flaccianello della Pieve 2017 grew by 25% during that period, followed by Bartolo Mascarello, Barolo 2016 which grew by 24% and Giacomo Conterno, Barolo Monfortino Riserva 2004 by 19%.

Piedmont has offered stability to the region’s index, the Italy 100 with strong price performance from producers such as Gaja and Giacomo Conterno helping the index to avoid the sharp decreases seen in other regions.  

Champagne also proved very popular over the last quarter as buyers saw an opportunity in reduced pricing for established vintages.  Newer releases also performed well such as Dom Perignon 2013 which held its position as one of the top traded wines in the market, both by volume and value.

Champagne now sits in a very strong position as we move toward the end of 2023.  The region typically experiences an uptick in trade around Christmas and New Year as it is acquired for consumption so, it’s worth keeping a close eye in the coming months.

California continues to progress globally, reflected in the performance of the California 50 index.  Tracking 50 wines from California's most powerful brands the California 50 Index showed a month-on-month growth of 0.3% in October and has proved to be extremely resilient through 2023.

Treasury Wine Estate's recent groundbreaking acquisition of DAOU Vineyards for almost US$1 Billion is a great example of the potential California has to offer the market.  Having been established in 2007 DAOU's wines have huge appeal with the newer generations of wine drinkers. 

If you'd like to check them out for yourself we have a selection of their wines available for delivery which can be purchased by clicking HERE while stocks last.

Wines Under The Hammer

Fine wine auction sales have been firing on all cylinders.  In September Sotheby’s Wines & Spirits reported year-to-date sales of $30 million, a 25% increase on 2022.  A recent Sotheby’s sale in the US saw 98% of lots sold from a $9.3 million single-owner collection.

This was the second-highest total price for a wine sale in the US ever achieved and helped to demonstrate the demand for premium wines at the highest end of the market.

Highlights from the sale included five magnums of Domaine de la Romanee Conti, Romanee Conti 1999 which sold for $275,000 and twelve bottles of Petrus 1961 which sold for $118,750, just shy of its $120,00 high estimate.

The same week Acker reported on a sale of mature wines which saw ferocious bidding and set the stage for an action-packed Autumn with upcoming sales in Hong Kong, Delaware and Singapore all taking place before the end of October.

The ‘ready-to-drink’ nature of the vintages on offer proved very popular with bidders. Top lots included a five bottle lot of Chateau Lafite Rothschild 1953 which sold for an impressive $40,000 and a lot of Petrus 1998 selling for £32,000.

Acker Chairman, John Kapon commented “This was a tremendous sale with astonishing activity for mature and older wines across all regions. Beginning the Fall season with this kind of auction is the perfect kickoff - this is going to be a big season for wine lovers everywhere, so get ready!”
 

Christie's held a ‘California Only’ auction in September which has highlighted the strength of Californian wine in the investment market.  The sale achieved $1,974,500 in total with 96% of lots sold. Screaming Eagle and Harlan took most of the limelight with a three bottle lot of Screaming Eagle 2007 selling for $15,000. 

The increase in popularity of California’s top wines outside of the US is something we’ve had our finger on the pulse of for some time now.  In recognition of the region's global growth, Christie’s Head of Americas Fine Wine & Spirits said “We were also very pleased with the global participation in our first California Only sale in twenty years. Registrants from around the globe competed for both the classic and cult wines from California establishing a number of record high prices.”

Outlook

Strong auction sales coupled with a stabilising UK market all point toward a positive outlook for the market in the months ahead through 2024.  In September, for the first time since February, price risers outnumbered fallers on the Liv-Ex exchange, signalling an opportune time to make acquisitions ahead of further increases to come.

Remember that investment-grade wine has demonstrated steady growth over the long term. The Liv-Ex investables index has maintained a compound annual growth rate of approximately 10% since 1988, leading to substantial returns. Any minor pullbacks, typically below 10% within a year, are transient, and the fundamentals tend to re-establish themselves.

Less than 1% of the world's wine production attains 'investment-grade' status, determined by factors such as quality, brand recognition, scarcity, vintage allure, and ageing capacity. Wine functions as an uncorrelated asset, providing a hedge with low volatility against fluctuations in both bond and equity markets. Its resilience to inflation is strengthened by its unique characteristics, as its lack of substitutability renders it a coveted commodity, maintaining its appeal even in the midst of price escalations.

We anticipate minimal additional declines in prices and maintain a positive outlook for next year's performance. The market is following a pattern reminiscent of past price correction cycles, displaying modest single-digit reductions over a period. Historically, such corrections have been succeeded by periods of subsequent upward growth.

One significant driver in favour of wine investment is changing global wealth demographics. As wealth increases worldwide, there is a growing demand for status symbols, which often include European luxury brands, and fine wine is an integral part of this trend.

Emerging markets with expanding middle classes, like South Korea, Southeast Asia, Singapore, Indonesia and the Philippines are showing strong demand for investment-grade wine.

Keeping your wine portfolio relevant to developments in the market is a key driver of growth and something that we continually assess to ensure that we’re making the best possible recommendations to our clients.