On the back of this year’s successes with en primeur Bordeaux, investment in wine looks to have been a canny haven for cash during troubled times. Two Swiss economists have conducted a long term study which has tracked an index of leading wines against the stock market over recent years. Philippe Masset and Professor Jean-Philippe Weisskopf of Freiburg University limited their study between 1996 and 2009, with an update to the initial report made just last month in March 2010.
Over the course, their study takes in both boom and bust. Whilst charting both the dotcom crash of the early 2000s and the recent banking crisis, their study also includes the booms preceding both bubbles. The results are fairly clear, with a prudent portfolio of wines (based largely around top Bordeaux Chateaux) investors performed far better than their peers in the conventional stock market.
To quote their report:
“Our results show that since 1996, the General Wine Index and particularly first growths wines from top vintages have performed better than equities while showing a lower volatility.”
Some investment is seen to be driven by Chinese capital, with the acquisition of less conventional assets such as wine an important status symbol as well as a prudent investment.
Their report also highlights the importance of diversifying assets during times of economic difficulty, lessening exposure to market volatility. In this vein, the economists’ General Wine Index performed well. During a relative drop in some Share indexes of 47p since the market crash of mid to late 2008, their wine index dropped only 17p. The researchers specifically stated that during times of painful economic downturn “the defensive characteristics of wine are most pronounced.”
It seems that Bordeaux in particular has provided a welcome shelter from the economic storms affecting the global markets. Yet, this isn’t necessarily all positive for your every day wine lover. With investors clamouring to acquire new holdings, prices are inexorably driven higher, as partially shown in this year’s 18% increase in en primeur Bordeaux. Yet, a wealthy industry is, in part, a healthy industry and the market’s thirst for quality wine will hopefully drive investment in both production and the retail sector on this side of the Channel. I may be no closer to picking up vast stocks of first growth bordelais produce, but I’m happy in the knowledge that at least there’ll be a space for it in future markets.
