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Liv-ex: Fine wine outperforms gold as secondary market booms

15 December 2021 By Arabella Mileham

Investing in fine wine is a better bet than investing in gold, the latest data from Liv-ex has found, as the fine wine secondary market soared to new heights in 2021.

The fine wine market place found that fine wine has been a better investment than several traditional equity markets, with the Liv-ex Fine Wine 100 index rising,20.83% compared to 9.54% for the FTSE index, 14.43% for the Dow Jones, or -3.82% fall in the gold market.

The findings formed one of thg highlights of the annual review of the fine wine market, which saw 2021 sets new records for secondary market trade.

Other key findings including Champagne becoming the top-performing region and Burgundy’s share of trade hitsting a new high. Meanwhile, although trade in Bordeaux dipped, the market share of First Growths rose, and blue-chip labels continued to grow, as the market diversification continues.

Liv-ex noted that all previous records set in 2020 had been been surpassed in 2021, making it the most most successful year ever for the secondary fine wine market. The Liv-ex Fine Wine 100 index – which tracks the price performance of the 100 most-traded wines in the secondary market – rose past its decade-old former peak, while the Liv-ex Fine Wine 1000 rose for 18 consecutive months.

The team at Liv-ex said there were several factors at play – not least the legacy of accumulated savings from the 2020 lockdown and low-to-zero interest rates, which continued to drive investment in alternative assets.

“Even when lockdown measures largely eased, fine wine remained in the spotlight,” the report said.

A big change came as a result of the ending of the US tariffs on EU wine imports in June (although these were suspended in March), which enticed US buyers back into the market, and boosting demand for Bordeaux and Burgundy. Meanwhile the surging performance seen from Italy, California and the Rhône but did not stop, and the market has continued to broaden and diversify.

This diversification was also seen in wines from less mainstream countries, such as Lebanon, Austria, Armenia, all of whom traded for the first time.

As Liv-ex pointed out, the “continued lack of clarity surrounding the future” in relation to the pandemic has seen enthusiasts, collectors, and investors continue to trust in the “steady returns and gustatory pleasures of fine wine”.

“It remains to be seen if this bullishness will survive the likely return of tighter fiscal and monetary conditions,” it concluded.

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