Sotheby’s fine wine boss optimistic about market’s underlying stability
The fine wine and spirits marketplace faces a series of challenges during 2023 – from war in Ukraine to the cost of living crisis – but one of the auction world’s leading figures is optimistic that it will remain resilient over the next 12 months.
Speaking exclusively to the drinks business, Jamie Ritchie, worldwide head of Sotheby’s Wine & Spirits, highlights the emergence of youth as a positive sign for the market, both in terms of new-generation wine producers and an increasingly influential Millennial consumer base looking to drink less, but better.
And he says that, while prices for some top-end Burgundies are beginning to decline, interest in the region remains undimmed – and is spilling over into demand for high-end Pinot Noir from other origins.
Sotheby’s wine and spirits auctions netted a record total of US$150m in 2022, up 14% on the year before, and the company is planning a raft of sales in the year ahead, with a strong focus on single-owner auctions, charity collaborations and the fast-growing spirits segment. The house will also continue its stewardship of the Hospices de Beaune auction which, at US$32m in 2022, accounts for a healthy slice of its annual revenues.
“I’m hoping the main surprise for the year ahead will be the resilience of the marketplace and, despite economic turmoil, [war in] Ukraine and political situations which are challenging, my hope is that we’ll see a relatively stable secondary market, and a continuation of previous trends,” Ritchie says.
Those previous trends include the rise and rise of Burgundy – and, to a lesser extent, Champagne – and a greater diversity in the market that has benefited segments such as Italy, the Rhône Valley and Spain. However, a recent Liv-ex report highlighted signs of change, with Burgundy and Champagne prices softening, and collectors beginning to narrow their focus on established areas of the market.
The report also suggested that these shifts might send buyers back to Bordeaux, which has seen its market share steadily eroded in recent years. “I think Bordeaux offers great value for money, particularly when you compare it to California, Burgundy and Champagne,” Ritchie says. “They’re making great wine at a scale which isn’t made anywhere else.”
However, he is wary of overstating any market correction for Burgundy as a whole. “In terms of the market, yes, we’ve seen some scaling back in the prices at the top end in Burgundy, but what goes up most tends to retreat more than others at times like this,” Ritchie says.
He admits that some Burgundy lovers might no longer be able to afford wines they were purchasing as recently as five years ago, but says most are not turning their backs on the region altogether. “Instead, they’re looking at different producers, areas and villages,” Ritchie argues. “There are new, younger producers coming through and making great wines. We certainly see continued interest, demand and desire for Burgundy.”
This broadening of the market is also extending beyond the borders of the Côte d’Or, Ritchie believes. “Pinot Noir made around the rest of the world did not really benefit from the Burgundy focus [in the past], but I think there’s beginning to be signs of that,” he says. “I think anywhere from the west coast of the US to New Zealand, Germany and Austria – anywhere where Pinot’s being made, people are interested in trying it and discovering it.”
The larger question is whether the increasing diversity of the fine wine scene that has been so evident in recent years will persist against such a fragile macroeconomic backdrop. Here, Ritchie remains optimistic. “I would see that continuing,” he says. “If you think prices aren’t going to scale back too much, people will continue to explore different areas.
“In every region, there’s a younger generation of winemakers coming through, making wines with more purity, delicacy, finesse. That’s what people are excited about, and I don’t see that stopping.”
People are also increasingly excited about spirits, which has gone from being an afterthought for most auction houses several years ago to an increasingly vital part of their businesses today. Here too, diversity is a trend, as Ritchie outlines.
“It started with Scotch [whisky], then went to Japanese, and now it’s with American,” he says. “There’s always been a reasonably strong secondary market [for spirits] in the UK, but in the US for regulatory reasons to a large degree, there hasn’t really been a large secondary market for spirits. But now there’s a big appetite and demand. We see the US marketplace as a big growth marketplace for us in the future.”
More generally, increased activity in the US has helped to make up for a slowing of demand in the Far East, largely as a result of the Chinese government’s zero-Covid policy ushering in continued severe lockdowns and an effective ban on overseas travel. “It will be very interesting for us, now that China is opening up and people are travelling again,” Ritchie says.
He remains unsure of how quickly the market will return, but underlying trends encourage optimism, with Greater China a world away from the gift-driven market of the 2000s and early 2010s. “It’s much more about personal consumption now,” Ritchie says. “Buyers are relatively sophisticated and want to explore and enjoy wine.”
Meanwhile, southeast Asia – Singapore, Indonesia, Thailand, Vietnam – is playing an increasingly significant role, and Ritchie has been pleasantly surprised by the resilience and stability displayed recently by the UK and continental Europe, despite war in Ukraine and spiralling inflation.
Resilience and stability – after an extended period of buoyancy for the global fine wine and spirits market that persisted through the years of the Covid-19 pandemic, these look set to be the bywords for merchants and auction houses during 2023. And, while there are question marks about the market’s short-term performance, it’s clear that the underlying trends remain largely positive.