Overview

Investing in wine is a popular ‘Alternative Investment’ for a growing number of UK citizens.  However it is a complex product in a complex market and reports of enormous returns in short periods of time are often greatly exaggerated.  However, vintages like 1982, 1990 and 2000 have rewarded the canny investor with great returns and vintages including 1995, 1996 and 2003 are slowly but surely working their way up in value.  This year saw the dramatic release of Bordeaux’s most in demand vintage ever – 2005 – with releases prices 200% up on the previous vintage.  Will this be the new 1982 or a repeat of 1997?

The past 10 years has seen some very strong returns on the best Fine Wines*. In fact Fine wine was second only to oil as an investment in 2008 as the value of top Bordeaux increased by more than 90%.

The Liv-ex 100 index gained 39% between January and December, beating the FTSE 100, which rose 3.4%. The value of gold has gone up 23% since the start of the year. The S&P 500 gained 4.4% and the Nikkei fell by 9%. The only investment better than wine was oil: barrels increased this year by 47%.

Some wines nearly doubled their value. Cases of Lafite-Rothschild 2000 went from an average of £4,775 last year to £9,100 last month, a 91% increase. The 2003 and 1982 vintages rose by more than 76%. Lafite 1986, 1996 and 1998 were also in the list of the top 10 wines by performance. Other top performers included Montrose 2003, which went up 64%, selling for £1,540 a case this month. Margaux 2003 also did particularly well, going from £3,325 per case in December last year to £5,225 this year.

REGISTER FOR MORE DETAILS HERE 

This growth is attributed to new markets and resilience in the established markets. Today, international wealth managers suggest that there are upwards of 10 million people with $1,000,000 in liquid funds & 100,000 with some $30mm plus in liquid funds. If, indeed, this is the case one can certainly imagine why a finite supply of first growth claret as well as the myriad of prestigious single estate wines from around the world might well be getting a great deal more expensive and a whole lot scarcer. Largely this recent example of rising demand is due to Europe, China and Russia fuelling the market, this combined with the well documented reductions in production from all major estates, in essence to maintain quality in difficult years and improve quality in the prestige vintages. In short, the finest wines are undoubtedly luxury goods with a proven track record in the investment market that stretches over two decades.

ALSO VISIT OUR SECTION ON INVESTMENT RESOURCES and INVESTMENT CLUBS

* VISIT LIV-EX the fine wine trading platform for further data.

If you would like to speak to experts in this field please contact us on 01603 411466 or e-mail us at sip@harperwells.com for a entirely free of charge consultation.

Please feel free to review this article on collecting wine (originally published in the Easter Daily Press, Norfolk Man in July 2005).