Fine Wine Market Faces Prolonged Downturn as Key Index Falls Below 2018 Levels

The fine wine market is facing one of its most challenging periods in recent memory. The Liv-ex Fine Wine 100 index, a key benchmark for the sector, has dropped 4.9% so far this year and is now down 26.6% from its peak in September 2022. This decline has pushed the index below its 2018 high, with the next significant support level at its 2020 low. For many in the wine trade, this downturn is the longest they have experienced, and uncertainty remains about when conditions will improve.

The current situation shares similarities with the downturn that followed 2011. Both periods have been marked by weak demand and exacerbated by high release prices from producers. In 2011, the withdrawal of Chinese buyers played a major role in the market’s decline. This time, it is American buyers who have stepped back, influenced by economic factors and ongoing trade tensions between the United States and the European Union.

Despite volatility in global equity markets this year, major stock indices have reached record highs. However, fine wine prices have not followed suit. While this divergence may seem negative for wine merchants and collectors, it also means that wealth has been created elsewhere. If even a small portion of gains from equities is redirected into fine wine, demand could rise quickly.

At present, most merchants are hesitant to rebuild their inventories. They are waiting for clear signs that consumer demand is returning before making significant purchases. The bid-to-offer ratio on Liv-ex currently stands at 0.15, close to levels seen during the 2008 financial crisis when sellers outnumbered buyers by a wide margin. These conditions are often necessary for a market reset, as lower prices can attract both seasoned collectors and new entrants.

Some segments of the market are adjusting more rapidly than others. Bordeaux wines from the 2021 vintage, for example, are reaching price points that may soon tempt buyers back. The pace of recovery will depend on several factors, including interest rates and consumer confidence. As rates fall and investors see gains in other assets, there may be more willingness to spend on fine wine.

A key factor in any recovery will be the return of American buyers. Trade disputes between the US and EU have created uncertainty around tariffs, but once these are resolved or clarified, US demand could pick up again—though likely with caution at first. There are also early signs of renewed interest from Asia, particularly Hong Kong and Singapore. It remains unclear whether this reflects genuine consumer demand or simply merchants restocking after a period of low activity.

The outlook for fine wine remains complex. While some indicators suggest that a reset is possible if prices fall further or if buyers return in force, there is no guarantee of an immediate turnaround. The market’s recovery will depend on how quickly demand rebounds in key regions and whether producers adjust their pricing strategies to reflect current realities. For now, industry participants are watching closely for any signs that the balance between supply and demand is beginning to shift back toward stability.