The Market Pauses for Breath in 2023
After 8 years of strong growth in prices and trading volumes, fine wine & spirits markets took a breather in 2023.
Having defied gravity in 2022, when global equities, bonds, crypto and risk assets fell precipitously, fine wine and whisky finally gave back some gains this year. Overall, fine wine prices declined by -10.2% (Liv-ex Investables Index), whilst fine whisky dropped a more modest -4.0% (Rare Whisky Apex 1000).
It is important, however, to zoom the camera out to view the bigger picture. Even with this year’s modest pullback, over the past 35 years, fine wine and whisky have been spectacularly good stores of value, outperforming most mainstream assets.
In terms of regional performance, the pain in 2023 was felt in areas where prices had run up the most. Uber premium red Burgundy and some Champagnes led price declines this year, whilst Super Tuscan and White Burgundy held up much better. Italy was the best performing region overall, recording only a -6.4% dip in prices.
As we discuss below, we don’t regard this year’s decline in prices as anything more than a healthy correction after a long bull run. Prices are now more affordable for new buyers, and this sets up the dynamic for the next bull cycle which we anticipate starting sometime in 2024 as global interest rates decline and a new liquidity cycle begins.
2023: A Year in Fine Wine
2023 started, as most years do, with an acute shortage of en primeur Burgundy. But Burgundy 2021 was even more of a challenging than usual as the difficult growing conditions yielded a pitifully small harvest. What was produced was of high quality, especially amongst the reds, but with so many cuvées simply not made, many clients were disappointed with allocations.
While 2021 Burgundy was characterised by frost, hail and excess rain, Bordeaux 2022 was one of the driest and warmest vintages on record (although mercifully interspersed with intermittent rainfall in June and August). Although some producers struggled with the heatwave conditions, many rose to the challenge and produced blockbuster wines. Pricing was patchy, with some notable successes (and a few failures!).
Château Lafite Rothschild 2022 (with its two potential 100-point scores) was a standout performer from the campaign - and ended up being our highest selling wine (by value) in 2023.
Despite a generally downward trend in prices over the year, Champagne produced some successful new releases. Dom Pérignon 2013 was well received by critics and was our third highest-selling wine of the year. In April Louis Roederer’s Cristal 2013 release made a similar splash and met with strong demand.
Other notable Champagne releases included Bollinger’s (very) long-awaited R.D. 2008 release - which finally arrived in March this year. Krug Grande Cuvee 171eme Edition NV was enthusiastically received in April, and the ever-popular Taittinger Comtes de Champagne Blanc de Blancs 2013 sold well in September.
Despite the many primary market successes of 2023, however, there is no sugar-coating the general misjudgement of pricing which characterised the Global Icons ‘campaign’ in October.
There were a few honourable exceptions, but far too often producers came to market with prices significantly above higher scoring wines in the secondary market and releases fell flat.
The failure of Global Icons may end up being a blessing in disguise, however, as a lot of unsold wine now resides in Bordeaux; and this (we believe) will weigh heavily on négociants’ minds when they come to price 2024’s primary releases.
A New Home for our Whisky Casks
The Covid-19 pandemic period saw a boom in whisky cask sales.
In 2023 things quieted down, as demand for longer-term assets was depressed by higher global interest rates. We used the lull in secondary market activity to upgrade our cask operations and opened a wonderful new facility in the Scottish Lowlands, which is now the home of Cru World Wine’s cask storage.
Cru World Wine's newly built Whisky Cask Storage Facility in Scotland
Called Spirited Bond, the new facility is custom-made for today’s cask collector. Our Whisky cask clients can now request premium services like cask samples, re-gauges on demand and high-res photos. And cask owners can even visit their cask and inspect/taste it, perhaps combining the trip with a round of golf at nearby St. Andrews.
New Clients, New Balances & New Services
We were delighted to welcome 3,350 new clients to Cru World Wine in 2023.
And we welcomed even more fine wine! This year we promoted our storage network and online portfolio management tools actively, which resulted in many portfolios being transferred into our ecosystem from competitors.
We ended 2023 with almost US$ 140 million in custody at our facilities in Bordeaux, United Kingdom, Singapore, Hong Kong, San Francisco and Scotland – which is well over 1 million bottles. This is a staggering quantity considering that in 2014 we had virtually nothing in storage.
Fine wine and spirits collectors continue to be attracted not only by our high quality physcial storage - with the new dedicated fine wine facility at London City Bond Drakelow becoming fully operational this year - but also by our digital tool suite.
This year we completely overhauled how we check and verify the wine and spirits on our platform.
We introduced a new gold standard condition status (called ‘Verified’ status) and we have already issued many hundreds of Verification Certificates.
In 2023 we also launched ‘Cru Markets’ as our new marketplace to provide liquidity to selling collectors. At any one time, there are now around 2,000 live bids on the platform and many of our trading clients are active on the Markets section daily.
The Only Way is … App!
In August we were excited to launch version 2.0 of our mobile App.
After more than a year of development, we believe our new App is now the most sophisticated and comprehensive in fine wine. We are very grateful for all the feedback we received whilst building it.
As well as providing a comprehensive portfolio management and trading tools, the new App also facilitates important actions like arranging deliveries and transfers.
Less than 6 months post launch, more than 3,100 clients have already downloaded and logged into the App.
If you haven’t downloaded it yet (it’s free) please search ‘Cru World Wine’ on the App Store / Google or click here.
Listening to our Clients
This year we conducted our largest ever survey of client views. Over 500 of you shared how you approach fine wine & spirits and what you think of Cru World Wine.
The overall message was clear: our clients view themselves not as investors or consumers, but as ‘collectors’, valuing a range of services from physical delivery and tastings through to the provision of trading liquidity and portfolio management tools.
We heard the message loud and clear that we need to improve our delivery times, and we have addressed this by opening new Air Freight routes from Bordeaux direct to our Asian hubs in Singapore and Hong Kong. Further improvements will be announced in Q1 of 2024.
The Clouds Start to Lift in 2024
2023 was a slightly sobering year in fine wine. After three very strong years (2020-2022), this year saw prices retreat from previous highs, trading volumes fall from pandemic levels and producers too often mis-judging market conditions when setting new release prices.
But many of the headwinds which negatively impacted fine wine & spirits in 2023 look set to ease in 2024. Cyclicality is a feature of all markets, and declines in prices sow the seeds for the next bull phase.
We believe that three key trends will play out in 2024:
- Interest Rate Cuts to Drive a new Liquidity Cycle – Financial markets are pricing in significant cuts to US interest rates next year, as inflation trends back towards target. Declining global interest rates will inject greater liquidity into all markets, and fine wine & spirits will benefit as they did in 2020 and 2021.
- More Realistic Valuations to Attract Buyers - A lot of froth has been blown off the fine wine & spirits markets. Pricing had reached unrealistic levels in some regions, but with prices now down over 20% in some marquee names, bargain hunters are already emerging - and will do so in greater numbers in 2024.
- Primary Market Drives Improvement in Sentiment - Burgundy 2022 should be a much better campaign than 2021, with a return to ‘normal’ levels of production. It is early to judge the quality of Bordeaux 2023, but what matters more will be the attitude of producers and negociants to pricing. We are hearing very encouraging whispers from Bordeaux about a ‘new realism’. We remember the impact on the market of the quite dramatic Covid-19 induced price reductions for Bordeaux 2019 when it was released in early 2020. These pricing decisions led to widespread release sell-outs, kick-starting a virtuous circle of secondary market price gains, increased trading volumes and generally improving sentiment. The Bordelais have the power to catalyse another such cycle in 2024, and we hope they will seize the opportunity!