Wine Market Performance

Wine Market Recent Performance

During times of economic uncertainty there are always winners and losers. Rather than batting down the hatches and waiting for the COVID storm to pass, the more experienced investor will look at diversifying away from the mainstream financial markets in order to achieve healthy returns with increased stability. The defensibility of the wine market is what is so attractive to investors right now. The fine wine industry is not correlated to financial markets nor is it dictated by any single economy, the strict supply and demand rules of this market allow the value of wine to consistently appreciate as the supply gradually starts to decline.

Long Term Historical Performance

Since 1988, when reliable data was first collected, the wine market has shown averaged returns of 12.4% p.a. As portrayed by the graph below, the market has consistently appreciated in value over time.

If you had invested £100 in the fine wine market in 1952, your investment would now be worth £420,000. On the other hand, £100 invested in the stock market would now be worth a modest £100,000. Recent research shows that, thanks to this impressive track record, the majority of financial advisors would support investing in fine wine as a way to diversify certain client portfolios.

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Broadening Wine Market

Ten years ago, activity on the market was dominated by a narrow group of top Bordeaux wines, however the market has broadened significantly since then. Bordeaux’s trade share is down from 95% in 2010 to 35% in 2020. This allows our consultants to be much more innovative with their approach, although the majority of wines offered are still traditionally from the Bordeaux, Burgundy, Italy & California region. As of late, the new trend for wine investment seems to be Italy. Since the incorporation of the Italy 100 index back in 2003, the market has improved in value by over 200% with very little volatility. The quality of Italian wines is now regarded as being just as good as French Bordeaux, however the pricing is far less expensive. For investors that are looking to ease their way into the market, Italian wines, namely the “Super Tuscans”, may be the best starting point.
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