Market Growth

Market Insight

In 2012 Barclays wealth management conducted a survey and found that 28% of high net worth individuals have a wine collection and that 2% of their wealth is invested in wine. The idea that wine improves with age dates back to the 18th century and has worked on that premise right up until the current day.

High Net Worth individuals that have a wine portfolio
HNWI'S 28%

The Liv-Ex Fine Wine Investable's Index

The graph below illustrates the trend of the top five indices on Liv-ex. As you can see, each one has shown a healthy return over the past five years with the an average of 34.4%. If you take most five year periods from 1990, all graphs show a similar growth pattern. This is one of the many reasons we always recommend holding a wine portfolio for a minimum of five years to ensure you give your portfolio enough time to mature.

'There is no better time to invest into the fine wine market.'

Global economies are recovering from the last financial crisis and investors are returning to the markets looking for ways to diversify their portfolios whilst maintaining a level of risk appetite that suits them. The fine market over the past 15 years due to an influx of investment from Asian investors has already seen a boom and bust cycle starting in 2006 and ending in 2011. Since then the fine wine market has experienced significant growth and there are many signs that the market is returning to its full strength.

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 61% in 2018 and there are now even wines from the UK and China being traded on the Liv-Ex platform. This is a clear indication of the lucrative nature of the fine wine market and how investors are broadening their spectrum when it comes to investable wines. This allows our consultants to be much more innovative with their approach, although the majority of wines offered are still traditionally from the Bordeaux region for the everyday of investor who are looking for a safe haven for their capital.
Every two years Liv-Ex produces a classification of Bordeaux wines like the original classification In 1855. It places fine wine into five classes solely based on price and the best of which being classed as “first growth” wines. Around 85% of wines offered through Vintage Associates will be first growth wines, however much like a coin collection, the ideal investment portfolio will include wines from various different classifications to complete the full set.

Past Performance

The graph above highlights the performance of the Liv-ex 1000 index from 2009-2019.

Past Performance

The graph above highlights the overall performance of the Liv-ex 1000 index from 2000-2020 (285.95% change).

The Power of Burgundy

As much as historical performance tells us that the wine market will improve by approximately 12% per annum, there are certain regions in France where supply is far more limited in terms of production. There is no better example of this than the burgundy region in France, which is home to the Domain de la Romanee Conti chateaux (DRC). DRC is unquestionably the most important wine brand in the world. Collectors around the world vie and compete aggressively for the approximately 8,000 cases total of its eight extraordinary vineyard bottlings that are released and sold globally. The wines of DRC are invariably the crown jewels in any wine collection. They have an uninterrupted track record of appreciating in value due to the confluence of increasing global wealth, limited quantities and superb quality year after year. In fact, the 2015 vintage, released in January 2018, has seen over 245% growth in the first two years. Burgundy alongside Bordeaux is one of Frances two classic, best known wine producing regions. As you can see from the table above the Burgundy region has seen a 87% increase in value over the past five years.
The graph above indicates the unquestionable dominance of DRC in the marketplace.

In 2018, one bottle of DRC 1945 sold at Southerby’s for $558,000. With only 400 cases produced by the Romainee-Conti estate per year the demand for this luxurious brand of wine always out ways the supply.

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