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ACKER MARKET INSIGHTS
A NEW BULL MARKET IN Fine WINE PRICES HAS BEGUN
NEW YORK - November 18, 2024
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INTRODUCTION
The fall season marked a robust beginning for the fine wine market, particularly at auctions in the US and Hong Kong. Notably, our September auction in Hong Kong showcased the region’s most vigorous performance in two years, signaling a revitalized interest in fine wines across Asia. This resurgence continued into October, with auction volumes year-over-year (YOY) for September and October surging by over 30%. Based on these trends, we project sustained growth in the market.
MARKET DYNAMICS
Recent macroeconomic shifts have significantly influenced market dynamics. The Federal Reserve’s recent 75-basis-point reduction in interest rates, coupled with China’s introduction of a comprehensive stimulus package, suggests an end to the two-and-a-half-year decline in fine and rare wine prices. Historical data supports a positive outlook: similar economic conditions in the past have consistently led to increases in fine wine prices ranging between 15 and 30% over a two-year period. Our forecast represents a conservative position within this historical range.
Our proprietary AI model, which factors in potential economic scenarios such as a further 100-basis-point cut in interest rates, predicts an 18% return on fine wine investments over the same period. This model draws on historical market responses to interest rate adjustments, noting that each rate cut by the Federal Reserve over the past 25 years has preceded at least a 15% increase in fine wine prices within two years. The underlying mechanics are clear:
• High interest rates typically escalate the holding costs for retailers, prompting them to reduce inventory through higher turnover, which can depress prices.
• Conversely, lower interest rates decrease these holding costs, encouraging both trade and collectors to expand their inventories, thus bolstering demand and prices.
Additionally, recent stock market gains have significantly enhanced investor wealth, with equities reaching new relative value highs compared to fine wines. Historically, such disparities have presaged favorable investment conditions for fine wines, as prices tend to rise and converge with elevated equity values.
The political landscape also plays a crucial role. The recent US election resulted in a Republican-controlled White House and Congress, increasing the likelihood of substantial tax cuts—a central theme of the President-elect’s campaign. If implemented, these tax reductions could increase disposable income among high-net-worth individuals, further stimulating demand for Fine & Rare Wines.
KEY PERFORMANCES 2024
There have been standout performances in the year-to-date (YTD) wine market, yet overall, the fine wine sector has exhibited relatively flat growth. This trend is reflected in the wine indices, where younger Bordeaux wines have underperformed, exerting downward pressure. In contrast, older Bordeaux vintages have shown strength, helping to stabilize the market. A shift in market dynamics is evident: prior to September, only 40% of our wine indices reported positive trends. However, for September and October, this figure has risen significantly, with over two-thirds of all indices showing positive results. This uptick aligns with the increased auction activity and revitalized buyer interest noted earlier, suggesting a robust recovery may be underway.
Top Performing Indices Overall*
Top Performing Producers
Top Vintage Performers
Regional Wine Indices
* Historic indices are comprised of a selection of the most traded wines from a given producer before the year 2000. The selection of the wines and the index’s pricing scale are static as of the index’s creation date.
* Vintage-related Indices are comprised of a selection of the most traded wines from a given producer between the year 2000 and 2020. The selection of wines and index’s pricing scale are static as of the index’s creation date. The index is comprised of wines within the specified range that have a high trading volume and are highly relevant to the fine wine market.
* Producer-named indices combine data of “Historic” and “2000s” indices to offer a composite view of a selection of the most traded wines from a given producer over the span of Acker Auction’s database (beginning around 2002). The index is redefined at intervals when newly relevant wines have enough statistically significant trading data available and is scaled so that pricing is continuous.
Summary
In conclusion, both macroeconomic and political factors are aligning to create what may be the most favorable conditions for fine wine investments since the zero-interest-rate era. While geopolitical developments such as potential tariffs introduce an element of uncertainty, overall market conditions support a positive trajectory for fine wine investment, our most optimistic forecast since prior market highs.
IRVIN GOLDMAN
Chief Executive Officer
