Fine wine market hit by the January blues
Cult Wines has reported a dip in the fine wine market during January, with its global indices showing a 0.52% decline over the month.
The report showed that its indices declined in all regions, with even Burgundy and Champagne – which saw a stellar performance across last year – down -1.08% and -1.04% respectively, reflecting some of the biggest declines month-on-month. The US indices also underperformed during January (–1.68%) after a strong December.
This “soft” start to the year, which the company attributed to wider macroeconomics and price consolidation, followed a “sustained rally” through the end of 2022, it said.
“Following a prolonged bull run, it’s not uncommon to see a temporary period where prices drift sideways or even slip a bit as markets adjust and gauge if the price rises are sustainable,” the company said.
It also followed a rally of equity indices during January, with inflation easing on both sides of the Atlantic and healthier-than-expected gas reserves in Europe helping to buoy market sentiment.
“An end to monetary policy tightening would allow central banks to shift to a more pro-growth policy stance,” the company pointed out.
The opening up of China and the boost to the Chinese stock market also helped support the view that economic activity would recover in 2023, it noted.
Cult Wines Global Index rose just 0.52% in January, compared to a 4.35% rise in the FTSE100, a 6.28% rise in the S&P 500, or the NASDAQ’s 10.72% rise. Meanwhile gold rose 5.65%, with Bitcoin was also up by 39.84%, according to information from investing.com.
The 12-month figures put Cult Wines’s index at 18.19%, compared to just 1.02% growth in gold, and 8.04% in the FTSE 100. Meanwhile there was a 8.22% fall in the S&P 500, and a17.95% fall in the NASDAQ over the same 12 month period.
The exchange rate and strengthening pound has also impacted sales of US wine, which saw its biggest decline of 1.68%, although Cult Wine said the underperformance was likely to have stemmed from “price consolidation after their strong 15.99% annual gain in 2022”.
Diversity and relative value
Looking at the lead performers across the regions, it noted that the diversity of the top performers – which included wines from the Rhone, Spain, and Germany – “demonstrates that wines that offer better relative value may play a larger role in the coming year amid the high prices in core regions”.
The top performer in January was a grower Champagne, Les Chenes Brut Nature Premier Cru, Cumieres from a Georges Laval, which rose by +16.30% on average during January, with Dom Perigonon Lenny Kravtiz edition the only other Champagne in the list. Others included two Rhones,Domaine Courbis, Cornas, Les Eygats and Domaine Jamet, Cote Rotie, Cote Brune as well as Rioja’s Artadi, Pagos Viejos, and Chateau Musar, White from the Bekaa Valley in Lebanon. Two Burgundies also made the top ten, Domaine de Montille, Puligny-Montrachet Premier Cru, Le Cailleret and Joseph Drouhin, Charmes-Chambertin Grand Cru – although the focus for Burgundy has been the 2021 releases of the en primeur campaign.