The wine investment world - a brief market comment

by Wine Owners

Posted on 2022-03-09

Like traditional asset classes, the appalling events in Eastern Europe have cast a (tiny) bit of a shadow over the wine market. Unlike traditional asset classes this does not mean prices sharply falling, then rallying, and then yo-yoing up and down, repeating again if necessary, but a much more sedate and sanguine sitting back and taking stock approach. There is no wall of stock flooding the market and buyers have not just suddenly disappeared, they may just be exercising a touch more caution than before the outbreak.
The wine market has been enjoying a really good run for eighteen months or so but the exuberance witnessed in the run up to Christmas has calmed. Indices were still positive in February but trading has slowed a little and the gains are not so pronounced.

Major indices over a one year period:

My feeling is that the wine market has developed so much breadth in the last decade or so that it is less affected by global events than previously. Merchants and market makers are slower to mark down prices than before; they have survived Asian currency crises, the bursting of dot com bubbles and global financial disasters  etcetera, etcetera and are better capitalised and have a wider audience. The volume and the diversity of the client base continues to grow which at this point in the wine market’s history is bringing more stability to underlying prices. As an asset class it offers probably better diversification than ever before and may even start to challenge Gold as a safe haven trade. The Kremlin’s gold reserves are well documented, and may be up for sale soon - luckily the same cannot be said about their fine wine holdings!
Factor that in with some supply issues (thinking drought affected Burgundy), supply chain issues (thinking Brexit amongst others), and rising inflation and I think wine is still a good place to be. We would definitely recommend looking out for cut priced opportunities if they arise and there’s certainly no reason to panic. Not yet at least!

And here's a look at the major indices over the last fifteen years: