Fine wine investment market has changed dramatically in the last twenty years and is booming, even more so since Hong Kong removed a duty they had on wine, and demand has risen dramatically.
Investors look to alternatives ways to invest their money in trying times and with Asia’s rapid wealth, which looks only to increase, more and more money will be invested in fine wine. Investing in wine is thriving amongst the Asian markets, especially with the increasing demand from China.
Wine is generally more stable than stock-market linked indices allowing investors to securely own a tangible asset. Wine has always held its value and the reason why Bordeaux is a worthy asset is simply down to the laws of supply and demand. Investors want high returns from wine and fine wines can be a good, low-risk long term investment and less likely to follow the same paths as equity markets. There is no doubt that over the last 25 years wine has been a sound investment. Even in a bad harvest with a low quota, wines still get consumed and demand still remains stable and even grows with prices increasing up to 20% a year. Some wine investments have already outperformed gold and crude oil investments.
Fine wine is the only asset that operates with a perfect supply curve. It is the uniqueness in demand in wines that create a consistent growth curve which is why wine has little in common to other asset classes in terms of volatility. Wine investment is tax free as it does not attract Capital Gains Tax. VAT and Duty may also be avoided if your wine investment is kept in bonds.
Fine wine as an investment should be bought from a reputable source and storing the wine correctly is vital to ensuring its investment potential. There is a huge choice of fine wine investment companies to help people get into the market, and investors need not know anything about vintage wine.
Case prices vary but some top performers can command £5000 for each case and it is not uncommon for prices to be double that. Investors should benefit from a full market cycle between three and five years with maximum returns on an eight to ten year period. It has always been said that wine matures with age and so does the investment. As wines mature and become consumed, they becomes rarer which adds value to investments.
Wine investment is not a new trend, and is no longer the domain of the knowledgeable few as more and more investors are benefiting greatly and joining this exciting and vibrant market.