Fine wine market in the red as Chinese demand dries up

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Fine wine investors have little left to toast this year, after prices for top Burgundy and vintage Champagne fell sharply as demand from Chinese buyers dried up.

Burgundy prices fell 14.4 percent this year through the end of November, according to Wine Exchange Liv-X’s Burgundy 150 Index. Vintage Champagne fell 9.8 percent and a broader index of Bordeaux dropped 11.3 percent.

The falls marked a second consecutive tough year for the fine wine market, which was Hit in 2023 By high interest rates – which make wine less attractive to investors – and traditionally a major buyer of French red wine, Asia is creating wealth without falling demand.

“It was extremely difficult,” said Gregory Swartberg, chief executive of London-based wine investment company Crew Wine. “November [2024] Had the worst month of the year. We’re not out of the woods yet.”

Liv-X’s overall Fine Wine 100 index fell 9.2 percent this year through the end of November, while global stocks rose 20 percent over the same period.

The losses stand in contrast to the market boom during the coronavirus pandemic. While restaurants close during the lockdown, retail investors, flush with savings and time on their hands.

Unusual weather patterns Coupled with climate change — warm weather early in the growing season, followed by brutal frosts that killed the buds — also limited the supply of new wines.

Such was the profit that vintage champagne and burgundy prices were even lower at times Earnings from rising equity markets outperformed and technology stocks.

But some in the industry believe prices rose too quickly, setting the market up for a fall.

“This bear market was a long-term correction after an unprecedented bull market during the pandemic,” said Calum Woodcock, chief executive of wine investment platform WineFi.

The market has also been hit hard by falling demand from Chinese buyers, who in recent years have snapped up top Burgundies but are now reining in consumption as the domestic economy slumps.

Investors who bought alternative assets such as wine as a way to diversify their portfolios in recent years are becoming more risk-averse because of the uncertain economic outlook, said Tom Gearing, chief executive of investment firm Cult Wine and a former UK finalist. version of apprentice.

Big-name wines suffering this year include Château Lafayette Rothschild’s Carrouads de Lafayette, whose 2021 vintage is down 29 percent this year to £1,640 for a case of 12, according to Liv-X. Its 2012 vintage fell 42 per cent to £1,740.

Among Burgundies, Domaine Georges Roumier’s Bonnes Mares Grand Cru 2020 fell 44 per cent to £11,529 a case. Champagne house Louis Roederer’s 2015 vintage is down about 17 percent.

Could be worse. Some industry points to sales by domestic Asian collectors, which they say make prices in the region more depressed. 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 addition, the so-called Bordeaux wine industry the first The campaign — an annual spring festival where new wines are scored by critics and can be purchased before bottling — has proven largely unsuccessful. This is because buyers often find that, instead of buying wines that will be viable in the future, they can simply buy bottled mature wines at lower prices on the secondary market.

Producers in the region now face the challenge of how prices will fare next year the first campaign, which will feature the 2024 vintage. According to Tom Burchfield, Liv-X’s head of market intelligence, after an unpleasant mix of light, heavy rain and cool temperatures, it’s “absolutely a terrible vintage”.

Michael Saunders, chief executive of Coterie Holdings, which owns wine merchants Leigh & Wheeler and wine warehouse Coterie Vaults, and who recently met with Bordeaux producers and dealers, said: “There is a bit of a mood of confusion about what the right course of action is. either.”

Despite the gloomy mood across much of the industry, some investors are using this year’s price slump as an opportunity to buy high-quality vintages at knockdown prices.

Swartberg of Cru Wines said he is buying and advising his clients to buy Krug 1996 and Dom Pérignon 1996, which he describes as “fantastic vintages” of Champagne and which he believes will do well given the supply shortage.

In Bordeaux he has bought vintages such as 2000, 2005 and 2009 vintages such as Château Angelus and Château Cheval Blanc, and he has sourced recent Burgundies from Domaine Romani Conti, Rousseau and Duzac.

“More and more people are starting to make the most of the current market conditions,” he said. “Two years ago it was unheard of to buy this wine at this price.”