Cult Insider

EDITION 014 | DECEMBER 2023

Uncorking the fine wine market in 2024

Written by - Cult Wines Investment Team

As we look towards 2024, the fine wine market is positioned at a critical juncture, influenced by recent market corrections and global economic trends. The analysis from Cult Wine Investment in 2023 provides a valuable lens through which to view the potential developments in the coming year.

The fine wine market experienced a significant correction in 2023, with an 11.35% decline over the last 12 months, as reported by Liv-ex. This correction is reminiscent of the downturn experienced during the 2008 Financial Crisis. Such corrections are often followed by a period of adjustment and can create opportunities for investors and collectors.

High-interest rates and economic uncertainties are likely to continue impacting the fine wine market in 2024. The strong British Pound, in particular, may affect demand from non-UK buyers, as most physical fine wine stocks are priced in Sterling. This could make fine wines more expensive for buyers using other currencies, potentially influencing global demand patterns.

Despite the downturn, there are opportunities for astute buyers. Some wines, especially from regions like Bordeaux, have seen significant price adjustments. For instance, Chateau Lafite Rothchild 2017 experienced a notable price drop in 2023. Such adjustments can provide opportunities for keen buyers.

As a collector’s asset, the liquidity of fine wine has its unique dynamics. The market does not offer instant liquidity, and successful transactions often require expertise and a strong distribution network. In 2023, many trades on the Liv-ex platform were executed at prices below their official market values, indicating that while liquidity exists, it often comes at a discounted price.

Several key trends and strategies from active players are likely to shape the fine wine market in 2024:

Market realignment: The market will likely continue adjusting to the recent correction, with the potential for stabilisation and gradual recovery once price equilibrium is reached.

Acquisition opportunities: Discerning collectors and investors may find opportunities in undervalued wines or regions that have experienced significant price adjustments.

Impact of global economic trends: Interest rates, currency fluctuations, and broader economic conditions will continue to influence the market, affecting both pricing and demand.

Navigating liquidity challenges: Sellers and buyers in the fine wine market will need to navigate the complexities of liquidity, potentially requiring more strategic and patient approaches to transactions.

Diversification and risk management: Investors may look to diversify their portfolios, adding investments in fine wine with other assets to manage risk.

The outlook for the fine wine market in 2024 is one of cautious optimism tempered by the need to navigate ongoing economic uncertainties and market corrections. For investors and collectors, the key will be to stay informed, adapt to changing market conditions, and seek opportunities where they arise. As always, the fine wine market promises a blend of challenge and opportunity, requiring knowledge and finesse to navigate successfully.

It’s important to remember that collecting or investing in wine is a long-term passion, and opportunities to acquire those prized bottles of wine when sellers are flexible on price are rare. History has proven the patient and intelligent buyers get rewarded.

News in brief

Champagne's Rare Jewel at Risk of Extinction

One of the world's most exclusive Champagnes, Bollinger's Vieilles Vignes Françaises, faces potential extinction. This unique Champagne, retailing around £1,500, is produced from ungrafted Pinot Noir vines in Aÿ, France. These vines, not grafted onto American rootstocks, are increasingly succumbing to phylloxera, a root-eating louse. Despite Bollinger's efforts, declining yields and climate change exacerbate the situation. The vineyards, yielding a complex and dense Champagne, have seen production drop significantly, with recent harvests producing as few as 700 bottles. This rare cuvée's future is uncertain, threatened by environmental challenges and the relentless spread of phylloxera.

Jay-Z's Bordeaux Birthday Bash

Hip-hop icon Jay-Z celebrated his 54th birthday with a secretive trip to Bordeaux's wine country, alongside Roc Nation co-founder Jay Brown's 50th birthday. The star-studded guest list reportedly included Beyoncé and Rihanna. While details are scarce, social media posts hint at visits to prestigious estates like Petrus and Château d’Yquem. The luxury spa hotel Les Sources de Caudalie was possibly privatized for the occasion. This wine-focused celebration underlines Jay-Z's continued interest in the industry, following LVMH's acquisition of 50% of his Armand de Brignac Champagne in 2021.

WSTA Counters Pesticide Report Claims

The Wine and Spirit Trade Association (WSTA) has criticized a recent Pesticide Action Network (PAN) report as "sensationalist," which claimed a rise in pesticide residues in wines. The UK government's testing found 50% of wines in 2022 contained multiple residues, up from 14% in 2016. However, WSTA highlights that all samples were within legal limits except for one. The report needs more clarity on legal compliance, and the safety of detected levels has been pointed out. WSTA emphasizes the global efforts of vineyards to minimize pesticide use and the strict regulations governing their application.

Jody Richardson, Director of Digital Innovation - Cult Wines - 2018 Domaine Ponsot, Morey-Saint-Denis 1er Cru 'Cuvée des Alouettes'

What we’re drinking

2018 Domaine Ponsot, Morey-Saint-Denis 1er Cru 'Cuvée des Alouettes'

Jody Richardson, Director of Digital Innovation - Cult Wines

• I save the good stuff for occasions that deserve something extra special, ideally shared with those who appreciate a fine bottle. This year, for a pre-Christmas catch-up with some close friends – a group we hadn't gathered in full since last holiday season due to our hectic schedules and new family additions – it seemed just the right time to open a bottle that was a bit out of the ordinary.

• Domaine Ponsot, renowned for its outstanding Pinot Noir, is a gem in the wine world, nestled in the Burgundy region of France. The estate, with its roots going back to the 1870s, is situated in the charming village of Morey-Saint-Denis in the Côte de Nuits. This area is famed for producing some truly exceptional red wines.

• What makes Domaine Ponsot stand out is their approach to winemaking. They place a real emphasis on quality over quantity. Among the first in Burgundy to adopt organic and biodynamic practices, they show genuine care for the land and a desire to let the wines naturally reflect their origin.

• While still relatively young in comparison, this Pinot Noir was a delightful choice enjoyed by all. Decanted an hour before serving, it revealed a deep, dark purple colour and a vibrant nose of dark berries and red cherries, with a hint of smoke and earthy notes. On tasting, it offered a beautiful balance of dark red fruit flavours and light savoury notes, complemented by refreshing acidity and a silky texture, remarkably smooth given its 14.5% alcohol content.

Our fine wine feature

Mastering the art of fine wine pairing for your holiday feast

Written by - Sean Wright, Purchasing Assistant - Cult Wines

With the festive period approaching quickly, thoughts will likely have already turned to what food to prepare for the upcoming feast. However, less consideration might have been given to what wines will be chosen to accompany the inevitably impressive array of wintery cuisine. Before the holiday roast makes its grand appearance, a common starting point is a varied selection of impressive small bites, as part of which it seems there is invariably an appearance by some form of smoked salmon.

As with many festivities, a sparkling wine of some form feels appropriate. A Blanc de Blancs Champagne would be the natural pairing here, possessing the required acidity to cut through and stand up to extravagant nibbles, as well as the depth of flavour and complexity able to prevent the wine from being overpowered by any particularly flavourful light bites.

Mastering the art of fine wine pairing for your holiday feast

Now, let's move on to pairing wines with the main course. A possible consideration is to focus on the turkey, or tofurkey, for our vegetarian readers, given its role as the centrepiece of the traditional holiday dinner. It is fair to say that the turkey is as much a foil to other more flavourful companions on the plate. A medley of roasted vegetables is frequently an accompaniment to the turkey and, for many vegetarians, elevated to the starring role in any festive feast. The flavours here would be best reflected by choosing a mature red burgundy wine with similar earthy aromas. Indeed, some mature examples can show gamey characteristics, which might well harmonise with the ever-popular festive side dish of pigs in blankets.

One fundamental principle of dessert wine pairings is that the wine should always be sweeter than the wine itself, but there are other factors to consider. Dessert pairings are a particular challenge for a traditional holiday dinner, as perhaps the most famous festive dessert is Christmas pudding, which is both very sweet and contains intensely rich flavours of dried and aged fruit. Whilst an elegant and rich botrytised sauternes such as Chateau d'Yquem, arguably the finest of all sweet wines, would have the required sweetness to face up to a Christmas pudding, it would likely be overpowered by the deep fruit flavours. Instead, consider an aged port to accompany your dessert, the raisin character of which will complement and highlight similar flavours in the pudding.

Whilst matching wine to food can be a transcendent experience, capable of elevating both the wine and the food, there is no reason to ignore your own preferences. For example, if you are a lover of white wine, a rich, mineral and decadent Meursault could be an equally impressive accompaniment to the holiday feast, as the Pinot Noir suggested.

Explore & travel

Journey through California's Wine Country

Written by - Carrie Tuck, CMO Americas - Cult Wines

California wine country, with its picturesque rolling hills and lush valleys, offers an experience that caters to a variety of tastes and preferences. Renowned for its diverse array of wine styles and grape varieties, the Golden State is home to all the noble varieties:

Chardonnay: Chardonnay is the most widely planted grape in California, with over 94,000 acres. It is celebrated for its versatility and the unique styles it can produce, from crisp and mineral to rich and buttery.

Cabernet Sauvignon: With around 93,000 acres, Cabernet Sauvignon is a close second. It is known for producing some of the state's most prestigious and age-worthy wines, particularly in Napa Valley.

Pinot Noir: This grape has gained significant popularity and covers over 44,000 acres. It is prized for its ability to reflect the terroir and is a key component in both still and sparkling wines.

Journey through California's Wine Country

Merlot: Once more popular, Merlot now covers around 38,000 acres. It is often used in blends to add softness and fruitiness but also produces excellent single-varietal wines.

Sauvignon Blanc: Occupying about 15,000 acres, Sauvignon Blanc is known for its crisp, aromatic qualities and is often a go-to for refreshing white wines.

Syrah: Covering close to 19,000 acres, Syrah is known for its bold flavours and is a favourite among those who enjoy richer, more full-bodied red wines.

Riesling: While not as widely planted, with just over 4,000 acres, Riesling is valued for its aromatic qualities and versatility, ranging from dry to sweet styles.

Semillon: This variety is less common in California, often used in blends for white wines and some sweet wines. It covers a small acreage compared to the others.

The vineyards in Napa Valley boast a rich history dating back to 1769, presenting a fascinating narrative worth delving into for any wine enthusiast. The uniqueness of California wines can be attributed to the state's varied soils and terroirs, contributing to its dominance in the American wine market. In fact, close to 90% of all wine produced in the United States comes from California.

A surprising insight is that winter is often the ideal season to visit Napa and Sonoma. While the traditional wine cycle spans from spring to fall, the winter months offer a more intimate experience, potentially allowing visitors to meet and converse with local winemakers during their off-season.

Napa vs Sonoma: A Visitor’s Guide

With over 4,200 wineries across California, planning your trip is essential. The sheer size of the region can be underestimated, and each area has its unique charm.

Napa is often seen as the more upscale destination. French Laundry, one of its most prestigious restaurants, requires early booking due to high demand. Other esteemed Michelin-starred dining options in Napa include La Toque, Farmstead, Kenzo, and Bouchon, among others.

Sonoma contrasts with a more expansive and laid-back feel. Covering twice the area of Napa, it is home to a broader spectrum of grape varieties. Sonoma also prides itself on its own Michelin Star dining establishments, such as Valley, FolkTable, Animo, and Molina Central, offering diverse culinary experiences. Whether you choose Napa's refined luxury or Sonoma's sprawling vineyards, both promise an unforgettable experience. With exceptional wines and gourmet food, your journey through California's wine country will be a memorable one.