HOW THE FINE WINE MARKET WORKS
How the Fine Wine Market works
“For the ultimate in liquid investments, try top quality wine, which has outperformed one benchmark U.S. stock index for 13 years and withstood two recessions.” – Bloomberg.
The fine wine market works on a simple supply and demand basis of economics. Supply is limited due to strict production laws, creating steady demand for a class of wine in finite supply. Coupled with the fact that as a wine matures and improves with age, a high number of bottles will be consumed which will in turn reduce the supply further and therefore increase its value. Leading American financial services firm Morgan Stanley once quoted their concerns over a world shortage of fine wine, with the demand exceeding supply by 300m cases. The Bordeaux region (The world’s leading region for fine wine production) has seen a reduction of around 12.5% in production, meaning that the best wines in the world are highly restricted and therefore face increasing demand.
“Since 1988 when reliable data first became available the fine wine market has generated an annualised return of 12.1%”. – Financial times.
Part of our affiliation with Liv-ex enables us to offer our clients a secure storage facility for their wine, which also comes with insurance. Your wine is stored at one of London’s leading underground bonded warehouses, with professionals ensuring your wine is kept at the optimum temperature. You can also book an appointment via your Vintage Associates consultant if you would like to go and view your portfolio in person.
The fine wine market is also one of the best investments in terms of a tax benefits. Fine wine is regarded as a wasting asset and therefor is classified different to stocks and shares or property. This means it is completely exempt from capital gains and income tax, however please note that we recommend consulting your accountant upon selling your acquisitions.