Drop in Chinese demand brings down prices of fine wines

Burgundy and vintage champagnes suffer another price drop, marking the second consecutive year of losses in the expensive wine market

Fine wine investors have had little to celebrate this year following a sharp drop in prices for high-end Burgundies and vintage Champagnes, caused by reduced demand from Chinese buyers.

According to Liv-ex’s Burgundy 150 index, Burgundy wine prices fell 14.4% by the end of November 2024. Vintage Champagne fell 9.8%, while a comprehensive Bordeaux index recorded a drop of 11.3%.

These losses mark the second consecutive year of difficulties in the fine wine market, impacted by higher interest rates — which make non-yielding assets like wine less attractive to investors — and declining demand from Asia, traditionally a big market for French red wines.

“It’s been a super difficult year,” said Gregory Swartberg, CEO of London-based wine investment firm Cru Wine. “November was one of the worst months of the year. We are not out of this situation yet.”

Liv-ex’s overall Fine Wine 100 index was down 9.2% by the end of November, while global equity markets were up 20% over the same period.

The losses contrast sharply with the market boom during the coronavirus pandemic, when retail investors, with accumulated savings and time on their hands, drove up prices.

Unusual weather conditions linked to climate change, such as heat at the start of the growing season followed by intense frosts that destroyed buds, have also limited the supply of new wines.

Prices for vintage Champagnes and Burgundy wines at times exceeded stock and technology market returns during the height of the pandemic. However, some experts believe prices rose too quickly, setting the stage for the current correction.

“This bear market was a long-awaited correction following an unprecedented bull market during the pandemic,” said Callum Woodcock, CEO of wine investment platform WineFi.

Falling demand from Chinese buyers also contributed to the decline. In recent years, consumers in China have been purchasing high-end Burgundy wines, but are now reducing consumption as the domestic economy struggles.

Tom Gearing, CEO of investment firm Cult Wines, highlighted that investors who bought wines as alternative assets to diversify their portfolios are now more risk averse due to economic uncertainty.

Among the wines most affected are Château Lafite Rothschild’s 2021 Carruades de Lafite, which has fallen 29% this year to £1,640 per case of 12. Its 2012 vintage has seen a 42% decline to £1,740.

Among Burgundy wines, Domaine Georges Roumier’s Bonnes Mares Grand Cru 2020 fell 44% to £11,529 per case. Champagne Louis Roederer vintage 2015 fell almost 17%.

The future of the market is still uncertain. Some experts point out that sales from Asian collectors could continue to put pressure on prices. Furthermore, European producers fear that US President-elect Donald Trump will impose trade tariffs, as he did in his first term.

The campaign first de Bordeaux — an annual festival where new wines are reviewed by critics and sold before bottling — was widely considered a failure this year. Many buyers preferred to purchase already matured wines on the secondary market at lower prices.

For the 2024 campaign, which will present this year’s vintage, producers face pricing challenges. “It was an absolutely terrible harvest,” said Tom Burchfield, head of market intelligence at Liv-ex, citing problems such as downy mildew, heavy rain and colder temperatures.

Despite widespread pessimism, some investors are taking advantage of falling prices to purchase high-quality wines at reduced prices.

Swartberg said he is purchasing and recommending to his clients wines such as Krug 1996 and Dom Pérignon 1996, described as “phenomenal vintages” of Champagne, which are expected to appreciate in value due to limited supply.

Among Bordeaux, he highlighted the 2000, 2005 and 2009 vintages of wines such as Château Angelus and Château Cheval Blanc, as well as more recent wines from Burgundy, such as Domaine Romanée Conti, Rousseau and Dujac.

“More and more people are starting to take advantage of current market conditions,” he said. “Two years ago, it was unthinkable to buy these wines at these prices.”

With information from the Financial Times*