The fine wine market prospered in 2022 and outperformed traditional investments such as gold, the US and the UK stock markets by a healthy margin, a report from WineCap has indicated.
Traditional markets faced multiple headwinds, but “In the first half of the year, fine wine prices continued their steady ascent,” the wine investment company said.
Sterling losing value in the third quarter was also “a boon to the market,” before “wine prices drifted in the final quarter.”
Even so, in the twelve months to December 2022, fine wine outperformed the FTSE 100, the S&P 500, and the DAX, as evidenced by the Liv-ex-100 and 1000 indices, which track some of the world's most traded wines.
A graph comparing the Liv-ex 100 with other indices Source: WineCap Q4 2022 Report
The Liv-ex 1000 was up 13.1% in a year and by 45% in the last five.
“The market has been slowing its pace,” WineCap said.
“Shifts are to be expected in 2023, as the market enters a period of correction,” it predicts, pointing out that the Liv-ex 100 and 1000 fell by 1.1% and 0.9% respectively in the last three months of 2022.
Overall, while “fine wine cemented its worth as an alternative asset and a hedge against inflation in 2022,” its success in 2023 will be dependent on further global economic difficulties, conclude the report.
Message in a bottle
There are currently no fine wine-based ETFs or trackers while the great vinyards are often owned by fierce independents or huge drink conglomerates such as Diageo or LVMH so to participate smaller investors have to buy physical quantities based on expert knowledge.
Domaine Leflaive, Batard-Montrachet Grand Cru was the best-performing wine in 2022 increasing in value by 101.1% over the year and priced at around £1,150 per bottle according to wine-searcher.com.
That’s about the price of a share in FTSE 100 stalwart Smith & Nephew currently, but there is nowhere near the liquidity (pardon the pun) in wine investing.
Those who require fast liquidity, have less capital, or cannot store the wine safely might be better to avoid this market, said insiders.