A Guide: Investing in Fine Wine
Investing into fine wine as a means to generate profit is generally a safe market. The link between the financial markets and the fine wine market is relatively minimal, but as more people veer towards investing into wine, the usual pattern of the market changes, acting more like an investment vehicle rather than just a commodity, this is due largely to its resilience when compared to many other investment areas and the rising number of consumers who play a significant part in changing trends.
In the 2008-2009 recession, for example, prices for fine wines rose as investors began to seek safer investments due to economic uncertainty. By 2011 the most sought after wine brands were seeing triple digit returns when sold on.
In a practical sense, the advantages of investing in wine are pretty straightforward. Wine benefits from being an easily transferrable asset, within a well-established market and an easily accessible auction market.
Wine, however, is not the best idea for those looking for a quick turnaround on their investment; it’s a simple to see the best returns you need to hold for a medium to long term.
Demand for fine wine still continues to grow as more investors learn about the peaks and troughs that can be experienced while their asset reacts to various global trends, but due to the finite nature of supply, wine becomes a rarer commodity as time continues to pass and the number of potential new wine buyers, drinkers and enthusiast’s increases. For this reason it is good to understand how wine prices changes.
Brand Recognition and Demand:
Most proprietors of the chateaux have made it their life long goal to increase awareness in their well established brands.
In 2010 Chateau Margaux sent Thibault Pontilleir to Asia. This was the first time in history a representative had worked outside of France.
For collectors, exclusivity and prestige fuels demand. Take Napa Valley’s Screaming Eagle for example. In 2012, when the first vintage of Screaming Eagle Sauvignon Blanc was released, just 600 bottles were released; the release price was $250 per bottle, making it the most expensive Sauvignon Blanc on earth. The wine instantly (and controversially) attracted secondary market prices in excess of $2,000 per bottle.
With any luxury item, the amount readily available for purchase will affect its price, with many of the best wine making regions having to deal with laws that restrict supply. Rarity and difficulty to obtain is an extremely effective catalyst for the market value of a wine.
There is no getting around the fact that some vintage simply cost more than others. Mythical vintages (when weather conditions are perfect) are typically expensive, and vintages benefitting from favourable harvest conditions always tend to attract higher prices, as do wines that have been given the seal of approval by well-known critics. It’s down to these factors that the reputation of a certain vintage will often influence the price of a wine more than the actual taste and quality.
Age and Maturation:
Age is arguably the most commonly recognised factor influencing wine values. This is due to the widely held idea that the older the wine the bigger the price tag, but this is not always the case.
With many investments, the economics situation of a certain country, or the world as a whole, is always likely to have a strong effect on the wine market.
Our wine investment policy:
- We do not give financial advice or advice on investments
- We do not offer any guarantees
- For customers seeking advice on the above two issues we recommend you contact an IFA (Independent Financial Advisor)
- We strongly encourage a medium to long-term view 5 years plus
- We do advise on the quality of wine, on a wines potential longevity and consequently its suitability for inclusion in a cellar
- We can provide current valuations
- We can offer our opinion, based purely on our experience and on demonstrable market history, on whether a particular wine will appreciate in value over a period of time, stressing that many factors can influence the price in that time, for good or bad
*An investor may get back less than the amount invested. Information on past performance, where given, is not necessarily a guide to future performance.