Merchants of fine wine have had a difficult couple of years. Prices have performed miserably. An index of the 100 most sought after bottles, produced by the exchange Liv-ex, has dropped nearly 21 per cent in sterling terms in the two years to June. To cap it off, a weak 2024 vintage in Bordeaux and Burgundy has dissuaded clients from taking up any new releases of wine from those regions.
It’s enough to make anyone think about drowning their sorrows. But Miles Davis, a consultant at London-based merchant Vinum Fine Wines, has noted some unusual behaviour recently: his customers are buying again.
“In the first half of June, we were fortunate enough to [have] some chunky orders,” he says.
Falling prices have helped shift what kinds of wines buyers are looking for. Traditionally, seasoned collectors would invest in younger bottles and hold on to them for 10 or more years to let the flavour — and hopefully the price tag — improve. With little indication that the market value when they come to sell will justify the holding costs, buyers these days, especially younger ones, are doing things differently.
“The wealthy we see buying fine wines today are buying them to drink 1753519338,” says Nick Pegna, global head of wine & spirits at Sotheby’s. “They are interested in wine and the experience. They are buying mature wines [that are] available now.”
So what wines are selling right now? And after some hefty price falls, are there some bargains to be had?
Not so long ago, the market looked rosier. Up until 2020, a series of ever-warmer growing seasons and some improvements in winemaking, including using precision digital tools on viticulture, contributed to a halcyon period for Europe’s top winemakers.
Then a burst of Covid-era purchases by stuck-at-home wine connoisseurs, who bought up the best of France, Italy and the US through most of 2022, led to a final surge in prices.
A hangover from the pandemic period boom then settled in. When the Russian invasion of Ukraine sent commodity prices soaring and central banks raised interest rates sharply, fine wine buying dried up.
Bordeaux and Burgundy wines, the most widely traded, have suffered badly. A Liv-ex price index of Bordeaux’s 500 best wines has dropped 23 per cent over the two years to June. Its Burgundy 150 benchmark has lost 27 per cent.
The depth of this bear market has surprised even long-term veterans of the London fine wine market, such as Stephen Browett, chair of Farr Vintners, who has worked in the business for 45 years.
“This is looking like the weakest wine market we’ve had in a very long time. In the banking crisis of 2008, the market was very weak but then the duty came off in Hong Kong [causing] the Asian market to boom afterwards. Our business [for French wines] in Hong Kong then just exploded.”
“Buyers are in the driving seat at the moment,” adds Browett. “But no one needs to buy wine.”
Add to this the cost of safely storing these wines, which in the UK can cost from £1 to £1.50 per bottle annually before any taxes and duties. Those with large collections in storage may have thousands of pounds of added costs annually, painful if some of that collection is falling in price as well.
“What’s worrying people about this fine wine market problem is that it’s broad,” says Justin Gibbs co-founder at Liv-ex, which is celebrating its 25th anniversary.
In past slumps when demand for Bordeaux slowed, buyers opened their wallets to buy wines from Burgundy and Tuscany as well as vintage Champagne. “But now it’s not just Bordeaux [falling in price], it’s happening in Italy and California.”
Despite the gloom, both Gibbs and his founding partner James Miles see value worth chasing, particularly in Bordeaux. “Over the next 12 to 18 months this is a great time to be picking up bargains [there],” believes Miles. “Your downside is limited.”
With the wine industry under pressure, adds Miles, the potential for bankruptcies and liquidations will grow. That could mean discounted offers of top bottles from Bordeaux, Burgundy and elsewhere. “There will be chances across the board to buy wine 30-50 per cent from peak prices of October 2022.”
An early victim of the downturn was Bordeaux. There, winemakers have long had a practice of offering their newest vintages for sale well before bottling, known as en primeur. But previous discounts offered by the châteaux to their customers, partly to attract working capital, not only disappeared but turned into a premium to older vintages.
That dismayed the market. A reticence to pay a premium for wines, not yet bottled and which might need ageing (and storage) for a decade or more, has put off collectors.
“For sophisticated drinkers who don’t need [or want] to deal with ageing their wines, they may prefer to buy drinking wines from much earlier years,” says Chloe Ashton, managing director at 1275 Collections, a fine wine curator.
“There are small parcels of these older, greater wines sitting with châteaux or négociants [wholesalers who buy from the châteaux],” she says. Some of her clients have found supply of rare vintages, such as Mouton Rothschild 1982.
Ashton also points to those vintages which received less than stellar reviews at the time, but have since evolved into lovely wines. She suggests looking at the 1983 Bordeaux vintage for clarets or bottles from 1995 and 2001.
“The point is there is not a rule on vintages,” she adds. “In the last 10-15 years, the baseline [quality] . . . is so much better than it was.”
Collectors might rightly ask where the future buyers will come from. US and Asian connoisseurs are less active then they were two decades ago.
However some are taking small sips. Where prices have fallen, “customers are buying better but less,” according to Shaun Bishop at JJ Buckley Fine Wines near San Francisco. “That has mostly happened for Bordeaux, Burgundy less so.”
His clients were less bothered by the swelling cost of the châteaux releases during en primeur. Bishop says that what customers do not like is the uncertainty about the final delivery price of foreign wines, due to President Donald Trump’s vacillating policies on tariffs. Instead, they prefer to buy what Bishop already has in stock, which is dwindling. “The consumer right now wants something that is in a bottle and ready to go.”
Hong Kong was once the epicentre of the Asian buying boom in the mid-noughties. Paulo Pong at Altaya Wines thinks that while his customers still love Bordeaux, there’s plenty of stock available that is ready to drink. So for them “there’s no point in buying young Bordeaux and ageing”.
Altaya has had more interest in Burgundy after prices have fallen. Given the small acreage and low volumes produced — in bottles not cases — a little selling can quickly move prices of the most expensive wines.
“Increasingly, there’s a trend [in Hong Kong] of people drinking more white wine,” he says. “With Burgundy this is a challenge for us, as we can’t get enough of some top whites. And [our clients] are drinking these much younger, focusing on Premier Crus and Grand Crus from communes such as Puligny-Montrachet and Chassagne-Montrachet.” Top producers include Coche-Dury and Colin-Morey.
Fine wine values have finally fallen enough to attract some attention from collectors. Whether prices can truly recover past highs is another question altogether.