Unlock Editor's Roundup for free
Roula Khalaf, editor of the FT, picks her favorite stories in this weekly newsletter.
Fine wine investors have been left with little to toast this year as prices of vintage Burgundies and Champagnes fell sharply as demand from Chinese buyers dried up.
The price of Burgundy fell 14.4 percent this year to the end of November, according to Liv-ex's Burgundy 150 index of the wine exchange. Vintage Champagne fell 9.8 percent while a broad index of Bordeaux lost 11.3 percent.
The declines mark a second straight year of difficulty for the fine wine market, which was hit in 2023 by higher interest rates – which make non-performing assets like wine less attractive to investors – and waning demand from Asia, traditionally a major buyer of the French. red wine.
“It's been very difficult,” said Gregory Swartberg, chief executive of London-based wine investment company Cru Wine. “November (2024) was one of the worst months of the year. We're not out of the woods yet.”
Liv-ex's overall Fine Wine 100 index is down 9.2 percent this year to the end of November, while global stocks are up 20 percent over the same period.
The losses are in stark contrast to the market boom during the coronavirus pandemic. Although restaurants closed during the lockdowns, retail investors, flush with savings and time on their hands, flocked.
Unusual weather patterns linked to climate change — warm weather early in the growing season followed by brutal frosts that killed the buds — also limited the supply of new wine.
Such were the gains that vintage champagne and burgundy prices even sometimes outpaced returns from rising stock markets and technology stocks.
However, some in the industry believe that prices rose too quickly, setting the market up for a decline.
“This bear market was a long overdue correction after an unprecedented bull market during the pandemic,” said Callum Woodcock, chief executive of wine investment platform WineFi.
The market has also been hit hard by falling demand from Chinese buyers, who had snapped up high-end Burgundies in recent years but are now curbing consumption as the domestic economy falters.
Investors who had bought alternative assets like wine in recent years as a way to diversify their portfolios were becoming more risk-averse because of the uncertain economic outlook, said Tom Gearing, chief executive of investment firm Cult Wines and more seen a finalist in the UK. version i learner.
Among the big-name wines that have suffered this year are Château Lafite Rothschild's Carruades de Lafite, whose 2021 vintage is down 29 per cent this year to £1,640 for a case of 12, according to Liv-ex. Her 2012 vintage is down 42 per cent to £1,740.
Among the Burgundies, Domaine Georges Roumier's Bonnes Mares Grand Cru 2020 is down 44 per cent to £11,529 a case. The 2015 vintage of the Louis Roederer champagne house has dropped nearly 17 percent.
There could be worse to come. Some industry insiders point to sales by Asian collectors, which they say is further driving down prices in the region. Many European producers fear that US President-elect Donald Trump will impose trade tariffs, as he did on some European wine imports during his first term in office.
In addition, the so-called Bordeaux wine industry first campaign – an annual spring festival where new wines are critically acclaimed and can be purchased by the bottle – was largely unsuccessful. This was because buyers often found that, instead of buying what is actually a future of wine, they could simply buy mature wines that were already bottled on the secondary market at a lower price.
The region's producers now face the challenge of how to make next year's price first campaign, which will feature the 2024 vintage. After an unwelcome mix of mold, heavy rainfall and cooler temperatures, this is “an absolutely terrible vintage across the board,” according to Tom Burchfield, head of intelligence of the market in Liv-ex.
Michael Saunders, chief executive of Coterie Holdings, which owns wine merchant Lay & Wheeler and wine warehouse Coterie Vaults, and who was recently in Bordeaux meeting producers and traders, said: “There is a slight mood of bewilderment that which is the right course of action.”
Despite the gloomy mood prevalent in much of the industry, some investors are using this year's price cuts as a chance to buy higher-quality products at lower prices.
Cru Wine's Swartberg said he has been buying, and advising his clients to buy, Krug 1996 and Dom Pérignon 1996, which he describes as “phenomenal vintages” of Champagne that he believes will do well because of lack of supply.
Among Bordeaux, he has bought vintages from 2000, 2005 and 2009 such as Château Angelus and Château Cheval Blanc, and bought the latest Burgundies from Domaine Romanée Conti, Rousseau and Dujac.
“More and more people are starting to take advantage of the current market conditions,” he said. “It was unheard of two years ago to buy these wines at these prices.”
