To the uninitiated, wine might seem a relatively high-risk investment, but the data tells a different story. Long-term returns from wine investment can be very good, in fact. Last year, wine was the best-performing of all passion asset classes. Below, we find out why, and offer some tips for investing in wine.
Compelling data. A quick look at historical market values for fine wine says a lot. Over the ten years 2008 to 2018, benchmark investment indices (such as the Wine Owners 150) show portfolios of top wines making consistent gains of 12%. This performance compares favourably against the FTSE, S&P 500 and gold, in spite of that 10-year period being disrupted by the worst-ever performance period for red Bordeaux. Scarcity-led wine markets have performed even better. The KFFWI index, which includes some of the world’s rarest and most sought-after wines, demonstrates this perfectly. This index boasts impressive 10-year growth of 192%.
A sign of the times. Since 2008, high net worth individuals have been investing ever-increasing proportions of their discretionary wealth in tangible assets. This move towards diversification was stimulated by the banking crisis, and rapidly gained momentum. It shows no sign of slowing down. This quote from the FT (October 2014) neatly captures this. “On the final day of the FTSE 100 index of leading UK shares set a record, closing at 6,950.6. Almost fifteen years later, it has still not retaken that level. It’s against this background that interest in passion investments — tangible assets such as art, cars, stamps, wine and coins — has increased so strongly.”