Home Wine Business Editorial Sales & Marketing Liv-Ex Recap: California Emerges as an Investment Powerhouse

Liv-Ex Recap: California Emerges as an Investment Powerhouse


There has been a boon in wine investment companies in the United States,
with California leading the way.

By Jeff Siegel

Over the past couple of years, the popularity of California wines has skyrocketed on the secondary market, even as the broader market has flattened over the past six months.

“It has really been one of the emerging regions, even if those in the U.S. probably don’t see California as a ‘new’ region,” says Robbie Stevens, the Americas territory manager for Liv-Ex, the stock market-style wine trading exchange in London. “Its growth has been a relatively new phenomenon.”

Stevens, speaking to an Internet media round table on Tuesday, January 24,  said that California’s share of Liv-Ex transactions has increased some 250% since 2017, from about 1% of the market to nearly 8% at its peak in 2021 (it was about 6% in 2022). In addition, the number of brands traded has moved past an early handful — Harlan, Opus, Dominus and Screaming Eagle — to include some 200, mostly in Napa but also Sonoma County  producers such as Ridge and Sine Qua Non, and Daou in Paso Robles. This is part of what Stevens called “developing a long tail” behind the best known producers, as more buyers and sellers looked to California.

This growth came even as the secondary market slowed to a crawl in the second half of 2022, from 20% to 30% increases in the previous 12 months to just 1 to 2% at the end of the year. In addition, California lost market share to Burgundy and Champagne, which thrived as the secondary market adjusted to the world’s post-COVID reality. Stevens said those new [post pandemic] conditions included currency fluctuations, inflation, the war in Ukraine and continued shipping shortages. As such, Bordeaux remains the most traded region by volume, at about 35% — but down from about 60% pre-pandemic. Burgundy is at about 26% by volume; Champagne is at about 14%.

Branching Out in California

So why California’s new-found popularity? A variety of reasons:

  • A hunt for value, as prices crept up in other regions and buyers turned to California to find quality wines that weren’t as expensive.
  • A string of good vintages and the high scores that were awarded to those wines, which made them more desirable.
  • A variety of currency fluctuations over the last several years and the strength of the U.S. dollar. This gave dollar-based buyers a chance to purchase wines at a significant discount when the British pound and the Euro were particularly depressed. But this trend also led to unrest in the secondary wine market, as some buyers waited to see what would happen with currency values and didn’t want to take any chances until currency values leveled off.

Investing in Wine

Also playing a key part in California’s surging popularity has been the growth in wine investment companies, which use Liv-Ex to not only help to price client portfolios but, in some cases, to buy wines for those portfolios. This has increased demand, further raising prices and boosting returns. In this, wine has seemed to be less volatile than many traditional investments, and if it’s not as liquid as stocks or bonds, it has often held its value better than other investments: a “safe haven,” said Stevens. 

“There has certainly been a boon in wine investment companies in the United States,” said Stevens, “and I can tell you I’ve seen that anecdotally.  In one respect, it’s nothing new. People have invested in wine in the U.K. for decades if not centuries. But then it was ‘Buy two cases, keep one and drink one.’ This is just easier access for more people to enter the wine market.”

Blame 3-Tier

The one thing hampering all of this growth? The U.S. three-tier system, which Stevens said surprises him with a new wrinkle almost every time he deals with it. The U.S. alcohol regulatory system, which doesn’t exist anywhere else in the world, has almost certainly slowed secondary market growth in the U.S., since it’s not possible in most states for retailers and restaurants to buy those wines without going through a wholesaler.

“Three-tier makes the business much more difficult in the U.S. than in the U.K. or even Europe,” he said. “It definitely limits the ability of retailers to buy wines on the secondary market in the U.S. There’s certainly a limitation of choice – and it seems convoluted, and it’s certainly archaic in the modern world.”

Three-tier also boosts retail prices, he said — perhaps by as much as 15 to 30% to take into account the wholesaler markup. Stevens said there isn’t a similar bump in retail prices in Great Britain, which doesn’t require the second tier. 

In addition, the DTC market, which evolved in response to three-tier to let wineries sell directly to consumers, may be hampering the secondary market’s growth in Washington state and Oregon. One reason there are few Northwest wines traded on Liv-Ex, he said, is because many quality producers sell their wines DTC, limiting their availability at retail.

Regardless of these hurdles, the future remains bright for California wines on the secondary market — even if that’s not surprising to those in the U.S.


Jeff Siegel

Jeff Siegel is an award-winning wine writer, as well as the co-founder and former president of Drink Local Wine, the first locavore wine movement. He has taught wine, beer, spirits, and beverage management at El Centro College and the Cordon Bleu in Dallas. He has written seven books, including “The Wine Curmudgeon’s Guide to Cheap Wine.”



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