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Find out below about the performance of Cult Wine Investment and the wine investment market for this latest quarter.
Cult Wine Investment Overview Q2 2024
Q2 2024 Performance Highlights
Q2 2024 was dominated by a very mixed Bordeaux En Primeur 2023 campaign. The wines were of good quality, if heterogeneous, and pricing was significantly adjusted from the elevated level of the En Primeur 2022 campaign. Despite those positives, demand was subdued, and negociants and merchants reported challenging conditions; rigorous selection and sound appraisal were key for our Investment Team.
The period was marked by a highly unsettled political landscape, with snap elections called in the UK and France. As we write this, Labour won a landslide in the UK, and France finds itself in political chaos following inconclusive parliamentary elections. Upcoming elections in the US, wars in Ukraine and the Middle East, and tensions over Taiwan all add to a very uncertain geopolitical landscape.
On the economic front, the financial markets in Q2 2024 demonstrated stability, with the US Indices leading the way (Nasdaq up 13.41% over Q2). However, questions over the timing of rate cuts remained a key theme, with the ECB leading with a 25bps cut, which was not mirrored by the FED or the BOE. Inflation remained resilient, and the forecast over the number of rate cuts in 2024 was revised, all of which significantly impacted the fine wine market.
All this weighted on the fine wine market, although we saw mixed performance across regions and a slowdown in the price correction that started 20 months ago. The CW Global index was down -1.70% for the quarter, but our portfolios of wines for Burgundy, Italy, and Rest of World were all moderately positive. The main underperformer was Bordeaux, which saw continuity in adjustment following the En Primeur campaign.
-0.61%
Cult Wine Investment Performance showed a modest decrease of -0.61% in Q2 2024, reflecting a slowdown in wine price correction and sound portfolio management (the CW Global Index was down 1.70% during the period).
+21.74%
Cult Wine Investment’s 5-year return, which evidences a defensive long-term growth rate of 4% CAGR, highlighting our capability to deliver robust risk-adjusted returns and outperform the wider fine wine market (Liv-ex 1000 5-year is up 9.1% over the same period).
+7.15%
Cult Wine Investment’s compound annual growth rate since inception (2009) driven by a focus on sustained long-term performance supported by our extensive fine wine knowledge and proprietary quantitative analysis.
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.
Macro market summary
In Q2 2024, equity markets exhibited strong performance, led by the Nasdaq Composite (TR) with a 13.41% gain, followed by the S&P 500 (TR) at 8.72%. The FTSE 100 (TR) and iShares MSCI All Country Asia ex Japan ETF also posted gains of 1% and 5.64%, respectively. Notably, Bitcoin surged by 3.44% in the quarter, capping an impressive 114.67% gain over the past 12 months.
In contrast, the Cult Wines Global Index and Bloomberg Commodity Index experienced declines, dropping by 1.70% and 0.67%, respectively, in Q2. Gold showed modest growth of 1.80%, reflecting its stability over time. Despite these mixed results, long-term performance remains robust across many indices, particularly with the Nasdaq Composite (TR) up 130.75% over five years and Bitcoin up a staggering 480.06%.
*Fine wine = Cult Wines Global Index.
Source: Wine-Searcher, Investing.com as of 30 June 2024.
Past performance does not guarantee future results.
Our performance in the second quarter of 2024 showed resilience and benefited from the diversity of our holdings, a key aspect of our strategy and portfolio management. Following a widespread correction in wine prices, each region is following different supply and demand dynamics, and investors have been very selectively adding to positions and rebalancing exposure across the spectrum.
The overall Cult Wine Investment portfolios experienced a moderate decrease of -0.61% in value, which was mainly driven by Bordeaux exposure (-2.06%) amidst repricing and rebalancing as 2023 En Primeurs were released. Champagne and USA positions were slightly down, but all our other regions demonstrated stability. Rest of World (RoW) outperformed and delivered a positive return of 2.19% for the quarter, reversing most of the losses experienced last quarter.
Cult Wine Investment Performance
The index level was rebased to 100 in October 2009.
CAGR = Compound Annual Growth Rate
Source: Pricing data from Liv-ex as of 30 June 2024.
Analysis by Cult Wine Investment. Past performance does not guarantee future results.
Regional performance highlights
In Q2 2024, investment performance demonstrates relatively smaller declines or even gains over the short three-month period compared to the more pronounced declines observed over the six-month and twelve-month periods.
Specifically, regions such as Italy, Rhone, and the Rest of the World (RoW) are showing signs of recovery or stability, with Italy and Rhone posting slight gains and RoW achieving the strongest performance. Bordeaux, Champagne and USA continue to face a decline but have seen a less severe drop in Q2. Burgundy remains relatively stable, showing a slight improvement in Q2. This indicates that while certain regions are stabilising or recovering in the short term, there are opportunities for improvement over longer timeframes.
The mixed second quarter indicates the market might be bottoming up as investors take advantage of opportunities across the different regions. Away from Bordeaux, which saw further price adjustments triggered by the release prices of the 2023 vintage and led by arbitrage across physical vintages, interest in benchmark wines of other regions created the necessary bid side for recovery.
Whilst modest, these gains in our holdings are encouraging, and our approach to portfolio management via tactical allocation and active rebalancing has enabled us to outperform the wider market.
With En Primeur 2023 behind us and some rate cuts in the pipeline, we anticipate a further increase in buyer interest in the coming months. Importantly, prices remain attractive relative to historical levels, providing reassurance to potential investors.
Regional Q3 2024 outlook
Bordeaux
Cautiously optimistic; Bordeaux EP 2023 pricing has triggered a repricing across vintages, and there are some real opportunities in benchmark wines and vintages. Relative value and a long-term approach coupled with opportunistic trading will unlock returns.
Burgundy
Whilst Burgundy prices are elevated compared to the rest of the Fine Wine market, the top categories now offer compelling value compared to historical prices. We might see some more volatility, but opportunities to acquire top-tier wines have never been better.
Champagne
We remain bullish on top vintage champagne. Whilst consumption of more generic non-vintage big brands has taken a hit, vintage and small producers will continue to benefit from scarcity and strong interest.
Rhone
Rhone has seen some dramatic repricing in some top names. We expect demand for other regions to precede recovery for this historically stable region. Accumulate selectively.
Italy
Italy continues to demonstrate stability, and recent price adjustments have met demand. We continue to believe the relative value here is high and should continue to drive demand.
Rest of World
This has been recently volatile, but the benchmark names have shown great stability due to lower price points vs. other regions. Selection and timing are key.
USA
US wines benefit from strong domestic collector and consumer interest, and the US economy is outperforming. Relative value compared to other regions makes us more cautious and selective about the region.
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 Global 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.