July 2023 Liv-ex data shows a continued softening in fine wine prices, triggering increased trade as buyers lap up the discounts.
The average price of Burgundy and Champagne investment wines rose 50.3% and 50.8% respectively in the 12 months to June 30th 2022. As the market cooled in Quarters 3 and 4 last year, we have seen this ‘adjustment’ trend pick up further in 2023.
This year to date, the key Liv-ex benchmarks have recorded a downward trajectory, with those regions which enjoyed the most outstanding growth in the bull-run seeing a sharp correction. The Liv-ex Burgundy150 is down -10.3% YTD and -9.4% in the 12 months to 31st July 2023.
Similarly, the Liv-ex Champagne50 index is down -10.5% YTD and -8.4% over the year. The average price of Rhone wines has been the hardest hit. The Rhone100 benchmark has fallen -16.4% in 2023 and nearly 18% in the last year. However, individual wines are still recording good growth that should encourage investors.
Top performing wines in July 2023
| Wine / Vintage | Region | June 2023 | July 2023 | Change |
|---|---|---|---|---|
| Ch. De Beaucastel Hommage à Jacques Perrin, Chateauneuf-du-Pape 2019 | Rhone | £2,304 | £2,492 | 8.2% |
Dom Perignon Rosé 2008 | Champagne | £2,940 | £3,140 | 6.8% |
Gaja Barbaresco 2018 | Piedmont | £1,404 | £1,478 | 5.3% |
Ornellaia 2019 | Tuscany | £1,687 | £1,759 | 4.3% |
DRC Richebourg Grand Cru 2018 | Burgundy | £40,866 | £42,593 | 4.2% |
The fundamentals of a tangible asset that will continue to improve in quality as it matures and becomes scarcer over time will drive future value growth. Is the current 10% discount from the market heights of Q3 2022 appealing? The increased volume and value of trade on Liv-ex in July would suggest - yes.
Most traded wines by value: 21 – 27 July 2023
| Wine | Vintage | Region |
|---|---|---|
Chateau Latour | 2015 | Bordeaux |
| Chateau Lafite Rothschild | 2016 | Bordeaux |
| Salon Le Mesnil-sur-Oger | 2013 | Champagne |
| Louis Roederer Cristal | 2015 | Champagne |
| Piper Heidsieck Rare | 2013 | Champagne |
Champagne is offering the most buyer appeal right now. The entry point is, of course, much more accessible than Burgundy, and prices are currently offering a 10% discount to last year's peak.
Wine investors should take note that the data could also suggest that Champagne prices may be nearing the bottom of their curve. In May 2023 the Liv-ex Champagne 50 index declined -2.1%, in June it slipped -1.3% and in July its trajectory softened further at -0.2%. August will be important to understand whether we are approaching the key lowest point in this cycle of the market.
Luxury investments trends
Luxury collectables and tangible assets such as property, are also going through a ‘re-set’ following the significant run on ‘real assets’ in response to the pandemic and war in Ukraine during 2020 to 2022. Knight Frank have observed in their newly published Report on Luxury Investments, that the value of luxury assets rose by an average 7% in the 12 months to end of Q2 2023.
Knight Frank comments on a softening in prices across all ten asset classes its KFLII index measures in the last year (wine, whisky, art, classic cars, watches, coins, coloured diamonds, jewellery, antique furniture, and luxury handbags). The 7% rise compares very favourably to the average price growth of prime central London property at just 1%, the FTSE 100’s 5% and gold 1% in the same period.
Wine is the second-best performer in Knight Frank’s collectables cache over 10 years with average growth of 147% to whisky’s 322%. Art has delivered the strongest growth over the 12 months to Q2 2023 at an average 30%.
Our view on the current market conditions
We are in a period of adjustment and certain regions such as Champagne are seeing a slowing in price decline now. This could mean we are approaching the potential market low for this region. We will know more in the next few months and this is an important period for investors looking to optimise growth in fine wine value.
Italy has seen a stronger performance throughout 2023, and its one-year price performance runs flat. The region’s wines did not experience the extreme highs of Burgundy and Champagne in the bull run and have ultimately been more sustainable. This clearly demonstrates the need to ensure your wine portfolio is regionally diversified and investors should be looking for opportunities now.
Investors can acquire key investment wines now at a significant discount to the peak prices of last year. How much longer will this last? The coming months will tell but, in the meantime, there is a real opportunity now for new investors in wine to enter in a lower market and position for growth. Those who already have a wine portfolio can potentially average down the cost of any investment in the bull-run and diversify into new regions and labels at prices offering future growth potential.
For more information see our latest Market Report and speak to a member of our expert team on 0203 384 2262.