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Fine Wine Portfolio Overview
Fine Wine Performance
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.
FTSE 100 price index 2004-2008
Liv-ex 100 (fine wine index) 2004-2008
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.
Summary
- High Performance and Gains compared with Stocks and Commodities*
- Tax Free Gains†
- Rarity and quality, hence price, increase with age
Gains from Fine Wine are normally Tax Free
Regarded by Inland Revenue as a ‘wasting asset’, vintage fine wines also benefit from an exemption from Capital Gains Tax, so long as investment term is beneath 50 years.
As with all commodities, investing in wine can be guided simply by: “buy low, sell high”, and remembering that price is determined by supply and demand
† See our fine wine tax guide for full details.
* 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.