Our CEO Gregory Swartberg sat down with Abode2 Magazine earlier in the month to discuss the benefits of wine as an alternative asset and highlighted his top five tips for getting started in wine investment.
Fine wine investment a safe haven during the economic downturn – we’ll raise a glass to that!
With a very stable track record and growing geographic diversity, the fine wine market has plenty of potential when it comes to investing in alternative assets and offering long-term stability within a portfolio.
Traditionally, collectors have hoarded bottles from prime vintages, but how and where to find these wines for someone starting out in the world of fine wine investing was trickier. This is something that Gregory Swartberg spotted when he found it hard to find a company who offered access to the world’s greatest wine with a 21st century touch. As such, Cru Wine was born, with the aim to offer clients a seamless opportunity to buy and collect wine with a modern and open-minded approach.
Investing in wine is now not only restricted to those with insider knowledge, but now entry-level investors are able to uncork new opportunities and with the current economic downturn, this comes at the perfect time.
“Liv-ex Fine Wine 1000, the broadest measure of the global fine wine market, is up just over 11% since the start of 2022, out-performing the FTSE 100 which has seen a rise of just 1.4%,” says Cru Wine’s CEO Gregory Swartberg. “Our investment team have also tapped into the rising demand of Burgundy and especially Champagne. Based on our recommendations of purchasing Cristal this year, we have seen a +30% increase in value already for those who added this champagne to their portfolio.”
Fine wine shared top-billing among ‘alternative investments’ last year in Knight Frank’s yearly Wealth Report, along with collectible watches, each providing a return of 16%. When looking at trends and predictions for 2022, Knight Frank noted that: “There has been a new wave of investment money coming into the wine market, some of it led by macro factors, such as inflation worries – with wine being seen as a hedge – but also more localised factors such as supply shortages due to weather conditions, particularly frost, and supply chain issues.”
Given the current rocky patch we’re experiencing with traditional asset classes and the classic “bear market” territory of the stock market, it’s understandable for investors to look at tangible assets which offer less risk of being affected by market downturns.
Jen Ford, Investment Strategist at Cru Wine is in agreement. “Wine is a low-risk investment which has produced very stable returns. In today’s market environment where there is a heightened sense of caution and uncertainty, it makes for a great investment, diversifying portfolios and hedging against inflation.”
Thinking about investing fine wine? Here’s our top five tips to get you started.
1. Broaden your horizons
Don’t just buy your favourite wine, but build a portfolio across the top regions, e.g. Bordeaux, Champagne and Burgundy to improve your risk adjusted returns. A portfolio manager will be able to guide you on the regional trends and which producers and wine are well regarded.
2. Things get better with age
The age-worthiness of your wine, its ability to mature and reach its optimum drinking window within 10-20 years is highly important. Bordeaux is a classic choice for wines which age well as some of the best can keep for decades.
3. Provenance, provenance
When wine connoisseurs talk about provenance, they are talking about the origin and the journey of the wine. Once purchased, where has it been stored? The environment around a bottle can greatly affect the quality of the wine inside, so ensure your wines are stored in a professional warehouse or cellar with the optimum conditions which are regulated for temperature, humidity and other factors. Maybe it’s time to reconsider keeping wine in the kitchen cupboard.
4. Top quality is key
Do your research on the producer and the wine. Wines that are well-regarded by international wine critics which have received high scores and positive reviews will influence the market perception of a wine.
5. Patience is a virtue
Fine wine is a medium to long term investment, with most investors waiting a minimum of three to five years.