A Happy New Year to our readers!
Following on from previous articles on wine investment, I thought the new year should contain some further validation of wine’s inherent value. Over the past 12 months, fine wine has fared better in investment terms than Gold, crude oil or traditional shares.
The Liv-Ex Fine Wine Exchange provides a trading service for Fine wines to satisfy the speculative urges of investors. Their benchmark for gauging the health of the market tracks first growth Bordeaux Chateaux across ten vintages to collate their Liv-Ex Fine Wine 50. This index has seen a genuinely staggering 57% increase throughout 2010.
Meanwhile, amidst soaring commodity prices, this rise has outstripped traditional investment options. The value of gold has risen 35%, crude oil has risen by 20% and the FTSE 100 by 11%. Developing markets in Asia are seen to be the strong driver for this growth, with the success of Lafite Rothscild a useful example of this phenomenon.
It’s unlikely I’ll be dipping my toes in the water, short of a lottery windfall, but it makes interesting reading for oenophiles around the world!
Happy New Year!
It is pretty amazing about the increase in value of these Bordeaux First Growths. Do you think that it is limited only to these top eschelon wines? More importantly as far as I am concerned, do you think that anyone investing in these expensive and valuable bottles ever drink them?
I think it depends upon the wine and it’s cost. Those who invest in Lafite-Rothschild or Latour or any other fine premier cru Bordeaux are probably just investors, for a start I think most people who want to spend 4 figures on wine expect to be able to drink it there and then.
The value in investing in first growths is linked to the fact that these wines take so long to mature and the end drinker often only wants to buy a wine when it is ready.
The best returns historically have indeed been with the top eschelon wines as you put it, but that does not mean that an investment would break the bank. Chateau Lynch Bages for example has very good historical growth, but an investment in a case of 2009 is currently around £1000.
Undoubtedly the top Chateaux can give excellent return on investment. The incresing Chinese demand has had an upward impact on pricing for the limited resource that is the wine from atop chateaux. Like Dave pointed out lesser wines can also give good returns.
What is unfortunate for me is that the skills of the vineyrd worker, cellar worker and all involved in the production of what are undoubtedly sublime wines will count for nothing. It is the brand that has the value in the eyes of investors, the contents could as well be Thames tap water as they will be never be drunk or approeciated.