The past couple of years have seen huge rate hikes for fine red wine, however market patience may be using thin.
© Pixabay/JuandPaola|The great wine market is still strong, however it has been revealing indications of a slowdown.
Throughout the lockdown phase of the pandemic, costs for high-end white wines soared on the secondary market. However in the last few months, sales have slowed and some prices have actually even dropped.
The information comes from Liv-Ex, which released its end of year report today. More wines from more locations than ever are being sold on the secondary market, however Burgundy and Champagne are the most popular items. That said, there is presently a lack of buyers at the extremely top of the Burgundy market– no surprise, as DRC from the Romanée-Conti vineyard now averages near $25,000 a bottle.
Burgundy has not yet surpassed Bordeaux as the most-traded white wine, though it’s capturing up fast. As just recently as 2017, Bordeaux accounted for about two-thrids of the deals on the Liv-Ex exchange. This year Bordeaux has dropped to a brand-new low of 35 percent, with Burgundy up to 26 percent. Champagne’s market grew more than 50 percent in a year and it now makes up 14 percent of deals.
This came regardless of a succession of small vintages in Burgundy and is a result of purchasers revealing interest outside of the top-end grand crus. Robbie Stevens, a member of Liv-Ex’s executive board, stated buyers are now interested not just in premier crus, however sometimes in village-level wines and from some wineries much more than that.
“Roumier Bourgogne Rouge nowadays trades at $400 or $500 a bottle,” said Stevens, Liv-Ex’s manager for the Americas market. “Domaine Bizot Bourgogne Rouge can be even more. Times have actually changed. There are growers that have just come onto the scene and they get a cult following. Individuals start to have need for their white wines. They’re not produced in huge amounts and they’re not efficiently dispersed across the world. The Burgundy landscape is certainly widening. In 2012 we traded simply over an overall of 2000 red wines, whereas last year we traded 12,000.”
But, that stated, the Burgundy market– and the fine-wine market in general– has actually cooled a little. Stevens stated Liv-Ex’s Burgundy 150 index, of the 150 most-sold Burgundies on the planet, has increased in rate only 4 percent in the past six months, after growing 68 percent in the previous two years– and it in fact dropped 0.9 percent in November. Likewise, the overall Liv-Ex 1000 index has grown only 3 percent in the past six months after rising 36 percent in the previous 2 years.
Bubbling over
“From what we have actually seen in the context of the last two years, once everyone realized that the world wasn’t ending in 2020 and life goes on– unless you own a dining establishment– the wine industry as all has had a respectable time of it,” Stevens said. “Unless you were furloughed or lost your task, a great deal of people had more disposable earnings. Part of that has actually led to the boost in collectibles, whether it’s white wine or whether it’s Pokemon cards. Those collectible markets are beginning to see the impact now as people start spending cash on experiences again.”
Stevens offered Cristal Champagne 2014 as an example.
“Back in September we were trading it at $1500 a six [- pack],” Stevens said. “It peaked up in October at $1750 a six. It’s traded most recently pull back at $1500. Individuals are breathing, as either increased supply comes onto the marketplace or demand subsides somewhat.”
The report states that white Burgundy is in favor with collectors again, after several years of concern about early oxidation.
An intriguing section at the end of the report addresses the fall of crypto business FTX, causing “wealth destruction” instead of wealth creation. Some wineries have explore NFTs, but Stevens says: “Among the things Liv-Ex stands by is we want wine to be fungible, instead of non-fungible. [Château] Lafite [Rothschild] makes 20,000 cases of year. They must all be the exact same, depending on storage. That’s fungible. I don’t see why you ‘d wish to make that non-fungible.”
The report concludes on a down beat: “The headwinds dealt with by the market are serious. No market increases permanently, and current action suggests that some areas may have peaked for the time being … The devil-may-care spending mindset appears to have passed. With demand beginning to dry up, the small swimming pool of purchasers for the really rarest wines either have the white wines they always desired or pricey bottles they can no longer sell. However provided fine red wine’s track record throughout periods of inflation and uncertainty, long-term enthusiasts will find it easy to look on the bright side.”
If you want to REALLY take a look at the intense side … so you’re stating great white wine costs might boil down?
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