Our Performance

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Find out below about the performance of Cult Wines and the wine investment market for this latest quarter below.

 

Cult Wines Investment Overview Q1 2022

 

Fine wine market Q1 summary

Our performance detail

Fine Wine Outlook

You trust us, we deliver. Our Performance

Insight into the fine wine & global markets

Cult Wines quarter in a nutshell

Q1 2022 Performance Highlights

Fine wine emerged as a source of stability during the turbulent first quarter of 2022. Prices rose in each of the first three months, as Burgundy and Champagne, the top two performing regions in 2021, once again posted big gains.

Cult Wine Investment posted a 3.28% Q1 gain. The steady rise in prices among our wines from most major regions came in contrast with the wider macroeconomic backdrop which saw a spike in volatility stemming from the Russia-Ukraine conflict and soaring energy prices. 

 

+3.28%

Cult Wine Investment’s Q1 return stemmed from ongoing gains for our Burgundy and Champagne wines.

+27.24%

Cult Wine Investment’s return since March 2020. Our wine investments have enjoyed a strong and steady recovery since the initial COVID-19 outbreak two years ago.

+180.73%

Cult Wine Investment’s return since inception (2009) driven by a focus on sustained long-term performance based on our extensive fine wine knowledge and proprietary quantitative analysis.

Fine wine market Q1 summary

Fine wine formed a stable store of value over the quarter even as mainstream financial markets saw a spike in volatility due to the Russia-Ukraine conflict. The Liv-ex 1000, the broadest measure of the market, rose by 7.25% with prices rising in each month.

This performance underscores how the fine wine market is primarily driven by internal influences. A supply-demand imbalance persisted during the period, keeping prices from all main fine wine regions trending higher.  

Burgundy and Champagne posted the largest growth figures in Q1 (14.62% and 9.55%, respectively), carrying over the momentum from a stellar 2021. Burgundy’s gain came alongside the en primeur releases of the region’s high-quality 2020 vintage.

The releases came more slowly than years past as many producers held back stock in anticipation of a low volume 2021 vintage. As a result, the insatiable global demand for top Burgundy wines pushed prices for back vintages ever higher. The top 10 biggest Q1 price jumps of all Liv-ex 1000 wines were Burgundy names, according to Liv-ex data.

The Bordeaux 500 posted a 2.71% rise as attention remained focussed on Burgundy and Champagne. Bordeaux’s steady but less spectacular performance over the past year has improved relative value in the region ahead of the 2021 en primeur campaign in the region, which will begin in Q2.

Burgundy and Champagne climb ever higher

Liv-ex 1000 and regional indices’ Q1 2022 returns 

 Source: Liv-ex as of 31 March 2022. Past performance does not guarantee future returns.

Macro market summary

Fine wine’s stability contrasted with a difficult macroeconomic backdrop in the first quarter, which resulted in most major equity markets ending the period lower.  The year began amid uncertainty about global inflation, which led to mixed equity performance and government bond yields drifting higher.

Volatility then spiked in late February with the outbreak of war in Ukraine. Western sanctions on Russia, a major energy and commodity producer, sent oil and natural gas prices skyrocketing, exacerbating the inflationary pressures and weakening the economic outlook.

Equity markets plummeted. Although some regions did claw back some of the losses in late March, the outlook remains highly unstable.

China dealt with a surge in the omicron variant, which triggered manufacturing shutdowns and other restrictions, leading to Asian indices underperforming.

Gold prices rose as investors sought safe assets, but bond markets offered little respite from the equity volatility. After briefly rising amid the late-February flight to safety, bond prices sold off as the inflation concerns meant central banks are still likely to keep raising interest rates. The US Federal Reserve raised rates by 0.25% during the quarter while the Bank of England implemented two 0.25% hikes.

*Fine wine= Liv-ex 1000; **US Treasury Bonds = iShares 7-10y US Treasury Bond Index 
Volatility  = Rolling 3-year standard deviation of monthly returns

Source: Liv-ex, Investing.com as of 31 March 2022.
Past performance does not guarantee future returns.

Cult Wine Investment's Performance 

Cult Wine Investment’s main index posted positive returns over the quarter as it remained removed from the day-to-day swings in the wider financial markets. Our Burgundy wines led the charge with an impressive 10.23% return amid the release of the region’s 2020 vintage wines. Our Champagne holdings also turned in a strong Q1.

Despite a solid start to 2022, our performance fell short of the rapid rise of the Liv-ex 1000 index (+7.25%). This largely stems from the latter’s greater concentration in a small number of top tier wines, which are experiencing strong price appreciation due to a supply-demand imbalance.

In reality, it is difficult to build a fine wine portfolio solely on these top names due to their scarcity. Such a concentrated portfolio would also pose a higher risk should market sentiment shift and prices for these top wines consolidate. Therefore, we remain focussed on building a broader base of diverse wines that can maintain performance through different markets and deliver outperformance over the long haul.

  

Cult Wine Investment's Performance 

 

CAGR = Compound Annual Growth Rate 
Source: Pricing data from Liv-ex, Wine-Searcher.com as of 31 March 2022.
Analysis by Cult Wine Investment. Past performance does not guarantee future returns.
Cult Wines’ Q1 Return: 0.37%  |  2021: 10.51%       

 

Our Bordeaux wines saw modest gains in Q1, taking a back seat to the red-hot Burgundy. After a solid but unspectacular performance in 2021, many Bordeaux wines now appear attractively valued relative to Burgundy, opening the door for stronger growth in the months ahead.

Bordeaux’s 2021 vintage EP campaign is set to kick-off in Q2. The vintage is expected to feature variable quality alongside short supply. Consequently, the best wines could see fierce competition for limited stocks  

 

Cult Wine Investment’s top three Q1 wines: 

Cult Wines’ Q1 Return: 10.23%  |  2021: 24.60%   

 

Q1 featured more soaring prices among Cult Wine Investment’s Burgundy wines even after the big gains in 2021.

A more diverse set of wines emerged as the leaders in Q1 2022. The top wine - Jacques-Frederic Mugnier, Nuits-Saint-Georges Premier Cru, Clos de la Marechale Rouge 2008 - came from our Iconic producer category, but Up-and-Coming producer Domaine Arnoux-Lachaux’s Echezeaux Grand Cru 2014 (+50.6%) was hot on its heels.

The Burgundy 2020 EP campaign took place over the period. Most producers held back stock to release next year due to expectations of low volumes from the 2021 vintage. This added to the competitive market, contributing to the ongoing price appreciation.

 

Cult Wine Investment’s top three Q1 wines: 

Cult Wines’ Q1 Return: 5.60%  |  2021: 45.0% 

 

We have been long-term believers in Champagne’s investment potential and our view continues to pay dividends into 2022. The supply-demand imbalance among vintage Champagne remained pronounced, contributing to ongoing price appreciation.

The higher concentration of the Liv-ex index accounted for its higher Q1 growth figure but our broader range is set up for sustained performance. Our dedicated focus on the Grower Champagne market segment bore fruit, led by Jacques Selosse Millesime 2005 (+62.8%), which is not part of the Liv-ex Champagne 50 index.  

 

Cult Wine Investment’s top three Q1 wines: 

Cult Wines’ Q1 Return: 2.50%  |  2021: 19.45%

 

Our Italian wines enjoyed moderate gains to start the year. In 2021, our Italian holdings outpaced the Liv-ex Italy 100 (19.45% vs 13.87%) and although the Q1 mark of 2.50% lagged the Italy 100’s 4.65%, we believe Italy has more potential due to improved relative value.

New wines from Barolo, Barbaresco as well as Brunello di Montacino hit the market in early 2022. Our Biondi-Santi Riserva 2015 and Annata 2016 allocation holds incredible potential, in our view, as they hail from fantastic vintages. We adopted a more select approach to more recent vintages in an effort to select the wines most likely to outperform the broader market.

 

Cult Wine Investment’s top three Q1 wines: 

Cult Wines’ Q1 Return: 2.42%  |  2021: 15.43%

 

Cult Wine Investment’s Rhone selections maintained the region’s reputation as a source of steady returns with a 2.42% three-month climb. Our performance came from a range of wines from our favourite regional producers, including Domaine Jamet’s 2007 Côte-Rôtie and Jean Louis Chave’s 2015 Hermitage. Many of Jean Louis Chave’s wines enjoyed notable price gains, according to Liv-ex data, in Q1. We also benefitted from Chateau Rayas’s 2010 Chateauneuf-du-Pape, Blanc over the quarter, a sign of the growing awareness of the diversity on offer in Rhone.

 

Cult Wine Investment’s top three Q1 wines: 

Cult Wines’ Q1 Return: -0.24%        2021: 6.62%

 

Cult Wine Investment’s Rest of World wines dipped slightly in Q1 in the wake of a strong end to last year. These more speculative segments of fine wine can experience price swings and the current rally in Burgundy and Champagne held the market’s focus in Q1.

We are excited about Spain’s long-term potential to gain traction with a global audience, and two Rioja wines found their way into our top three performers. Australian Henschke, Hill of Grace Vineyard, Eden Valley 2013 also turned in a strong quarter despite ongoing Chinese import tariffs.

The Liv-ex RoW 60 index includes some US wines whereas our segment does not, which partly explains why the former posted a higher quarterly figure.

 

Cult Wine Investment’s top three Q1 wines: 

Cult Wines’ Q1 Return: 2.22%  |  2021: 7.31%

 

Our 2.22% Q1 return from US wines showed a broadening of the regional market beyond core Napa icons such as Screaming Eagle, which has dominated California’s performance in recent months. Two 100-point (Wine Advocate) wines turned in healthy price appreciation in Q1 - Hundred Acre Ark Vineyard 2005 and Harlan Estate 1997.

The Liv-ex California 50 index’s higher return (8.30%) largely stems from its concentration on Screaming Eagle, Opus One and Dominus. These wines are very hard to source in quantity, meaning a healthy US allocation should include a broader range of names built for long-term growth.   

 

Cult Wine Investment’s top three Q1 wines: 

Fine wine outlook

Although increasingly cautious due to high prices and the macro volatility, we retain a positive outlook for fine wine markets. The ongoing supply-demand imbalance can help the market continue to perform despite global instability stemming from the Russia-Ukraine conflict and energy price inflation. However, the deepening cost-of-living crisis will likely impact the fine wine market to some degree and could slow the pace of the rally.

However, as a less liquid asset, fine wine has historically been a stable store of value due to its degree of a separation from day-to-day sentiment swings. This characteristic could pull in more demand from investment-minded buyers.

Expectations of lower supply from the 2021 vintage in several French regions are deepening the imbalance.

 

Once again, frosts struck some regions in France in early April of this year. While the extent of the damage is not yet clear, the changing climate is exacerbating supply uncertainty and boosting the value of back vintages. 

Within fine wine, the uncertain outlook could spur a shift in focus to more stable, long-term regions, producers and wines. We think Bordeaux and Italy look increasingly attractive.

Bordeaux’s 2021 en primeur campaign will take place in Q2 as the first ‘in-person’ campaign since the pandemic. Low volumes from the 2021 vintage will likely mean the best wines meet with stiff competition. However, some producers may look to push pricing to compensate for the lower volumes, meaning a selective approach is necessary. Undervalued back vintages could provide an important source of performance potential.

Data-driven investment

To reach investment goals, we identify wines with the best relative value and growth prospects. We do that by using proprietary AI-driven statistical models derived from millions of data points.

 

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* Past performance is not indicative of future success; the performance was calculated in GBP and will vary in other currencies. Any investment involves risk of partial or full loss of capital. The Cult Wines Index is a hypothetical tool. The results depicted here are not based on actual trading and do not account for the annual management fees that may be charged to a Cult Wines customer which ranges from 2.95% to 2.25% depending on the size of the portfolio, and there is no guarantee of similar performance with an investor’s particular portfolio.