Fine Wine Investment Portfolio

The fine wine investment market is one of the oldest and most established investment markets of all. In days gone by investors understood that if they bought two cases of fine wine, and held one for investment, they could drink the other for free! While we whole heartedly approve of this strategy, the fine wine investment market has undergone considerable growth and development since then.

In addition to spectacular 'one-off' returns for wines such as the Petrus 2005 (recently valued at £35,000 per case), recent financial journalism has stressed the wine market's ability to generate stable and consistent returns over time. Justin Gibbs and James Miles write;

By combining the results of Duthy's Vintage Claret Index, Kumar's Fine Wine 50 Index and the Liv-ex 100 index. We can piece together a price series that has generated double digit growth since 1950'. (Financial Times, June 8, 2007)

China alone has seen imports nearly double each year since 2006 with 25 million bottles imported initially and rising to an unprecedented 76 million bottles in 2008. The largest wine merchant in Asia has already seen sales increase 249% from January 2009 to May 2009, with experts predicting a further doubling by 2012 to 17 billion dollars. This is expected to rise to 27 billion by 2017, leading to some concern of whether there will be enough wine produced to support global demands.

In addition to strong performance figures, fine wine offers:

• Low correlation to economy and debt /equity markets.
• Effective divergence investment, lowering the overall volatility of an investment portfolio
  where there is high correlation between the asset classes.
• Qualification as a 'wasting chattel' meaning that it generally doesn't attract capital gains tax.
• VAT exemption while in bond.