Wine Basics
Wine Investing
Apr 24, 2025
How will Interest Rate Cuts Affect the Wine Market?
Interest Rates and the Fine Wine Market
The Bank of England has cut interest rates for the first time since 2020 as inflation continues to remain steady, holding at their two percent target for two consecutive months.
Bank Rate has been moved from 5.25%, a 16-year high where it has been pegged for the last year to fight inflation, to 5% – a drop of 0.25 percentage points.
Wine prices, often regarded as both a luxury item and an investment, are influenced by interest rate changes through various channels. By examining the chart below (which displays the Liv-ex Fine Wine 1000, Bank of England interest rate, and the Consumer Prices Index (CPIH)), we can observe several instances where a drop in interest rates preceded a significant rise in the market – notably in early 2009, mid-2016, and early 2020.
These upward trends can largely be attributed to heightened demand from both consumers and investors. While a reduction in interest rates generally boosts the industry’s prospects, those looking to profit may anticipate certain indices to climb more rapidly than others. Additionally, buyers using Euros and Dollars stand to gain from the impact of rate cuts on exchange rates.
The market demand and interest rates dynamic is well documented. For instance, following the onset of Covid-19 in February 2020, the Bank of England reduced interest rates to stimulate economic growth. This led to a surge in spending across various sectors, including the wine industry. Increased disposable income, particularly during prosperous times, tends to boost demand for mid-range wines (£1,000–£2,000 per 12×75), making them accessible to a broader range of consumers.
However – the world of wines that WineFi considers as ‘investment grade’ tends to be above this price bracket. The chart below illustrates the price trends of the Liv-ex Fine Wine 1000 and Liv-ex Investables index since 2006. The Investables index contains a basket of wines at a higher price point than the £1,000–£2,000 per 12×75 listed above.
During the inflationary period from early 2021 to mid-2022, the Investables index exhibited less price volatility compared to the 1000.
This suggests that prices of these wines are less influenced by spending tendencies and more by expectations of future returns, similar to stock prices. This idea is further supported by the sharp decline in the Investables index in August 2011, which coincided with the stock market crash. Buyers investing in wine tend to be motivated less by affordability and more by the perceived stability of the market.
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Wine Basics
Wine Investing
Jul 14, 2025
WineFi Q2 2025 Quarterly Report
In Q2 2025, we have seen a stabilisation in wine market prices. In this quarterly report we dive into this finding to understand how list prices compare to trade prices, along with macro-analysis and regional comparisons.
In this edition, we explore:
🏦 Macroeconomic Analysis and the Effect on Wine Markets
📈 How Wine Compares to Other Assets
⚖️ Wine Market Stabilisation?
🔀 List Prices vs Trade Prices
🌍 Regional Performance Breakdown
Wine Basics
Wine Investing
Apr 24, 2025
WineFi Q1 2025 Quarterly Report
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
Wine Investing
Apr 6, 2025
Navigating New Tariffs: Fine Wine’s Resilience Amid Trade Tensions
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.
