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Find out below about the performance of Cult Wine Investment and the wine investment market for this latest quarter below.
Cult Wine Investment Overview
Q3 2023
Fine wine market Q3 2023 summary
Q3 2023 Performance Highlights
The fine wine market experienced a challenging third quarter in 2023, marked by stagnant performance and economic uncertainties. Key market indices remained flat, primarily due to ongoing cautious investor sentiment and reduced demand from Asia. The Bordeaux market has seen a notable drop in prices, with some of the most prestigious producers experiencing the biggest decline in the past quarter.
However, despite these headwinds, the outlook for 2024 holds promise for investors, with emerging opportunities on the horizon. The stabilisation in pricing towards the end of the quarter also provides an enticing opportunity for wine investors.
-1.81%
Cult Wine Investment Performance Q3 our Bordeaux dragged on performance due to cautious investor sentiment and reduced demand from Asia.
-0.22%
Cult Wine Investment Burgundy outpaced the wider market.
+8.02%
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
The third quarter of 2023 proved to be a period of mixed performance and fluctuating sentiment across various asset classes. Global markets faced a series of challenges, including concerns over inflation, central bank policies, geopolitical tensions, and supply chain disruptions.
On equity, UK market was among the best performing regions, with FTSE 100 (TR) returning 2.2% in Q3, thanks in part to its large tilt toward the energy sector. The US stock market, in contrast, experienced a modest decline in Q3, with S&P 500 losing 3.3% and Nasdaq 3.9%. Investor sentiment was influenced by debates over the Federal Reserve's monetary policy and apprehensions about rising inflation. While inflation increased in August, it seems to stabilise after a rapid succession of rate hikes. However, Fed policymakers' comments indicate that another rate hike is likely before the end of the year and that rates might stay at elevated level for longer than initially thought as economy seems to be performing strongly.
Underperformed the broader emerging market, Chinese stocks fell sharply in August, with the country's real estate sector performing particularly poorly as investors questioned Beijing's ability to provide enough stimulus to get the world's second-largest economy back on track. Investors reacted strongly to the global economy's headwinds posed by tight oil markets, with Brent crude oil prices rising by 28% over the quarter.
The announcement by Saudi Arabia and Russia that they will extend voluntary oil output cuts of 1 million barrels per day until the end of the year was a major driving force behind the move.
Global government bond yields peaked in September, led by the US, before falling slightly at the end of the quarter. Corporate bond markets outperformed government bond markets, with spreads narrowing between investment grade (IG) and high yield (HY) bonds. Despite a slower growth trajectory, European credit outperformed that of the United States.
Despite a number of new economic stimulus measures announced over the quarter aimed at stabilizing housing activity, renewed concerns about the state of China's property sector weighed on sentiment in emerging markets.
As we enter the final quarter of 2023, market participants will continue to monitor central bank actions, inflation data, and geopolitical developments for potential market-moving events. Investors are encouraged to maintain diversified portfolios and stay attuned to evolving global economic conditions to navigate potential challenges and opportunities in the coming months.
*Fine wine = Cult Wines Global Index.
Source: Wine-Searcher, Investing.com as of 3o September 2023.
Past performance does not guarantee future results.
The third quarter of 2023 has presented a challenging environment for fine wine investments. Several factors have contributed to a decline in market performance during this period.
Cult Wine Investment Performance was down -2.3% in Q3.
Cult Wine Investment Performance
CAGR = Compound Annual Growth Rate
Source: Pricing data from Liv-ex as of 30 September 2023.
Analysis by Cult Wine Investment. Past performance does not guarantee future results.
Cult Wine Investment Performance Q3: -4.7%
Historically a bellwether of fine wine investments, Bordeaux faced a challenging quarter with prices declining across various classifications. Notable factors contributed to Bordeaux's underperformance. Slower demand from both traditional markets like China and emerging markets has put downward pressure on Bordeaux pricings.
Economic challenges have dampened enthusiasm for Bordeaux wines among investors and the En Primeur 2022 campaign was met with mixed reception despite excellent wines- being the most liquid wines traditionally, Bordeaux prices have reflected the recent downturn more acutely.
However, the real picture is more balanced with some wines such as Climens 2010 from Barsac and multiple vintages (including 2011, 2014 & 2020) of Calon Segur still managing to return positively, beating the regional benchmark.
Cult Wine Investment Performance Q3: -0.2%
Burgundy wines, known for their scarcity and desirability, saw mixed performance. Among the Grand Cru categories, Perrot-Minot and Joseph Drouhin remained resilient, supported by global demand and strong brand recognition, while some Iconic producers like Dugat-Py and Armand Rousseau in recent vintages experienced a downturn in pricing due to cautious investor sentiment and reduced demand from Asia. Notable winners include Perrot-Minot, Chambertin Grand Cru, Vieilles Vignes 2018 and Hubert Lignier, Charmes-Chambertin Grand Cru 2016 from Tier 1 producers, gaining 20% and 15% respectively in Q3. Producers in this category will likely continue to play an important role in the coming months as buyers hunt for attractive relative value.
Cult Wine Investment Performance Q3: -4.0%
The Champagne market has faced a period of stagnation during the last quarter, with a decline in both global demand and price performance. The ongoing global economic uncertainties, including inflation and a more sombre mood across the world, have negatively affected consumer sentiment and contributed to a cautious approach towards luxury purchases like Champagne. While grower Champagne have been more affected by the downturn, vintage Champagne from Grand Marques houses have shown more resilience in terms of price performance. Among the Q3 winners are Veuve Clicquot, La Grande Dame Rose 08 (+20%), Cristal Rose 08 (+6%) & Perrier Jouet, Belle Epoque Rose 10 (+5%).
Cult Wine Investment Performance Q3: -1.9%
A region known for diversity, Italy faced different level of challenges in Q3. Within the region, Tuscany saw resilience, driven by demand for iconic labels likes Bruno Giacosa & Super Tuscans such as Tignanello, which remained in positive return territory. Among the losers, G.D. Vajra in recent vintages (e.g., 2012, 2016 & 2017) struggled with poor performance due to slow growing brand recognition and competition from other regions.
Cult Wine Investment Performance Q3: -2.6%
Rhone, still a relatively niche region in terms of global recognition saw generic price declines. Factors affecting the Rhone region include reduced export demand and lower trading activity, which contributed to price softness. Price declines came from different appellations and different back vintages, including a -15% slide for the M. Chapoutier, Hermitage, Le Meal Rouge 2007 and a 24% drop for E. Guigal, Cote Rotie, Chateau d'Ampuis 2011. Historically, Rhone provided a consistent source of healthy gains even during downturns, making it a safer option- This could be a trigger for renewed interest from investor in the coming months.
Cult Wine Investment Performance Q3: -1.5%
Emerging wine regions, such as Chile & Australia, were not immune to the market decline, with Sena and Penfolds witnessing a decline in Q3. While some individual labels and estates showed resilience, overall performance was lacklustre. Iconic Argentina labels continued to attract interest, but price growth was still modest. Moving to Spain, Vega Sicilia held up well due to strong brand recognition and increased global demand, with its Unico 2011 and Alion 2014 & 2012 performing well YTD.
Cult Wine Investment Performance Q3: -0.8%
Despite a modest drop, The US emerged as a standout performer, defying the market trend. Harlan Estate and Stag's Leap Wine Cellars, in particular, saw robust appreciation. Thanks to its improved distribution networks, US allowed investors and collectors to access a wide range of producers, further driving demand.
While the market has faced significant headwinds during Q3 2023, some investors may view this period as an opportunity to acquire fine wines at more favourable prices.
However, selectivity is advised, as the fine wine market remains highly sensitive to external economic developments. It is crucial for investors to stay informed, exercise patience, and consider a long-term investment horizon in navigating these turbulent times.
The stabilisation in pricing towards the end of the quarter suggests the recent drops are attracting interest and that investors are looking at opportunities.
Regional Q4 2023 outlook
Bordeaux
Increased demand from US may seek out best valued back vintages – Bordeaux will be about choosing the wines and vintages that offer the best opportunities for growth when market turns round.
Burgundy
The length of the 2020-2022 rally means Burgundy prices may see a few more months of ongoing consolidation but scarcity and prestige should drive long-term growth.
Champagne
Recent slowdown could open up buying opportunities among rare vintage Champagne.
Rhone
Steady nature of market should sustain even during challenging macro backdrop.
Italy
Relative value improved over the past year. Best wines could see greater demand.
Rest of World
Spain and Chile hold excellent potential for growth but affordability and relative value of top wines should be the main criteria vs other more established regions.
USA
US economic recovery and GBP/USD exchange rate ( wines are priced in GBP) could increase appeal of US wines for investors, led by greater domestic demand.
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.