Fine wine gets the January blues

By Jo Gilbert

Published: 09 February, 2023

Fine wine got off to a slow start in the first month of 2023 at fine wine investment platform Cult Wines, deflating a more encouraging bubble which began towards the end of 2022.

Last month, Harpers reported that the platform closed 2022 with a ‘positive end to the year’, with its Cult Wines Global Index concluding the 12 months with a 20% gain.

Since then however, this ‘sustained rally’ has begun to dip.

Analysts noted a 0.52% decline throughout the month, with last year’s stellar performers Burgundy and Champagne down 1.08% and 1.04% respectively.

Overall, the soft start was attributed to a combination of macroeconomics and price consolidation.

Fine wine saw a strong performance via the Index through the end of 2022 (+42.5% since April 2020), which pushed prices higher – especially among top Burgundy and Champagne wines. The current market decline therefore is likely a reflection of “price consolidation causing an overall slowdown across all regions. Following a prolonged bull run, it’s not uncommon to see a temporary period where prices drift sideways or even slip a bit as markets adjust and gauge if the price rises are sustainable,” Olivier Staub, CIO, Cult Wine Investment, told Harpers.

“We saw this happen in the wine market between 2018 and 2020; and we’re seeing this play out now following a pause after the strong performance of 2022, especially in Burgundy and Champagne."

He added that a couple of factors are playing into the slowing down that the market saw last month, such as the strengthening of GPB vs USD.

"After a difficult year, equities have rebounded so there is a renewed focus on traditional investment which could also be a factor. Moving forward, we believe the market will become more selective.

"We still believe there remains the potential for pockets of growth in the wine market. For example, Italy and Bordeaux which appear relatively inexpensive to Burgundy after the region’s strong performance. A healthy 2022 Bordeaux vintage following the en primeur releases could re-ignite interest in the region. However, a strong supply/demand imbalance should continue to support Burgundy and Champagne in the long run,” he said.

This slowdown was also indicated by previous top performers – notably Burgundy and Champagne – experiencing some of the bigger declines month-on-month.

Despite the declines, Champagne still claimed the top performer, however. Georges Laval’s Les Chenes Brut Nature Premier Cru, Cumieres wines rose on average 16.30%. Meanwhile, Cult Wines Burgundy Index’s 31.31% annual gain made it the top performing region in 2022

Other regions, like the US, had a strong showing in the performance of individual wines with the number three and four spots nabbed by 2005 Cabernet Sauvignons from California: Joseph Phelps, Cabernet Sauvignon, Napa Valley, up 52.48%; and Mayacamas, Cabernet Sauvignon, Mt. Veeder, up 50.14%.

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