Falling rates to boost activity?

Recent analysis has suggested little prospect of a swift upturn on the fine wine market in early 2024, but lower prices may present opportunities for astute buyers.

Last year was challenging for the fine wine market (see December 2023 issue).

Prices dropped by some 12% overall, said UK-based merchant Bordeaux Index in a January 2024 report.

That said, its transaction data showed prices were broadly flat over a two-year period and still up 18% versus three years ago (see chart 1, right).

Liv-ex, a global marketplace for the trade, reported in January that ‘bearish momentum and increased volatility’ on its Liv-ex 1000 index suggested a downward trend would continue in the short-term. The index, calculated monthly, dropped 13.6% in value in 2023, and fell by 0.7% in December.

Bordeaux Index said market sentiment was ‘reasonably neutral’, with limited selling activity. ‘Historical trends support market prices likely having reached a bottom point, and this is our base case,’ it said. However, it didn’t expect an upturn in the first quarter of 2024.

A number of trade sources have mentioned potential opportunities for buyers. Wines from Bordeaux, Burgundy, Italy and Champagne, for example, were trading below market price, on average, on Liv-ex in the fourth quarter of 2023.

Three Bordeaux 2017 wines were among the top-traded names on Liv-ex in the second week of January 2024, but the group said some transactions were below en primeur release prices (see chart 2, below).

Bordeaux Index said the rapid interest rate rises of 2023 may have dampened fine wine market trading. Speculation about rate cuts in 2024 is potentially significant.

UK-based Cult Wine Investment, part of the Cult Wines group, said interest rate cuts, combined with lower prices, could help to increase wine market activity in 2024, ‘potentially rejuvenating the landscape and building momentum heading into 2025’.