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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 Q3 2024
Q3 2024 Performance Highlights
Q3 2024 brought mixed results for the fine wine market, continuing the trends earlier in the year but with increased signs of stabilisation. While the market overall saw a further decline, the rate of decrease is slowing, hinting that a market bottom may be approaching. The Cult Wine Investment Performance Index fell by -2.29%, largely driven by Bordeaux’s continued correction (-4.40%) and declines in Italy (-4.04%) and the Rest of the World (-4.45%). However, regions such as Burgundy (-1.03%) and Rhône (-0.89%) showed much smaller declines, and some areas even experienced a surge in trading activity over recent months.
This uptick in trades suggests growing buyer and investor confidence as prices reach more attractive levels. The slowing pace of price reductions reflects a market finding its footing after a prolonged 2-year adjustment. With the global economic uncertainty pushing investors towards tangible assets, the fine wine market, long prized for its longer-term stability, is beginning to attract renewed attention. Investors are starting to recognise that current price levels could offer real long-term value, especially as fine wine historically performs well as a hedge during turbulent times.
Global markets, meanwhile, posted a much stronger performance. The S&P 500 rose by 5.89%, buoyed by the US Federal Reserve’s rate cut in September, while gold surged by 13.28%, as investors sought safe-haven assets amidst persistent inflation and geopolitical instability.
China’s unprecedented stimulus announcements, including aggressive rate cuts and central bank funding, signal a major boost for key luxury markets. Early signs of recovery, such as a surge in property sales and luxury brand stocks, suggest that China’s economic resurgence could greatly bolster investor confidence as we move into the final quarter of the year.
While the fine wine market has not yet returned to growth, the increased trading volumes and slowing price declines are promising indicators that a recovery could be on the horizon. As the global markets rally, fine wine may present an attractive alternative for investors looking to diversify into hard assets with strong potential for future gains.
-2.29%
Cult Wine Investment Performance showed a modest decrease of -2.29% in Q3 2024, reflecting a continued slowdown in price corrections and demonstrating effective portfolio management amid market challenges.
+17.80%
Cult Wine Investment delivered a 17.80% 5-year return, with a compound annual growth rate (CAGR) of 3.33%, showcasing steady, risk-adjusted growth. This outperforms the Liv-ex 100, which posted a 7.63% return over the same period.
+6.82%
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
Q3 2024 exhibited notable strength in global markets despite ongoing economic challenges and geopolitical uncertainties. The S&P 500 delivered a strong 5.89% return, maintaining momentum from previous quarters. This was supported by the US Federal Reserve's decision to begin its interest rate-cutting cycle in September, which fuelled investor optimism. The NASDAQ also gained 2.76%, reflecting the tech sector’s resilience even as the initial hype around AI-related stocks tempered. Meanwhile, MSCI Asia Pacific emerged as the quarter’s standout performer, up 8.99%, driven by a surge in Chinese equities following a coordinated stimulus package from Beijing.
The recent stimulus measures from the People’s Bank of China bring significant optimism for the fine wine and broader luxury sectors. The package introduces a bold combination of interest rate cuts, reserve requirement reductions, and central bank funding for stock purchases. Rolling out such measures simultaneously is unprecedented and underscores Beijing's urgency in tackling deflation risks and boosting growth to meet its 5% target.
As we head into Q4 2024, China’s economic resurgence is poised to drive demand across various luxury markets. The immediate impact has already been seen, with luxury property sales in Shanghai and Shenzhen surging as 360 flats worth USD 2.85 billion were purchased. This wave of optimism is also reflected in global luxury brands, with LVMH rising by nearly 18% and Richemont, owner of Cartier, up 17% in Paris, highlighting the wider impact of China's economic recovery on high-end consumer goods.
Gold surged by 13.28%, capitalising on its role as a safe-haven asset amid heightened geopolitical tensions, particularly in Eastern Europe. This upward trend in tangible assets extended to commodities and Bitcoin, which managed a modest 0.93% rise over the quarter. In comparison, the Bloomberg Commodity Index faced a slight decline of -0.64%, reflecting the subdued performance of key commodities such as oil, which fell 17% during the period.
In European markets, the FTSE 100 recorded a modest gain of 1.83%, supported by easing inflationary pressures and lower energy costs. However, investor sentiment remained cautious due to broader economic concerns across the Eurozone, particularly in manufacturing-heavy economies like Germany.
Post En Primeur 2023 we entered the summer trading lull, with the Cult Wines Investment Performance down by -2.29%, while the Liv-ex 100 posted a steeper decline of -3.76%. Despite this, there were promising signs towards the end of the quarter, with increased trading volumes in some wine regions indicating that the market could be nearing its bottom.
| Index | Q3 2024 Return | 12 Month Return | 3 Year Return | 5 Year Return |
|---|---|---|---|---|
| CWI Performance | -2.29% | -8.58% | 3.71% | 17.80% |
| Liv-ex 100 | -3.76% | -10.96% | -8.05% | 7.63% |
| S&P 500 (TR) | 5.89% | 39.28% | 30.99% | 105.39% |
| FTSE 100 (TR) | 1.83% | 16.70% | 27.22% | 36.09% |
| NASDAQ | 2.76% | 42.57% | 28.94% | 136.74% |
| MSCI Asia Pacific | 8.99% | 27.75% | -7.63% | 18.29% |
| Gold (USD/oz) | 13.28% | 32.85% | 47.77% | 74.11% |
| Bitcoin | 0.93% | 82.79% | 44.53% | 664.57% |
| Bloomberg | -0.64% | -4.09% | -0.41% | 29.01% |
Source: Liv-ex, Investing.com as of 30 September 2024. Past performance does not guarantee future results.
In the third quarter of 2024, Cult Wine Investment saw a decline of -2.29%, continuing the price adjustments observed over the past 24 months, particularly in regions like Bordeaux. These market corrections have persisted as supply and demand dynamics shift across the fine wine industry.
Despite recent challenges, long-term performance remains solid, with a 5-year total return of 17.80% and a compound annual growth rate (CAGR) of 3.33%. Over the last three years, returns have stood at 3.71%, while the since-inception performance of 167.61% (CAGR of 6.82%) highlights the market's enduring strength, even amid short-term volatility.
This steady long-term growth reflects the resilience of fine wine as an asset class despite the current phase of market recalibration.
Cult Wine Investment Performance
The index level was rebased to 100 in October 2009.
| Period | Total Return | CAGR |
|---|---|---|
| Q3 2024 | -2.29% | - |
| 1 year | -8.58% | - |
| 3 years | 3.71% | 1.22% |
| 5 years | 17.80% | 3.33% |
| Since inception (31/10/2009) | 167.61% | 6.82% |
CAGR = Compound Annual Growth Rate
Source: Pricing data from Liv-ex as of 30 September 2024.
Analysis by Cult Wine Investment. Past performance does not guarantee future results.
Regional performance highlights
In Q3 2024, regional fine wine performance was characterised by continued corrections, though the pace of declines has generally slowed. Burgundy led the regions with the most modest decline of -1.03%, signalling resilience amidst broader market volatility. This suggests investors remain confident in Burgundy’s long-term value despite short-term challenges. Rhone also saw a relatively mild decline at -0.89%, reinforcing its position as one of the more stable regions during this period.
On the other hand, Bordeaux continued its downward trend, with prices dropping -4.40%, reflecting ongoing corrections following the subdued En Primeur campaign earlier in the year. Italy and the Rest of the World (RoW) regions also posted declines of -4.04% and -4.45%, respectively.
In contrast, Champagne and the USA recorded slightly better results, down by -2.03% and -1.78%, respectively, indicating a slower rate of decline compared to previous quarters. While these regions have yet to show signs of recovery, the less severe losses offer cautious optimism moving forward.
Overall, despite the general downturn during the quieter trading months of the summer, some regions are showing encouraging signs of stabilisation, and investor/buyer sentiment appears to be gradually improving as we move towards the end of the year.
| Index | Q3 2024 Rebased 30 June 2024 |
2024 YTD Rebased 31 December 2023 |
1 Year Rebased 30 September 2023 |
|---|---|---|---|
| CWI Performance | -2.29% | -5.76% | -8.58% |
| Bordeaux | -4.40% | -9.36% | -12.55% |
| Burgundy | -1.03% | -3.50% | -6.16% |
| Champagne | -2.03% | -5.20% | -11.10% |
| Italy | -4.04% | -5.67% | -7.33% |
| Rhone | -0.89% | -2.70% | -4.79% |
| Rest of World (RoW) | -4.45% | -6.75% | -7.25% |
| USA | -1.78% | -5.74% | -8.42% |
As we approach the end of 2024, the fine wine investment market shows increasing signs of stabilisation, with reduced volatility and stronger trading activity in several key regions. The broader market appears to be nearing its bottom, offering investors opportunities to capitalise on historically low prices.
Several factors could influence investor behaviour in Q4. The US Federal Reserve's ongoing interest rate cuts are expected to boost investor confidence by reducing borrowing costs and increasing liquidity. Similarly, rate reductions by the European Central Bank and Bank of England ease European financial conditions, potentially driving more interest in alternative assets like fine wine.
Geopolitical tensions, such as the conflict in Ukraine and potential trade disputes between China and the US, continue to cast a shadow over global markets. However, these uncertainties often lead investors to turn to stable, tangible assets like fine wine, particularly in established regions. With increasing trade activity in these areas, investor interest will likely grow.
The upcoming holiday season typically spurs demand for Champagne and other fine wines, potentially tightening supply and lifting prices. This seasonal increase in consumption may offer a short-term boost for the market.
Looking ahead, the fine wine market is well-placed for recovery, with attractive entry points for investors due to current price levels. As sentiment improves and demand rises, we anticipate increased interest, making Q4 a prime opportunity for new and seasoned investors to position themselves for future long-term growth.
In conclusion, Q4 2024 presents a pivotal moment for wine investors as stabilisation continues and the market approaches its bottom. Focusing on active portfolio management and strategic investments will be crucial to maximising potential returns as the year ends.
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.