Market watch
Fine wine prices could fall in a global recession, but the severity of the drop depends on several factors, according to researchers. The economic impact of the Covid-19 public health crisis posed clear risks to the stability of fine wine price indices, said a paper published on the European Association of Wine Economists’ (EuAWE) website in April.
While a market collapse looked unlikely at the time of writing, the authors suggested that fine wine prices could still drop by about 35% in some cases in 2020.
Their projection was based on anticipated weaker demand from buyers, related to a projected 3% drop in global GDP this year, as predicted by the International Monetary Fund, also in April.
However, the authors acknowledged several variables in their analysis. ‘Clearly the longer and more severe the recession, the larger its impact on the wine market will be,’ wrote the authors, who included Jean-Philippe Weisskopf and Philippe Masset, associate professors in finance at Ecole Hôtelière de Lausanne, and EuAWE president Professor Jean-Marie Cardebat from the University of Bordeaux.
Price movement would partly depend on the number of market players needing to sell quickly, though they added that the situation across the wine world would not be uniform, with Bordeaux and Burgundy generally more susceptible to price declines than Italy, where ‘prospects appear to be more positive’.
‘Prices of Italian wines remain reasonable compared to their French counterparts and there still is some latent demand as illustrated by the year-long waiting lists of new buyers at many wineries in Piedmont.’
Young Bordeaux has already faced a degree of downward pressure in the past 18 months. However, the EuAWE authors also said new buyers might enter the market if prices were to look more attractive.
Miles Davis, head of professional portfolio management at Wine Owners, said that he shared a cautious outlook, but added that, as of June, ‘demand for fine wine is still there’.
Several younger Bordeaux wines struggled for momentum in 2019 and in the first months of 2020. This was down by nearly 8% over a year and by 12% versus two years ago.