Thursday, 30 December 2021 16:30

Fine Wine a Hot Investment

Written by  Bob Campbell
Bob Campbell Bob Campbell

OPINION: Drinks Business magazine has reported that, after taking a bit of a hit when the pandemic first struck, fine wine rebounded in the second half of 2020 and continues to grow, hitting an all-time high in 2021.

While luxury watches and cars rose by 5 percent and 4 percent respectively, the average price of "investment grade" wines rose by 13 percent in the 12 months to June 2021, according to Andrew Shirley, editor of Luxury Investment Index at Knight Frank.

Assuming those figures are based on the sale of fine wines, the question remains: are the buyers stockpiling for investment or simply drinking their newly acquired wines? We know that Covud has prompted us all to increase our alcohol consumption, but I can't imagine that the arrival of the deadly virus would encourage many people to buy wines for investment. In fact, quite the reverse. Faced with our pending demise, surely we are more likely to drink up than stock up.

Rupert Millar, managing editor for Live-ex, the global marketplace for fine wine, told Drinks Business: "Fine wine provides very low volatility which makes it popular as a long-term investment. What has really boosted fine wine over the past 18 months or so, however, has been enthusiasts drinking up and restocking. With restaurants and bars closed, holidays out of the question and generous stimulus packages pumping cash into the economy, people have found themselves with extra money to burn and have been treating themselves to luxuries such as fine wine, which can be readily enjoyed at home."

Another explanation for the recent boost in fine wine sales might be a trio of spectacular Bordeaux vintages in 2018, 2019 and 2020, followed by huge shortages this year. It is pure spectaculation on my part, but surely that would encourage investors to stock up now and take a quick profit when the market finishes its current price surge?

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