Fine Wine Investment -
Cult Wines Ltd
Although fine wine investment as a
viable asset class seems a relatively
new phenomenon, savvy collectors and
fine wine enthusiasts have been doing it
for many years. By buying more wine than
they intended to drink the future sale
of their excess cases would fund new
purchases. At Cult Wines our aim is to
make the Fine Wine Market more
accessible to the everyday investor, who
may not have the knowledge or
understanding to do it themselves.
Over the last 25 years there is no doubt
that wine has been a sound investment,
with prices for the best wines rising
around 15-20% per annum. Of course there
have been quieter periods balanced out
by
periods of sharp growth, but in general
the market has proved to be a low risk
investment. Traditionally the US and
Europe have been the largest buyers of
Bordeaux Grand Cru classés, but in
recent times the Asian market has taken
a larger and keener interest in the
market. As a result investing in Fine
Wine gives the UK investor the
opportunity to tap into the world’s
biggest growth economy – China. With
Chinese
buyers showing insatiable demand for the
top wines and with only a finite supply,
the demand supply imbalance that this
market relies upon has been exacerbated
and investors have seen fantastic
returns on their
wine investment.
With the market for fine wine ever
expanding, the supply remains limited.
Whilst the supply of any particular
vintage of wines such as Lafite
Rothschild is constantly diminishing,
the younger vintages are ever improving
– and this year the 2009 vintage has
been released to profound widespread
acclaim – with many critics labelling
this vintage as the best since 1961!
For those investors who are tired of low
interest rates, poor stock market
performance and the recent hike in
Capital Gains Tax to 28% - Fine Wine is
the solution. The correlation between
the fine wine and financial markets is
remarkably small. Whilst prices have
shown some volatility over the last 25
years, in general these have been the
exceptions not the rule. The market in
general has been resilient when compared
to the traditional investment markets.
The reason wine is such an attractive
investment is that it is a tangible
asset, a highly desirable luxury product
that we aspire to have. And when this
asset becomes more rare and expensive,
it’s desirability increases.
It is a Veblen good (a commodity for
which people's preference for buying
increases as a direct function of their
price, as greater price confers greater
status, instead of decreasing according
to the law of demand).
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Current News
China Set For Luxury Boom
(WARC - 02/02/2011)
Time For Fine Wine Investing?
(Interactive Investor -
01/02/2011)
Is Investing In Wine A Good Alternative Asset?
(Money High Street - 31/01/2011)
Andrew Lloyd Webber's Wine Auction Fetches £3.5m
(Telegraph - 22/01/2011)
Investors Toasting A Vintage Year
(The Drinks Business - 14/01/2011)
Wine Booming After 40% Rise In 2010
(This is Money - 08/01/2011)
Where To Invest In Wine In 2011
(Wall Street Journal (blog) -
07/01/2011)
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