Last year was a very strong year for the secondary fine wine market. As detailed in our end of year report, new records were set as the market’s leading indices, the Liv-ex Fine Wine 100 and Fine Wine 1000 both reached new highs amid an unbroken, 18-month run of gains.

2022 began where 2021 left off, bolstered by a good campaign for the 2020 Burgundy vintage. The Liv-ex 100 and the Liv-ex 1000 indices were up by 1.9% and 3.5% respectively.

However, the market showed signs of slowing in February, with the smallest gains for the Liv-ex 100 and Liv-ex 1000 since May 2020. The Liv-ex 100 performed better in March, up 0.7%, while the Liv-ex 1000 was up 2.0%.

Over the quarter, Liv-ex’s leading indices, the Fine Wine 50, Fine Wine 100 and Fine Wine 1000 rose 2.3%, 2.9% and 7.3% respectively.

While the Q1 gains in the Liv-ex 100 were more gentle than in 2021, the performance for the Liv-ex 1000 was striking, reflecting robust gains in both Burgundy and Champagne.

But, can the fine wine market’s performance continue to be divorced from the wider global economic and political situation?

Rising inflation and interest rates were already on the minds of many at the end of last year. The Russian invasion of Ukraine on 24^th February has only exacerbated these concerns, as the rising cost of oil, gas and metals impact further on a struggling global supply chain.

The price of a barrel of crude oil is still over US$100 a barrel (though releases from the US reserves announced on 31^st March helped curb the price creep) and the price of a ton of nickel or copper has also ballooned (see chart below).

On top of war in Europe and the rising cost of living there is the rapidly worsening Covid situation in China, a major buyer on the secondary fine wine market – where fresh lockdowns have once more turned the country’s mega-cities into ghost towns.

Just as the tedium and turmoil of the last two years seemed to be receding, the storm clouds have gathered again to darken the mood in global markets. For now, at least, fine wine seems immune.

As an alternative asset it retains certain advantages over mainstream financials in difficult times, especially as it is both a diminishing asset and one where time invested in holding on to stock is often necessary and generally encouraged. Thus, its volatility is extremely low.

As the chart below shows, the Liv-ex Fine Wine 50 has remained stable over the past quarter. It has outperformed all the major equity markets such as the FTSE100 and Dow Jones.

Demand for fine wine is invariably linked to price. The greater value buyers feel they are getting for their money, the more likely they are to buy. Major dips in the value of Sterling (such as immediately after the Brexit vote in 2016) have been shown to lead to an increase in non-UK based buying activity.

The chart below shows the Fine Wine 50 (measured in Sterling) and alternative currencies. Sterling has had a volatile quarter against many of the world’s major currencies, notably losing ground to the US Dollar.

Demand generally from the US, geographically and economically more removed from the effects of the war on Ukraine than Europe, is robust, but the strength of its currency provides a boon too for those with linked currencies – such as Singapore and Hong Kong. The weakness of the Yen, by contrast, has led to a cooling in demand.

Burgundy and Champagne have continued their strong 2021 performance in 2022.

A look at the sub-indices that make up the broadest measure of the secondary market, the Liv-ex 1000, shows that Burgundy and Champagne have been the best performers so far this year, up 14.6% and 9.6% respectively.

Although the Champagne 50 index remains the top performer over the last year, the table makes it clear that the Burgundy 150 has been the standout performer over the past three months.

The Rest of the World 60 index has been led by strong trade and price performances of US wines, especially the stable of Napa estate, Screaming Eagle.

This table shows the top price performers among the Liv-ex 1000’s component wines over the last three months. Nine of the 10 labels are Burgundian, the exception being Domaine Jean Louis Chave from the Northern Rhône.

The prices shown in the table above are Liv-ex Mid-Prices. The Mid-Price is the mid-point between the highest live bid and lowest live offer on the market. These are the firm commitments to buy and sell at that price; transactional data rather than list prices. It represents the actual trading activity of 600 of the world’s leading fine wine merchants. Because Liv-ex doesn’t itself trade, this data is truly independent and reliable. Prices given are for 12x75cl trades, or 6x75cl converted to a 12x75cl price.

In Q1, Burgundy and Champagne continued to command strong shares of secondary market trade. Burgundy’s trade share was 25% and Champagne’s 11.5%, while Bordeaux continued to lead overall trade with a 32.8% share; but this was below its activity in the first quarter of 2021 (36.1%).

As can be seen in the chart below. Over the past year there have been some changes in activity for certain regions.

Several core regions have maintained their positions in the rankings, but Champagne and the Italian regions have seen swings. Champagne climbed significantly last year, making it the third most-traded region. It replaced Tuscany, which had enjoyed a breakout year in 2020. But then activity cooled as the end of US-EU trade tariffs in March 2021 brought American buyers back to replenish their supplies of Bordeaux, Burgundy and Rhône.

It has recovered its footing, however, following strong trade this quarter for vintages of Super Tuscan Sassicaia – which released its 2019 vintage in mid-February.

Although Burgundian labels may have dominated the quarter’s top price performers, the most traded wines by both volume and value were more varied.

Louis Roederer’s Cristal took three of the top six spots, as the market reacted to the release of the new 2014 vintage.

The prices shown in the table above are Liv-ex Market Prices. The Market Price is the best listed price for a wine in the secondary market. It is always presented  for a 12×75 case unless otherwise stated. To calculate the Market Price, we look at list prices from a large group of trusted international merchants. Preference is given to prices from stock holders over brokers, to cases over single bottles, and to recent prices over older prices. The algorithm behind it runs every day, evaluating a pool of over 1 billion data points to determine the most accurate Market Prices for 240,000+ wines.

Despite the volatility in commodity markets and glum global economic forecasts, stock markets have recovered many of their losses

But while the shock of these combined blows has not knocked markets entirely off course (yet), there is a lingering sense of unease and risk aversion, which is being hinted at in fine wine too.

Along with smaller gains for the market’s leading indices, the bid to offer ratio on Liv-ex has recently seen offers rise and bids fall – suggesting nervousness on the part of buyers.

This is happening ahead of the fine wine world’s marquee event, the Bordeaux En Primeur campaign which will take place this May-June. A strong futures offering can provide a boost to market confidence but a poor campaign can do the opposite.

So far, the feeling in the trade is that 2021 vintage that will be offered is a weak addition to the recent canon of top Bordeaux vintages. If the châteaux are too bullish on pricing, it will likely dampen market enthusiasm which could have a knock-on effect on the broader market.

After such a positive end to 2021, the fine wine market finds itself in a situation similar to the end of 2019 when global trade disputes and Brexit uncertainty loomed large. Fine wine’s track record of low volatility and steady returns is now well-established and could yet prove decisive in the uncertain months ahead.

Liv-ex analysis is drawn from the world’s most comprehensive database of fine wine prices. The data reflects the real time activity of Liv-ex’s 600 merchant members from across the globe. Together they represent the largest pool of liquidity in the world – currently £100m of bids and offers across 16,000 wines. Independent data, direct from the market.

Our indices track the prices of the most traded fine wines on the world’s most active and liquid marketplace; Liv-ex.

They are calculated using our Mid Price; the mid-point between the highest live bid and lowest live offer on the market. These are firm commitments to buy and sell at that price; transactional data rather than list prices. It represents the actual trading activity of 600 of the world’s leading fine wine merchants. Because Liv-ex doesn’t itself trade, this data is truly independent and reliable.

Stretching back over 20 years, the Liv-ex 100 is quoted on Bloomberg and Reuters screens.

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• Introduction
• Fine wine outperforms equity markets but lags behind surging commodities
• Growing opportunities for dollar buyers
• Champagne and Burgundy lead price performance in Q1
• Leflaive 2012 leads price performance in Q1
• Trading overview in Q1
• Top traded wines in Q1
• Conclusion: What is next amid deep uncertainty?