In the ever-evolving landscape of fine wine investment, 2023 has been marked by transformation, influenced by a combination of economic and geopolitical factors. These forces, which include the culmination of the pandemic and the Ukraine War, fluctuations in inflation, and shifts in currency values, are reshaping the fine wine market.
The fine wine market witnessed an extraordinary surge, during the pandemic and the start of the Ukraine War. “Following the Covid era, there was a reservoir of purchasing power waiting to be unleashed,” explains Suthagar McNamara-Rajeswaran, Head of Business Development at OenoGroup. This surge propelled significant price hikes, particularly in wine regions such as Champagne and Burgundy, where prices soared by a 50.8% and 27%, respectively.
Nevertheless, McNamara-Rajeswaran reminds us: “No market or asset maintains uninterrupted growth indefinitely. There are always cycles, and the fine wine sector is currently undergoing a period of correction.”
Indeed, this year has ushered in a phase of adjustment, with Champagne prices experiencing a decline of -5.3% since the conclusion of Q2 2022, followed by a -10% dip in the first half of 2023.
This price correction has created enticing opportunities for investors seeking to enter the fine wine market at more favourable price points.
McNamara-Rajeswaran underscores this: “Currently, it’s very much a buyer’s market, but it’s essential to remember that fine wine investment is a medium to long-term strategy.”
The finite supply of each vintage ensures that wines will innately become increasingly scarce over time, potentially leading to future price appreciation. Consequently, regions such as Burgundy and Rhône now represent attractive prospects for diversifying fine wine portfolios.
Amid these market fluctuations, Bordeaux and Italy have exhibited a degree of stability. McNamara-Rajeswaran spotlights Bordeaux’s resilience, stating, “Bordeaux, operating under its own rules and designed for long-term play, still delivered positive single-digit returns.” Meanwhile, Italy has demonstrated robust performance in the first half of 2023, reinforcing that top Tuscany and Piedmont estates carry strong demand in the market.
While fine wine has traditionally been perceived as a stable investment, McNamara-Rajeswaran underscores, “Unlike conventional financial markets, wine values are influenced by factors such as weather conditions, supply and demand dynamics, and decisions made by vintners.” As wine is consumed over time, its supply naturally dwindles, typically resulting in an upward trajectory for its value.
McNamara-Rajeswaran’s unique role at OenoGroup, where he compiles monthly and quarterly reports on the fine wine market, provides invaluable insights into market trends and fluctuations. He emphasises the pivotal role of Liv-ex, the official trading platform for fine wine, and its contribution to tracking industry performance through various indices. These indices, including the Fine Wine 50 and Fine Wine 100, offer effective tools for monitoring market dynamics.
Moreover, OenoGroup’s ability to supply wines to the hospitality and retail sectors yields valuable data that informs future investment decisions. McNamara-Rajeswaran underscores the significance of this information, affirming, “All of this data serves as a foundation for shaping our future investment strategies.”
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To talk to Oeno’s team of knowledgeable investment experts, call 020 7846 3366 or email info@oenogroup.com
