Why Invest In Wine?
Wine INVESTMENT FOR EVERYONE
Fewer than 2% of all wines produced globally are considered to be of sufficient quality to rise in value, with only the vintages that are graded highly enough by the world’s most influential critics deemed to be of investment grade.
Thanks to the ever-growing presence of global trade and e-commerce, fine wine has become increasingly accessible to the modern day investor, while maintaining its value as a luxury good with inelastic demand.
We'll walk you through why wine has performed so well over the last few decades and why you should add fine wines to your investment portfolio.
Long Term Investment
Fine wines rise in value because of two main reasons: the first being that each vintage is produced to preordained maximum quantities. The second is the ever-increasing demand for wines regarded as suitable for long term storage or 'bedding down'. Basic supply and demand is the driving force behind the market with branding also playing a key role.
Unlike many areas of investment, the finite production levels of fine wine are paired with an increasing rate of consumption, something that is not commonplace in most markets. A buoyant European following, along with a resurgent US market and the addition of rapid growth in collection and consumption in Asia means the market is in a state of evolution.
Old & NEw World
Consumers, connoisseurs and collectors, together known as the secondary market, will traditionally look to acquire wines just prior to the wine’s maturity window. Their selection is often influenced by the world's leading critics, whilst some buy based on brand, with history, ownership, winemaker and exclusivity also influencing buying patterns.
Almost all New World fine wine is fit to drink soon after its release and will be reaching the start of its maturity window five to eight years from that point. Individuals will be looking to source them from the beginning to the mid-point of that maturity window, which could range from twenty to fifty years.
Old World wines generally have a lengthier maturity cycle but will normally be considered the blue chip element of a portfolio and reward owners over the extended hold term. This is why we aim to understand a client’s wider financial goals, enabling us to utilise all aspects of the market and build a bespoke portfolio.
Why Invest In Wine?
Finite Supply & Scarcity
Unlike many areas of investment, the finite production levels of fine wine are paired with an increasing rate of consumption, something that is not commonplace in most markets. This positions fine wine as an asset with inelastic demand with profitable opportunities for investors.
Diversify & Hedge
As wine is a tangible asset, it resists correlation with other intangible asset classes. This allows fine wine to remain an enduring investment opportunity in times of economic volatility, primed for diversification and hedging. The secondary fine wine market has allowed many of our clients to diversify their investment portfolios.
Tangible Asset
As a physical asset, fine wine holds an intrinsic value, something that differentiates the secondary wine market from other investment opportunities. As tangible assets perform best with regular monitoring, we provide multiple ways for clients to track their investments, such as our online portals and periodic communication with an portfolio manager.
Performing Asset
The principles of the fine wine have been tried and tested over decades, and continually prove to offer a safe, reliable haven for long-term growth. The reasons wine of the highest quality has shown such solid performance are the same today as they have always been: a short and finite supply coupled with an ever-increasing demand.
Tax Efficiency
Wine’s exemption from CGT (Capital Gains Tax) paired with the elimination of excise duty and VAT on wines stored ‘in-bond’ gives investors a unique and advantageous opportunity. We recommend speaking to a tax adviser to see how it could benefit your investment portfolio.
Liquidity
Fine wines can be sold through a variety of different channels: peer-to-peer selling, on and offline auctions, international trade, and retail sale through Cult & Boutique’s ‘Uncorked’ online shop front. The range of liquidation methods available makes a client’s exit from the market simple and straightforward.
