Wine Investment
"The danger with investing in wine is that you drinks the profits. However, if you can hold your nerve, and choose the right vintage, the returns can be better than almost any other asset."
What is Wine Investment?
Fine wine investment is one of the longest standing alternative asset classes, offering effective diversification for your investment portfolio.
It has shown strong performance against traditional asset classes with much less volatility, as seen during the global financial crisis or the COVID-driven downturn just two years ago. Since the inception of the Liv-Ex 100 benchmark in 2001, the market has returned 7.3% on average per annum.
To bring it back to basics, a finite amount of wine is produced in any vintage. Over time, these wines are purchased, collected and consumed so the supply decreases. As investors become more sophisticated and diversify further into alternative investments, the dynamics for investment are attractive given this structural rise in demand.
Traditionally linked to historic winemaking regions such as Bordeaux, we’ve seen this grow over the past 10 years, alongside technological advances, into a truly global market. However, the fundamentals have remained the same, an ever-growing demand for a finite supply of fine wine. This is what drives pricing on the secondary market and creates a compelling investment opportunity with key benefits:
Fine wine is outperforming major asset classes, including other luxury assets
Low risk and stable returns
Low historical volatility helps de risk the overall investment portfolio and, with a stable return profile, improve risk adjusted returns.
Asset backed investment
Fine wine has an inherent, physical value, which can act as a safe haven for investors during periods of economic uncertainty, recessionary or inflationary. High quality wine becomes more valuable as it matures.
Low correlation to traditional asset classes
Wine can provide downside protection in market downturns and diversification in sources of return. Fine wine has shown a 0.1 – 0.2 correlation to major indices over the last 20 years.
Tax Efficiency
Wine is considered a wasting asset, generally qualifying for exemption from Capital Gains Tax in the UK.1
1Always consult your own professional tax expert for advice
Let’s take a look at a current case of fine wine – 1989 Château Haut-Brion, from Pessac-Léognan in Bordeaux. When this was first released from the Château the following summer, a case of 12 bottles was worth £360. Some 30 years later, that same case is worth over £25,000 – a return just shy of 7000%. Had you put your money into major asset classes like Gold or FTSE 100, you’d only be looking at returns between 200-300%.
Quite a difference.
Why invest with Cru Wine?
Our philosophy at Cru Wine is about providing a tailored approach to wine investing that is suited to your needs and objectives. Our priority is to deliver an exceptional investment experience for our clients and to build them a profitable wine portfolio that is forward-looking, diversified and designed to deliver long term returns.
- Delivering strong returns
We offer a fully-managed portfolio service, backed by a state-of-the-art digital platform and a team of investment managers with more than 30 years of experience combined. The current investment team has delivered an average of 11.8% annualized gross returns.
- Key relationships
Our long-standing relationships with producers, merchants and suppliers enable us to obtain the best wines and our expert knowledge of the market itself means we have the insight to identify the right wines for you and your investment portfolio.
- Digital platform
Our online platform allows you to access your portfolio 24/7 and review your current collection of wines, by region and vintage, with an analysis of its value at the touch of a button.
- Secure storage under optimum conditions
Your wine is stored in bond under optimum conditions to protect its provenance and value at Eton Park owned by London City Bond Eton where it is fully insured and exempt from duty and VAT.
For more information or to discuss a potential investment please download our Fine Wine Investment Brochure or contact our team of fine wine experts on +44 (0)203 925 4526.
Get Cru Wine's Guide to Investing in Fine Wine
Fill in the form below and you’ll receive the Cru Wine Fine Wine Investment Brochure. The guide will provide you with a clear overview of the benefits and process of investing in fine wine and show you everything you need to know to start your first investment.
Let us introduce our top experts in fine wine investment:
ROSTISLAV PETROV
Associate Director with 14 years of experience in fine wine and wine investment
Contact: +44 (0) 2039 2545 28
[email protected]
What was the best deal you have done so far?
Seeing great potential in Italian wines, classic regions such as Tuscany and Piedmont. Having been a big fan for a number of years each, every new vintage I tasted I was impressed with more than previous. Classic wines of Italy such as Barolo and Brunello have a great history of making great wine. In the last two decades, these regions benefited from a lot of investment as well as well as global warming which means the quality of the wines have never been better in this part of the world. Seeing big improvements in quality, consistent high scores from wine critics and great history of these wines meant that demand will only rise for these wines. I bought my first bottle of 2010 Monfortino at £300 and it’s now worth circa £1000.
What do you think to be the main characteristics of a well-established wine portfolio?
Only carefully selected producers should be part of the wine portfolio. There are a number of great and expensive wines out there but not all of them investment-grade wines, so it’s important to stick to right “brands”. These producers typically have earned a great reputation over the years and show a proven track record of growth. A balanced portfolio is another key to successful portfolio; like with any assets, it is important to diversify.
What is your number one advice to someone new in wine investment?
Partner with a professional investment wine company that will work on a personalised needs of yours.
MATT SMALL
Senior Portfolio Manager 10 years of investment experience at Danske Bank and Cult & Boutique
Contact: +44 (0) 2039 2545 15
[email protected]
Given your background, how are you putting your equity investment experience to work?
The equity and wine markets are remarkably similar. Price is determined where demand meets supply, we are trying to identify securities/products where the market price is below fair value and limit our risk by having exposure to multiple sectors/regions. As with the equity market, the macro environment has an impact on the wine world and a knowledge of these dynamics are important when making wine investment decisions.
What do you think are the main characteristics of a well-established wine portfolio?
Most importantly the wine portfolio is tailored to the client’s risk appetite and time horizon. From a top down perspective the portfolio will be diversified across regions which not only lowers the portfolio risk but also increases the risk adjusted return. From a bottom-up perspective we hand pick producers with strong brand names and excellent past performance. That’s not to say we will not select vineyards who we deem to have massive potential, however striking the right balance is key.
Advice to someone new to wine investment?
Work with a wine investment manager who you trust. The best investments in life tend to be the ones that make sense and work over the long-term.
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If you would like to know more about our fine wine investment services, we advise you to contact us above.
In case you would like to read more, check out our FAQs or read our previous articles on wine investment:
