Wine Market Overview: Q1 2025

The first quarter of 2025 marked a period of transition for the fine wine market, shaped by evolving macroeconomic conditions and shifting global trade dynamics. While the recent U.S. tariff announcement introduces new considerations for producers and distributors, broader fundamentals remain intact, and we see emerging opportunities as the market adjusts.

Trade Volume and Pricing Environment

Trade volume in Q1 remained stable overall, with strong activity throughout March, particularly in the days leading up to the announcement of new U.S.-import tariffs on April 2nd. These figures reflect the market's positioning ahead of the news and may not yet incorporate reactions to the potential longer-term implications of the trade policy shift.

Despite stable volumes, the Liv-ex 1000 index declined by approximately 3% over the quarter, continuing a softening trend that began in mid-2023. This correction reflects a healthy normalization following the post-COVID rally, with certain segments—particularly those heavily weighted to Burgundy and Champagne—showing the sharpest pullbacks. Bordeaux remained relatively stable, supported by attractive relative value and global liquidity.

Auction activity during Q1 remained solid, with results suggesting a broad-based equilibrium in prices across vintages and producers. Auction outcomes are an important indicator not just of short-term demand, but also of sentiment among end clients—whose purchasing behavior ultimately shapes the strategies of distribution partners and merchants. While high-exuberance bidding has tapered off, pricing remained consistent with secondary market expectations and confirmed continued depth of demand for blue-chip wines with global reach.

U.S. Tariffs: A Developing Situation, with Grounds for Caution and Perspective

The announcement on April 2nd of a 20% U.S. import tariff on EU goods has prompted understandable concern among producers, merchants, and investors. While it is too early to draw firm conclusions about the full market impact, several structural elements suggest the fine wine segment may remain more insulated than other categories.

One important point of context: the U.S. represents approximately 35% of global fine wine imports. As such, any trade friction has the potential to influence pricing, and we have already seen signs of downward pressure since the announcement. However, for Cellar Investment Partners, the current environment also presents opportunity. As we are still in the early stages of deploying the fund’s capital, decreasing prices can offer access to blue-chip wines at more attractive entry levels—laying the foundation for future returns.

A critical nuance is the basis on which these tariffs are levied. Rather than applying to the final retail price, the tariff is calculated on the ex-cellar price charged by producers to U.S. importers—or, in some cases, on the internal cost of goods sold if the importer is vertically integrated. This can substantially reduce the pass-through to end buyers, softening the inflationary effect on shelf prices.

Looking back to the 2019–2020 period, the 25% U.S. tariffs imposed under the Trump administration led to a 14% drop in total U.S. imports from the EU. Yet this figure encompasses the full wine market, including price-sensitive and high-volume categories. Within the fine wine segment, where buyers tend to be less price-elastic and motivated by long-term collection or investment goals, the decline was less pronounced.

Furthermore, fine wine remains a global market. Mature wines already distributed outside Europe, or held in bonded warehouses globally, are not subject to new tariffs. These inventories continue to be available to U.S. buyers through established secondary channels, creating a buffer effect.

We also note the potential for retaliatory trade actions from the European Union. Should the EU respond with tariffs on U.S.-made wines and other goods, this could introduce price tension in the opposite direction—potentially enhancing the value of U.S. wines already held in European cellars. We are actively exploring such opportunities and have continued to source iconic U.S. wines following the tariff announcement. Recent acquisitions include Screaming Eagle 2018.

The upcoming 2024 vintage also adds an important dynamic. Many key European regions have experienced sharply reduced yields due to poor flowering, hail, and mildew. This will likely result in one of the smallest harvests in over a decade. In a supply-constrained environment, existing back vintages—particularly those with proven secondary market liquidity—may benefit from renewed demand.

Historically, fine wine has demonstrated resilience during periods of macroeconomic uncertainty, owing to its low correlation with financial markets, global collector base, and scarcity-driven pricing dynamics. While it remains too early to make definitive claims about the immediate effects of the tariffs, the structure of the market provides reasons to remain constructive over the medium term.

Regional Developments

• Burgundy: Market softness continued into Q1, with notable corrections in mid-tier producers and recent vintages. However, top-tier domaines such as Domaine Leroy and Domaine de la Romanée-Conti retained pricing stability, reflecting enduring global demand for rare allocations.
• Bordeaux: Remained relatively flat, with first growths showing resilience and increased merchant activity in pre-arrival offers. The region’s broad distribution and attractive price-to-quality ratio continue to support market confidence.
• Champagne: Corrected further, particularly for grower champagnes and less liquid vintages. Larger maisons remained more stable, but investor interest is clearly rotating into regions offering greater relative value.
• Tuscany: Stable demand in Q1, with increased U.S. activity in March. The upcoming 2020 vintage for Brunello is receiving early praise, which could stimulate forward buying.
• California: Active trading resumed in top Napa producers, with Screaming Eagle, Harlan Estate, and Bond seeing increased European demand. European holdings of top U.S. wines could benefit if reciprocal tariffs materialize.
• Piedmont: Slow but steady market. Barolo in particular continues to attract long-term collectors. Scarcity-driven producers like Bartolo Mascarello and Roagna continue to see robust demand across vintages.

Looking Ahead: A Period for Disciplined Participation

We enter Q2 with a blend of caution and conviction. While the full implications of the U.S. tariffs are not yet known, historical and structural factors provide a measure of reassurance. Wine remains a fundamentally scarce, globally consumed, and emotionally resonant product—a combination that has historically supported prices through market cycles.

We continue to monitor trade flows, pricing behavior, and regional allocations. With historically low 2024 yields on the horizon and selective buying opportunities already emerging, we remain focused on sourcing for quality and value across geographies.