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WineCap cautiously optimistic for 2024

Published:  11 January, 2024

Following news that the Liv-ex Fine Wine 100 Index ended 2023 down 14.1%, WineCap has outlined its expectations for the year ahead, amid a ‘correction phase’ which might present opportunities for investors. 

The decline comes after fine wine significantly outperformed mainstream markets in 2021 and 2022, with WineCap stating that the bearish trend of 2023 is a sign of a healthy economic cycle, as “no market can rise forever”.

As a result, buyers in 2024 are likely to seek well-established brands and high-quality vintages, a behaviour reflecting increased risk aversion typical in bear markets. 

“Rather than perceiving the 2023 declines as setbacks, they should be seen as advantageous times for new buyers entering the market who want to take advantage of the mid to long-term returns and stability that fine wine offers,” a WineCap spokesperson said.

Riskier investments will likely be overlooked in 2024, while classics such as older Bordeaux vintages could enjoy a rebound. This is in stark contrast to the state of the market in 2021-2022 when it was broadening at a quicker pace. Until the macroeconomic context improves and interest rates come down (currently at their highest since 2008) buyers will remain less open to diversification in 2024.

Currency fluctuations have also affected the market, with the US Dollar weakening against Sterling, meaning that prices fell less sharply when seen in dollar terms. In 2023, Burgundy and Champagne experienced the biggest declines of 16.2% and 18.3% respectively. Italy, on the other hand, showed relative stability dipping 6% last year but ending the year on a positive note, rising 0.4% in December.

Another factor to consider will be the introduction of high-yielding vintages from Bordeaux and Burgundy, which will pose a further challenge in terms of market absorption. With a growing stockpile of wines, the market is at a crossroads, putting continued pressure on prices.

Much will depend on pricing strategies – if new releases are priced too high in a downward market, even high-quality offerings will struggle to attract buyers.