Market Note: Fine wine prices drop in line with GDP, repeating historical pattern

The path of fine wine prices, such as Bordeaux, is matching the path of the economy, just as it often has in the past. 

In the present, the prices have stumbled, in sync with demand, as economic growth has weakened.

Prices for some top wines, like Bordeaux, have dropped more than 30% recently, as wealthy investors curb their buying, according to the Financial Times. A top-level bottle of Bordeaux can run from $200 to $4,000 and up.

The price drop has come despite wealth gains for the world’s wealthiest citizens. It stemmed from a low-quality harvest last year, thanks to bad weather; a surplus of high-quality wine already on the market; and weak demand from younger collectors, the FT reports.

The data

As for the economy, world GDP growth dipped to 3.3% last year from 3.5% in 2023, according to the IMF. And it projects a slide to 2.8% growth this year.

Previous periods of price declines for luxury French wines include 2023, 2008-09, 1979 and 1973-74, according to artificial intelligence service Grok. 

The 2023 price drop came as the world emerged from the Covid pandemic, which put a major dent in world economic growth. The financial crisis of 2007-09 did the same. The 1970s represented a lost decade for many of the world’s economies, thanks largely to huge oil price increases.

If the global economy continues to weaken this year, as many expect, French fine wine prices may drop further. But obviously there’s no guarantee.