The Wine Market
Building a portfolio of fine wine is becoming increasingly attractive to many people, offering a combination of stability, low risk, high yields and edification. Demand has increased enormously over the past decades, resulting in some astonishing returns when purchased prior to bottling at the En Primeur stage. For instance, in the last year alone, prices of 100 different wines on the Liv-ex, the equivalent of the FTSE 100 for wines, jumped by 42 per cent, outperforming other asset classes such as oil, copper and gold.
Factors Driving Prices
As a wine matures, more bottles are consumed, and like all things rare and desirable, its valuation will rise. Being produced in small quantities, wine has often outperformed the stock market and even property and yet offers low volatility. *
A consumable asset with longevity gains, fine wine is a strong defensive asset in times of uncertainty, being able to recover from drops in valuation. With consumption and age, more upward pressure is put on prices.
For a growing number of speculators and collectors, the market place is no longer just about consumption.
* Note as with any investment the value of wines can go down as well as up. Past performance is not a guranantee of future trends or returns.