In September, the fine wine market saw significant shifts, with both the Liv-ex Fine Wine 100 and Liv-ex Fine Wine 1000 recording their sharpest monthly declines in recent memory.
The Liv-ex Fine Wine 100 fell by 1.7%, marking its sixth consecutive month of decline and its largest drop since October 2023. Similarly, the Liv-ex Fine Wine 1000, a broader measure of the market, decreased by 1.9%, indicating a challenging month for the fine wine trade.
Liv-ex Fine Wine 100: A Continued Decline
The Liv-ex Fine Wine 100 is the industry-leading benchmark, tracking the price movement of the 100 most sought-after wines from regions such as France, Italy, the USA, Australia, and Spain. In September, the index fell by 1.7%, bringing its year-to-date loss to 7.0%. This follows a trend of sustained underperformance, as the index has recorded only one month-on-month rise in the past year (0.4% in March 2024). Despite these short-term challenges, the index remains up by 7.6% over the past five years, demonstrating the long-term resilience of fine wine investments.
Liv-ex Fine Wine 1000: Global Trends and Regional Losses
The Liv-ex Fine Wine 1000, which tracks 1,000 wines from around the world, also struggled in September, closing at 377.7 after a 1.9% fall. All seven of its sub-indices recorded declines, but the Rest of the World 60 was the worst performer, dropping by 4.4%. This index includes wines from non-European regions like the USA and Australia, and it faced significant pressure as key wines from these regions saw price reductions. Notably, Screaming Eagle’s Oakville Cabernet Sauvignon and Opus One were among the worst performers, with eight of the ten most recent vintages of each recording losses.
The decline in prices for these wines is likely linked to the strengthening of the Pound Sterling against the US Dollar, making wines priced in dollars more expensive for international buyers. Screaming Eagle 2016 experienced the sharpest drop, with its Mid Price falling by 21.2% in September alone.
Bordeaux and Burgundy: A Mixed Performance
The Liv-ex Fine Wine 50, which tracks the ten most recent vintages of Bordeaux First Growths, also experienced a decline, falling by 2.1% in September. The index is now below its 2020 levels, and technical indicators like the Relative Strength Index (RSI) show that it is in oversold territory, suggesting the possibility of further downward price movements. Château Lafite Rothschild 2021 was the worst-performing wine in the index, with its Mid Price dropping by 9.5%, leaving it just below its ex-château release price of €390 per bottle.
Burgundy wines, a historically stable performer, were not immune to the downturn. While the Burgundy 150 sub-index also fell, Vega Sicilia’s Unico from Spain was a bright spot. Six vintages of Unico recorded price increases, with the 2008 vintage leading the way, rising by 10.0% month-on-month.
A Strong Performance for Port
Amid the broader market declines, the Port 50 index was a standout performer, rising by 2.0%. This positive performance highlights the unique market dynamics of fortified wines, which are often seen as more stable during periods of broader market volatility. The increase in the Port 50 index shows that even in challenging times, certain categories of wines can still perform well and offer potential for investment.
Technical Analysis and Market Sentiment
The continued decline in the Liv-ex Fine Wine 50 and Liv-ex Fine Wine 100 underscores a period of uncertainty for the market. The Liv-ex Fine Wine 50, in particular, is showing signs of being oversold, as indicated by its RSI falling below the 30 threshold. Additionally, with the Bollinger Bands remaining wide, technical analysis suggests that further downward price swings are likely.
However, despite falling prices, the number of individual wines (LWIN11s) traded on the secondary market in September saw a slight increase compared to August, indicating that market participants remain active. While traded value decreased, the rise in traded volume suggests that buyers are still engaged, albeit at lower price points. This trend points to a market that, while under pressure, remains vibrant and adaptable to changing conditions.
Long-term Outlook for Fine Wine
While the fine wine market has experienced notable declines in 2024, particularly in recent months, the long-term outlook remains relatively positive. Over a five-year period, the Liv-ex Fine Wine 100 has still posted gains, and historical data shows that fine wine, as an asset class, can weather economic uncertainty better than many traditional investments.
Market participants will be closely monitoring the performance of key regions like Bordeaux, Burgundy, and the Rest of the World, as well as watching for any signs of recovery in the Liv-ex Fine Wine 100 and 1000 indices. For now, buyers are taking advantage of lower prices to acquire highly sought-after wines, while sellers face the challenge of adjusting to a new pricing environment.
In summary, September marked a sharp decline for fine wine prices, but the resilience of the market remains evident as activity continues and certain categories, such as Port, show strength. The coming months will be crucial in determining whether these trends persist or if the market can stabilize as we move into the final quarter of the year.
Source: Liv-ex