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Fine wine investors have been left with little toast this year, after prices for vintage Burgundies and Champagnes fell sharply as demand from Chinese consumers dried up.
The price of Burgundy fell by 14.4 percent this year to the end of November, according to wine exchange Liv-ex's Burgundy 150 index. Vintage Champagne fell 9.8 percent while the broader Bordeaux index lost 11.3 percent.
These falls mark the second consecutive year of heavy sales of fine wine, which was it arrived in 2023 with higher interest rates – making non-yielding assets such as wine less attractive to investors – and declining demand from Asia, traditionally the biggest buyer of French red wine.
“It was very difficult,” said Gregory Swartberg, chief executive of London-based investment firm Cru Wine. “November (2024) is one of the worst months of the year. We are not out of the woods yet.”
The Liv-ex 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 loss stands in contrast to the sales boom during the coronavirus pandemic. Although restaurants were closed during the shutdown, retail investors, flush with savings and time on their hands, flooded in.
Unusual weather patterns associated with climate change – warm weather at the start of the growing season, followed by bitter frosts that kill the buds – also reduces the supply of new wine.
Such were the gains that Champagne and Burgundy prices have made at times exceeded returns from emerging markets equities and technology stocks.
However some in the industry believe that prices rose too quickly, setting the market up for a crash.
“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 a drop in demand from Chinese buyers, who have been snapping up the last Burgundies in recent years but are now reusing energy as the domestic economy slows.
Investors who have bought other assets such as wine in recent years as a way to diversify their portfolios have become more vulnerable due to the uncertain economic outlook, said Tom Gearing, chief executive of investment firm Cult Wines who was previously based in the UK. version of Student.
Among the big-name wines affected this year is 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. Its 2012 yield fell 42 per cent to £1,740.
Among the Burgundies, Domaine Georges Roumier's Bonnes Mares Grand Cru 2020 fell 44 per cent to £11,529. House of Champagne Louis Roederer's 2015 vintage fell by around 17 percent.
There may be worse to come. Some industry insiders point to sales by Asian collectors, which they say are further depressing prices in the region. Many European producers fear that US president-elect Donald Trump will impose trade tariffs, just as he did on European wine producers during his first term in office.
In addition, the Bordeaux wine industry is called At first the campaign—an annual spring festival where new wines are discovered by critics and can be purchased before they're bottled—proved a failure. That was because buyers often found that, instead of buying a vintage, they could just buy old bottled wines on the secondary market at a lower price.
Producers in the region now face the challenge of how to set prices next year At first campaign, which will feature the 2024 vintage. After an unpleasant mix of mold, heavy rain and cool temperatures, this is “a very bad season across the board”, according to Tom Burchfield, head of market intelligence at Liv-ex.
Michael Saunders, chief executive of Coterie Holdings, which owns wine merchants Lay & Wheeler and wine cellar Coterie Vaults, who was recently in Bordeaux meeting producers and retailers, said: “There is a bit of an air of confusion about what the right course of action is. that's it.”
Despite the prevailing gloom throughout the industry, some investors are using this year's falling prices as an opportunity to buy high-quality vintages at low prices.
Cru Wine's Swartberg said he has been buying, and advising his customers to buy, Krug 1996 and Dom Pérignon 1996, which he describes as “vintages” of Champagne and which he believes will do well given the lack of supply.
Among Bordeaux he bought 2000, 2005 and 2009 vintages of wines such as Château Angelus and Château Cheval Blanc, and picked up recent Burgundies from Domaine Romanée Conti, Rousseau and Dujac.
“There are a lot of people who are starting to make the most of the market conditions that exist,” he said. “It was nothing two years ago to buy these wines at these prices.”