Bordeaux - where has it all gone wrong... Part 2

We’re pleased to share our Q1 2025 Quarterly Report, offering a concise, data-driven overview of fine wine’s performance in the first quarter of the year. As macroeconomic pressures persist and traditional markets continue to fluctuate, fine wine’s role as an alternative asset class remains in sharp focus.

In this edition, we explore:

🏦 Macroeconomic Analysis and the Effect on Wine Markets

📈 How Wine Compares to Other Assets

⚖️ Wine Market Stabilisation?

🌍 Regional Performance Breakdown

On Thursday, the Trump administration announced a fresh wave of long-anticipated protectionist trade policies. Drawing inspiration from President William McKinley’s era, the administration has introduced a baseline 10% duty, alongside additional bilateral tariffs, pushing the overall U.S. tariff rate to levels not seen since the “Gilded Age” (1870–1913).

Financial markets reacted sharply. The S&P 500, Nasdaq, and Dow Jones all posted their worst single-day performances since the COVID-induced selloff of 2020.

Under the new framework, European goods—including wine—will face a 20% import tax. Naturally, this raises the question: what impact will these tariffs have on the fine wine market?

This is not the first time the Trump administration has targeted European wines. In October 2019, a 25% tariff was imposed on wines from the EU and UK (excluding Italy), following a WTO ruling in favour of the U.S. in its long-standing dispute over Airbus subsidies.

As shown in the highlighted section of the WineFi 10-Year Index, the implementation of the 2019 tariffs had a muted impact on the index’s value. This was followed by a noticeable uplift, driven by dovish monetary policies in response to the COVID-19 pandemic.

What We Expect Going Forward

One of fine wine’s defining attributes is its longevity. Many wines only reach their optimal drinking window 5+ years after bottling. This allows U.S. buyers to sidestep immediate tariff exposure by purchasing wines in Europe, storing them in bond (free of duty and VAT), and taking delivery once tariffs are reduced or lifted. This flexibility should mitigate downward price pressure in the near term.

Fine wine also benefits from supply inelasticity and geographic uniqueness. Iconic wines from regions like Champagne and Burgundy cannot be replicated domestically. While tariffs are typically aimed at boosting local demand, inelastic supply and limited substitutes mean demand for European fine wine is unlikely to collapse. For example, Napa Chardonnay remains distinct in profile from White Burgundy, limiting true substitution.

Some consumers may shift from grand crus to premier crus or opt for second wines over first growths. However, the impact of this down-tiering can be softened through a diversified portfolio approach.

Finally, during periods of macroeconomic uncertainty, fine wine offers meaningful diversification benefits due to its low correlation with traditional asset classes. As volatility returns to equity and bond markets, we expect growing investor interest in uncorrelated alternatives. Fine wine’s unique market dynamics make it a valuable addition to a well-diversified portfolio.

President Trump has since stated he remains open to negotiations following the negative market response. WineFi will continue to monitor and report on the evolving impact of U.S. tariffs on the fine wine sector.

Donald Trump’s recent announcement of potential 200% tariffs on wines, Champagnes and spirits from France and the EU has sent ripples through the global wine industry. While the proposal is politically charged and far from guaranteed, it has already sparked volatility in European beverage stocks and prompted concern among négociants, importers and wine investors alike.

The U.S. is a major buyer of EU wine – but from a fine wine investment standpoint, the most important question isn’t what happens to American consumers, but how global wine pricing and allocations might shift as a result of displaced supply and changing market dynamics.

For investors – particularly those buying and storing wines through the UK market – the impact is less about the direct effect of tariffs and more about how Europe and the global trade react. Crucially, this is a story of two vintages: newly released wines are set to face the greatest pressure, while back vintages (mature, in-market wines) may emerge relatively unscathed or even strengthened by the disruption.

With En Primeur season approaching and Bordeaux still seeking market equilibrium, this disruption could either reignite interest or prolong stagnation – depending on how producers and merchants adapt.

This piece explores the divergence in impact between young and mature vintages, potential consequences for UK pricing and allocation, and historical parallels that might shed light on what lies ahead.

New Vintages in the Crosshairs

If implemented, a 200% tariff on EU wine would effectively block recent vintages from accessing the U.S. market – not merely making them less competitive, but outright unviable at current price levels. While the U.S. would absorb the most direct blow, the ripple effect across the global trade is where the pressure truly mounts.

Without U.S. demand, European producers will be forced to redirect stock elsewhere, with the UK likely absorbing a larger share. For wines released this year and next – including the upcoming 2024 Bordeaux En Primeur campaign – producers may need to either further lower prices to stimulate demand from UK and Asian markets, or limit volumes and hold back stock in anticipation of a future rebound.

Either option changes the investment landscape significantly. A genuine effort from châteaux to cut release prices (as seen with the 2019 vintage during COVID and previous tariff threats) could finally provide the reset Bordeaux needs to re-engage investors. On the other hand, if pricing remains firm and quantities tighten, supply-side scarcity could keep upward pressure on values of mature stock.

Wines currently being released – from the 2020, 2021 and 2022 vintages – may also see short-term price softness in the UK market as a result of increased availability. If wines intended for U.S. allocation are rerouted, UK merchants will have more to sell – but not necessarily more demand. That imbalance could benefit opportunistic buyers looking to acquire young wines at more attractive prices.

Back Vintages: Largely Shielded

In stark contrast, mature back vintages – particularly those already in bond or with strong global distribution – face little downside risk from the proposed tariffs. These wines are already in circulation, with pricing well-established, and critically, they are not affected by new import duties.

In fact, in a scenario where new vintages become logistically and financially constrained, back vintages may experience a relative boost in demand – especially concentrated in the US. Collectors, merchants and drinkers unable or unwilling to pay tariff-laden prices for new wines will likely shift focus to existing stock. This is especially true at the high end, where drinking wines like Petrus or Latour are rarely priced on marginal cost – the buyer is more concerned with provenance, condition and access than with an incremental price rise.

Moreover, WineFi investors and others operating outside traditional allocation systems are at an advantage here. With flexibility to select vintages with the best appreciation potential, and no need to absorb specific releases, portfolios can remain focused on relative value, maturity curves, and scarcity – rather than pipeline availability.

Should the UK market experience any pricing softness from rerouted stock, the value proposition of back vintages only grows stronger. They become the stable, appreciating reference point against which discounted young wines are measured – a dynamic we’ve seen before during market dislocations.

Global Pricing Pressure – More UK Supply, Softer New Vintage Prices

Although the U.S. won’t be importing much EU wine under a 200% tariff, those wines still need to be sold somewhere. That ‘somewhere’ is likely to be the UK – the most active secondary market globally, and still a preferred destination for producers seeking visibility, bonded storage, and global redistribution.

More supply in the UK – particularly of newly released vintages – is likely to put downwards pressure on prices in the near term. This won’t affect all wines equally. As discussed, back vintages are (relatively) insulated, and high-demand labels will still find homes quickly. But lesser wines, or vintages already viewed with caution (such as 2021), may struggle.

This could create attractive entry points for investors willing to take a medium – to long-term view. Much like the 2019 En Primeur campaign, which saw deep discounts and strong returns once normal market activity resumed, a tariff-driven dip in pricing could set the stage for outperformance once equilibrium returns.

Outlook for En Primeur: Tariffs as Catalyst for Reset?

With the 2024 Bordeaux En Primeur campaign looming, all eyes are on pricing strategy. The market already expects moderation after a patchy 2023 campaign, and the threat of U.S. withdrawal from the demand equation could tip the balance toward widespread cuts and more competitive releases.

There are two plausible paths:

1. Châteaux lower prices meaningfully, recognising the need to re-engage global buyers and stimulate uptake. This could finally provide the jolt Bordeaux needs to regain momentum, and would benefit investors acquiring at cycle lows.

2. Châteaux restrict release volumes, maintaining high prices but allocating less wine for sale. This delays revenue but may prove prudent if producers expect the U.S. to return in future years. A tighter market with less availability could be bullish for existing stockholders.

Either way, WineFi and its investors are well-positioned: not locked into allocations, and focused on wines with long-term value potential. Should pricing soften, the opportunity to enter Bordeaux at multi-year lows could be compelling.

Conclusion: A Tale of Two Vintages

Trump’s proposed tariffs could create a sharp divergence in the fine wine market. Newer vintages, particularly those awaiting release or still in the primary market, face headwinds: more supply in Europe and the UK, fewer buyers, and pressure on pricing. For investors, this could present selective buying opportunities, particularly if pricing is rationalised across regions.

Back vintages, by contrast, are well insulated. Already in circulation, unaffected by duties, and often with established provenance and scarcity, they may become relatively more desirable as the market navigates disruption. As seen in prior episodes – whether trade tariffs or COVID-induced slowdowns – those who hold through volatility often emerge with the strongest gains.

In the end, while such tariffs may create near-term dislocation, they also reinforce the importance of selectivity, flexibility, and long-term focus in wine investing. WineFi’s model – unconstrained by allocations and built around conviction-led acquisition – is well suited to navigate this environment.

The market may shift. Value will remain – if you know where to look.