How The Market Works
How The Vintage Wine Market Works
Wine as an Investment
Collecting fine wine to trade in the future is not a new concept. It has, however, become one of the most popular soft commodity markets, enjoying a perpetual increase of investment over the last 25 to 30 years, because it enjoys an extremely stable environment, flexibility and favourable tax treatment from regulators.
The simplicity of the market also adds appeal. Driven by the simple laws of supply and demand, trading fine wine makes economic sense to investors – even those with no experience of this asset.
Wine Investment Supply and Demand
Unlike many luxury consumables, there is a definitive stock at the end of each harvest year, because you cannot produce more than the capacity of the vineyard. Therefore, you cannot increase production to meet demand. As a wine matures and improves with age, a high number of bottles will be consumed which reduces the supply further. This leaves the remaining few to be far more valuable.
The wine investment market has transformed into a real viable alternative investment option for the everyday person. A traditionally opaque market, is now one of the easiest investments to realise your profit from. We exclusively sell our clients wine back through Liv-ex, ensuring a quick and easy exit for all clients.
Most clients appreciate wine as a medium-term investment and know that if they receive 10-15% percent growth per annum in a tax-efficient environment, they will have a valuable fine wine collection in years to come.
A Simple Example
Fine Wine Investment
Investing in fine wines is both enjoyable and very rewarding, providing the opportunity to explore, understand and own some of the finest luxury products in the world. For example, top Bordeaux wines are highly valued by wine collectors and merchants alike, their value and prices only increase over time. Fine wine’s historical performance has led many investors to view it as a tangible, alternative asset that can be used to diversify an investment portfolio, delivering stability and growth that can de-risk an investing strategy and protect wealth.
Fine Wine Prices
Liv-Ex fine wines is the world’s most comprehensive database of fine wines, including wines pricing and market tracking. The Liv-Ex secondary market trades maintained positive growth in 2020 with record growth volumes. Wines rise in value over time, and as their prices increase they gain more value. Positive market growth and been consistent for Bordeaux and Burgundy top performers across the world. For Example, Burgundy Wines Domaine Georges Roumier 2012 saw a price increase of 74.5% to £17,800 (12 x 75cl) in the 12 months to March 2021 (source: Liv-ex.com, March 2021).
Benefits of Investing in Fine Wines
Performance – Fine wine prices and the wine market has a track record of delivering stable growth and strong returns that has outperformed financial markets and commodities all over the world, over the long term. Unlike the spirits and champagne world markets, the wine market is extremely tax efficient. World price and performance is not directly correlated to more volatile financial markets and as a tangible asset with a finite supply, fine wine can protect wealth during periods of economic uncertainty as clearly demonstrated with Covid-19.ts.
If you are looking for an asset to outperform financial markets and commodities over the long term, Bordeaux fine wines offer a unique opportunity. Fine wine investment opportunities, including Bordeaux fine wine investing, have proven over the past few years to maintain a stable performance. We are able to make insights into the wine industry using the comprehensive database at Liv-Ex. Liv-Ex has a comprehensive database that contains the latest fine wine prices, top wines and market insights.