Stability amidst turbulence: fine wine outperforms equities

The financial turmoil wrought by the spread of Covid-19 is already being compared to the global banking crisis of 2008-2009, but during that particular crise the world of wine’s calendar and distribution channels were not disrupted. Prices fell, but normal business continued. In the past month, major trade jamborrees like Prowein and Vinitaly have been cancelled, and, in the past week so too has the forthcoming  UGC tasting of Bordeaux’s latest release – vintage 2019.   

This might suggest more dramatic shifts in prices than in 2008 when the Liv-ex 100 fell 22% in two months. But so far, so little. While recent events have lead to huge swings in equity, currency and commodity markets, the wine market has remained positively dull.   

Liv-ex indices

The Liv-ex 100, industry benchmark, and the Liv-ex 1000, the broadest measure of the market, have outperformed global equities (and oil!) both in the short and long (5-year) term. The Liv-ex 1000 index has risen 40% over the past five years, while the FTSE100 has dipped 5%. 

As investors are seeking to put their money into safer assets in these uncertain times, fine wine offers steady returns and low volatility. Amidst the turbulence, might such stability become increasingly valued?