First property prices fell, stock markets soon followed and just this week the international art market appeared to crumble in the face of the credit crunch.

Now sales of wine, for some time a supposed safe haven for investors, are finally feeling the full effect of the credit crunch, with the biggest fall in prices for seven years, down 12.4 per cent in October, according to the Liv-ex 100 Fine Wine index.

Almost all important wines from every modern vintage came under pressure last month, but the most expensive Bordeaux first growths from 2005 have seen the biggest fall, with prices collapsing 25 per cent from the peak of the market in August.

Justin Gibbs, director of Liv-ex, said that October’s dramatic fall was a result of a much more transparent market and the influence of funds that hold wine as investments. Mr Gibbs said: “Wine had shown great resilience – it had actually risen by almost 5 per cent in the year to September. So that means that many buyers were sitting on substantial profits.

“Many City boys, worried by what is happening in the economy, have seen this and decided to sell. However, wine merchants are finding it increasingly difficult to sell fine wines, so the prices are plunging. People have stopped buying houses and cars, and now wine.

“Like the property markets and the equity markets, the wine markets are trying to find their right level. However, it is not clear when the bottom will be reached.”

Relatively large drops in prices for fine wines are not a new phenomenon. There were similar patterns during the recession of the early 1990s. After the Asian crises of 1997 and 1998, wine prices corrected by 25 to 30 per cent.

However, in past times of difficulty, prices have decreased gradually over a period of a year. This time they have crashed by 16 per cent in four months, with two thirds of that fall in October.

The volume of wine sales recorded in October by Liv-ex also dropped considerably from the previous month’s record levels. However, unlike in the housing market, those with cash to spend have been buying heavily at the reduced prices. Champagne also had an extremely good month, as the rush for bubbles defied the gloomy economic outlook.

The credit crunch is also hitting sales through restaurants. According to sommeliers, quoted in Decanter magazine, the average bottle spend has fallen by 40 or 50 per cent over the past six months. However, value supermarkets such as Lidl are reporting sales rises of about 25 per cent as customers choose to seek bargains and drink them at home.

For those wondering what their cellar is now worth, there are some sips of comfort. Wine, like any market, is governed by laws of supply and demand, and there is a finite supply of the best vintages.

Mr Gibbs said: “Only 20,000 cases of Mouton Rothschild first growth are produced each year and there are more than 20,000 people in the world who would like to own one.”

However, with many investors having had their fingers burnt, perhaps now it is time to stop trading wine like mortgage-backed securities and instead get out the corkscrew.

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