Fine wine markets had another record year in 2022 as investors’ interest in alternative, tangible assets continued to grow, but there are warning signs of weakening sales in the short term, according to a year-end report from Liv-ex, a global marketplace for the fine wine trade.
All the major indices compiled by Liv-ex reached new highs and outperformed major equities and commodities this year, according to Liv-ex.
Liv-ex Fine Wine 1000, the broadest index of the fine wine market, was up 16.1% year over year, while the benchmark Liv-ex 100 rose 3.8%, according to the report released Thursday.
Those results greatly outperformed major equities. By comparison, the S&P 500 lost 15.6% year over year, while Hong Kong’s stock market benchmark, the Hang Seng Index, dropped 19.8% and London’s FTSE 100 Index fell 17%.
“As a diminishing asset which encourages long-term storage, fine wine is an inherently low-volatility investment. This gives it advantages over mainstream assets especially in turbulent economic times,” Liv-ex said.
However, there are signs of a slowdown in fine wine markets due to supply chain turmoil caused by rising energy prices, according to the report. Despite its annual gain, the Liv-ex 100 recorded its first decline in 18 months in July, and again in October and November.
While trade volume hit a new high, it only increased 2.4% in 2022, compared to a 10.4% rise last year. The number of active buyers for wines identified by specific vintages, which tend to have higher price points, fell from a year ago, Liv-ex said.
A survey of Liv-ex merchant members also pointed to a less promising future, with a slight majority of respondents having a “neutral” or “quite pessimistic” view about next year. Two respondents even predicted that the Liv-ex 100 Index would fall more than 25% in 2023.
Merchant members noted their continued concerns about global recession, rising logistics costs, foreign exchange volatility, and loss of consumer confidence, according to Liv-ex survey.
“The fine wine market has been on the up since 2015. An increasing amount of indicators are pointing to a pull back in the short term,” Justin Gibbs, deputy chairman and exchange director at Liv-ex said in a statement. “But the wine market has never been about the short term.”