by Wine Owners
Posted on 2022-05-20
Just back from the USA where I spent two weeks speaking widely to wine business owners. There are signs of a cooling off in the fine wine market. Even given the buying power a strong dollar confers.
The backdrop is a correcting stock market that’s seen its biggest sell-off since 2020. Unlike 2020, the drivers behind the correction are inflation and the threat of recession. In other words, it’s not driven by a market discontinuity, however persistent Covid proved to be. It’s driven by a fear of market fundamentals turning sour.
As far as blue chip Bordeaux is concerned - as far as collectible fine wine in general is concerned - we don’t yet know the impact of these macro economic factors, nor the impact of a shock to global food security.
But I’d wager there are a fair few highly leveraged buyers, and a lot more feeling considerably poorer than a month or so ago. However immune much of that market may be to cost of living increases, it is not unaffected by sentiment.
The similarities between Spring 2020 and now are striking, albeit the outlook as of early summer 2022 is less positive because it’s harder to look beyond the events that are driving market concerns. Lockdowns drove outsized wine sales. A recession will not have the same effect. A well priced 2019 campaign lit up demand. An overpriced 2021 campaign could douse it.
Meantime arbitrage opportunities in back vintages abound, which is why négoces are busy buying UK stocks and why US fine wine businesses are buyers: but with what intensity and for how long?