The fine wines market top players reveal sentiments and forecasts for 2023

The 625 members of Liv-ex are divided into 44 countries, including historic wine merchants and young start ups, and represent the top of the world fine wine trade. And, as a matter of fact, they hold 90% of the sector's turnover. The sentiment and expectations of this small and exclusive circle, which the London index has collected in the "Global wine trade predictions for 2023” report, offers very useful indications to be able to understand what 2023 will be like for investment wines. The first aspect is related to expectations for the next few months, and there is some optimism. Thirty-eight percent said they are "rather optimistic", while 21% declared that they are "rather pessimistic", 34% gave a "neutral" opinion and 5% instead said they are “very optimistic”.
Fifty-four percent of the investors agreed on one point, though. The biggest challenge in 2023 will be global economy. Among the investors, 30% expect a global recession accompanied by difficulties in several regions, while 20% indicated currency volatility as their main concern, while a minority were concerned about inflation, investment sentiment and market uncertainty.
The second major challenge that will need to be faced is logistics, and, more generally, the supply chain, which 16% of respondents indicated. However, some also indicated that bureaucracy is a hindrance, from Brexit onwards, trade towards Great Britain, and business relations problems with China. These aspects figure in 12% of the answers, but for other reasons, such as the Covid-zero policy (in the meantime, Beijing has abandoned this policy, ed.), and the difficulties in Hong Kong. Another 12% indicated that one of the biggest problems is the shortage of supplies, in reference to Burgundy in 2021, and the Champagne vintage in general. Finally, 10% indicated price hikes as the biggest challenge they face in 2023, which could be "rejected" by investors. The war in Ukraine is also a cause for concern, but only for 9% of Liv-ex members.
The second field of interest is related to territories and brands that have become the most popular ones in 2022. Here, the answers only confirmed what the numbers had told (as well as having been analyzed) over the last few months. Burgundy was indicated as the most requested territory by 41.8% of those interviewed, which was thanks to low yields, limited releases, high demand and a certain level of speculation, especially for white wines. Champagne is not far away, and 40% of investors indicated it as the area most in demand, driven by the boom in vintage wines, at still accessible prices, after all, as well as an investment intended more for the table and the joys of the glass, rather than for vaults. Another 9% still indicated Bordeaux, which has come from excellent years and guarantees definite stability in terms of prices, then follow Tuscany (3.6%), California (3.6%) and whiskey (1.8%).
The answers are definitely more split for brands. Romanée-Conti is at the top (7%), and as usual at the center of speculation, tied with Dom Pérignon (7%). Dom Pérignon enjoyed an especially high demand in 2022, prompting many wine merchants to turn to the secondary market and offer old vintages, which were sold without any difficulty whatsoever, at very high prices. Other iconic brands were Armand Rousseau and Domaine Leflaive, both, like the others, in the top ten of the 2022 Liv-ex Power 100.
There were also mixed points of view regarding changing customer buying patterns in 2022. There were 14.5% that said buying patterns have not changed or have remained the same, but another 10% said that buyers have become more selective, while 7% saw evident portfolio diversification. Some have noted increases in purchases of Champagne (9%) and Californian (5%), as well as Rhône and Tuscan wines. Further, some also observed a higher average expenditure, however, in the face of a lower volume in purchases — the premiumization that also applies to fine wines. Then, there were those who observed that orders from Asia had returned, and also those who complained about a definite drop in the second half of the year, while some pointed out that those who had decided to bypass brokers and rely on online trading, are growing.
It is not surprising, therefore, that 48% of Liv-ex members in 2022 worked with the same client base as the previous year, while 37% saw an increase in clients, and the remaining 14% did not. Those who saw an increase in new customers, especially from Asia and Europe, generally expanded their sales team dedicated to private customers. All in all, anyway, the numbers are still lower compared to 2020, when the Pandemic and the lockdowns led to a real sales boom, driven by savings that could not be used for travel and eating out at restaurants.
The final question concerns what will happen in the wine trade in 2023, and a series of forecasts has emerged. The most popular theme is related to Burgundy, which 14% of respondents mentioned, and who expect a drop in prices, as they are unsustainable. There is also the desire to focus on more speculative brands, though, such as Arnoux-Lachaux, believing that white wines will continue to grow. On the other hand, 7% of Liv-ex members expect a comeback for Bordeaux wines, even if opinions remain mixed, and are almost fifty-fifty on the success, or failure, of the 2022 en primeur campaign. It all depends on the prices, and if they are considered too high, it will push investments into the vintages on the market.
There are also other territories on the launch pad, starting with Piedmont and Barolo, indicated by many as the most desired wine in 2023. Demand should also grow for Californian wines, as well as for Champagnes by emerging producers. Another forecast sees the return of Asian interest in the fine wines market, especially from Japan, Taiwan, Singapore and South Korea.
Then, there are less rosy forecasts, related to bankruptcies and business closures, as well as mergers between large UK wine merchants and consolidating smaller companies. Finally, the growing role of technology should be pointed out, because there are perhaps some that still believe the wine industry is not ready for blockchain technology — and therefore are predicting it will end — while the majority thinks that technology will continue to change the way wine is exchanged wine in the world, guaranteeing speed and transparency.