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Putting Your Money in Wine – A Safe Bet or a Gold Mine?

Savvy investors are always one step ahead of the curve, especially in today’s digital economy. They anticipate trends and invest accordingly, which is why they pay attention to the best investments to keep on their portfolio. This can range from holding precious metals to quality wine.

However, is wine investment still viable today? Let’s look at the perks of investing in wine if it’s still a gold standard in 2022:

An Overview of Wine Investment Performance in Q4 of 2021

The fine wine markets had a fantastic fourth quarter. As supply-demand imbalances continue to fuel skyrocketing price gains for some of the world’s most iconic wines, top-name producers lead the surge.

According to the Liv-ex Champagne 50 index, champagne continued to surprise with another massive gain of 22.98 per cent. Prices continued to climb due to a lack of vintage Champagnes on the market and rising demand from an investment-minded audience, 

Several older vintages of Le Mesnil-sur-Oger Grand Cru, Salon, Vintage Rose, and Dom Perignon Vintage were very well received.

Supply constraints aided the Burgundy 150’s continuous climb, which posted an 11.19 per cent quarterly gain ahead of the 2020 vintage en primeur (EP) releases. 

Top-tier winemakers had the greatest improvements, with some Domaine Leroy wines enjoying market price increases. Burgundy also had its greatest yearly trade share of 21.4 per cent in 2021.

Top US wines also finished strong in last year’s final quarter, raising their annual mark to 22.40 per cent.

Is Investing in Fine Wine Still Worth It?

Fine wine investing is a hot commodity in the investment sector. Demand for the world’s finest and rarest has skyrocketed in recent years, and the market is expected to climb. Wines in high demand include Lafite, Latour, Krug, Masseto, and Petrus.

Wine outperformed the stock market last year and is now a better investment than gold. That is a remarkable milestone!

Since 2004, gold has outperformed inflation and served as a haven for investors. However, the gold market has always been volatile. As inflation rises, so does interest in gold. Similarly, when other markets give higher yields, the gold price falls.

Wine, on the contrary, has shown a more consistent price rise trajectory. While we still remember the agony of the Lafite market’s collapse in 2008 and 2009 due to the financial crisis, the market has bounced back.

In fact, a bottle of Lafite’s 100-point 1996 sold for about £1,000 in 2008. By 2015, you could purchase the same wine for £600 per bottle. Currently, the typical cost of the same wine is £1,150.

What Does the Future of Wine Investing Look Like?

According to experts, fine wine will continue to do well in 2022. Prices will rise further as the economy grows and the supply-demand imbalance intensifies.

Even if the prices go down, it should still be a good source of stability and revenues when inflation and macroeconomic policies are changing.

The key is to be selective in your wine investments, particularly in Champagne and Burgundy, which are expected to rise more in value in 2022. These wines remain solid long-term investments, but select wines from Bordeaux and Italy, as well as some emerging regions and producers, provide attractive relative value.

Fine wine shows positive monthly returns. It makes it more stable than the stock and government bond markets, which have been shaky at times because of inflation, uncertainty about monetary policy, and the ongoing pandemic.

Since fine wine still possesses significant untapped performance potential, the wine investment market has been and will continue to grow.

Let’s take a look at some investment trends to watch out for, so you can decide if wine investment is a go for you:

1. Champagne Is the Top Wine Investment

April frosts, May floods, and August wildfires affected the 2021 Champagne crop. This ruined a lot of grapes before harvest. So the limited availability will undoubtedly raise the price of this sparkling wine.

So the limited availability will undoubtedly raise the price of this sparkling wine.

As a result, the world’s top Champagnes are outstanding investments, especially between 2002 and 2008. 

2. The Price of Quality Wine Remains Unaffected by Inflation

Currently, inflation has been affecting economies worldwide to varying degrees. Thankfully, fine wine pricing retains its value even during this economic instability. Due to limited availability and rising demand, investment-grade wine’s value is increasing amid inflation.

In fact, between 2003 and 2020, the Liv-ex 1000 fine wine index rose from 100 to over 350, while the CPI rose from 100 to 150.

3. Wine Investing Platforms Simplify the Process for Newcomers

Wine investing isn’t just for wealthy people with access to auctions and portfolio managers. A growing number of wine investing platforms makes investing easier, even for small-time investors wanting to get in on this lucrative market. Can invest an average of £800 to £1000. 

4. Young Bordeaux Is Superior To Vintage Wine

As wine ages, its investment potential increases. Older vintages are, therefore, more valuable. Over time, fewer premium wine are available which makes it disadvantegous for newcomers to the trade. However, this pattern is changing noticeably for Bordeaux wines.

Younger Bordeaux vintages are becoming a better investment than older ones. There is an increasing demand for younger vintages in the Asian fine wine market. In fact, Bordeaux Châteaux released fewer younger vintages at once to maintain price momentum.

It’s a good thing, too, that younger vintages are easier to find and trade, just like what’s currently happening with Château Lafite Rothschild and Château Mouton Rothschild.

5. Second Labels Outperform The First in Terms of Sales

Bordeaux’s second wines (second vin or second label) will likely outperform their first labels this year. Second-label wines yield higher returns, like the Château Mouton Rothschild’s 5-year return (19 per cent) is lower than Petit Mouton’s (79 per cent).

Second wines are still relatively cheaper for wine investors. For instance, the first label, 2015 Château Lafite Rothschild, costs around £800, while its second label, 2015 Carruades de Lafite, is at £350. This is why wines with second labels offer a better value for money.

6. Increasing Recognition for Italy’s Lesser-Known Wine Regions

Italian wines’ 30 per cent LiveTrade trading volume growth makes them an interesting 2022 investment.

Abruzzo, Puglia, Campania, and Umbria were unknown 10 years ago. They make up an average of 5 per cent of Italy’s wine market. These lesser-known wine regions have significant financial possibilities despite their tiny worldwide impact. As a wine investor, anticipate these underdog regions to lead.

Wine Investment is the New Gold Standard

Despite inflation and recession, the wine market has remained robust. So far, the outlook is positive, but buyers looking for returns will need to diversify, stick to top producers, and be willing to play the long game. As with any investment, the value of your assets can go up and down, so be mindful of trends, so you make the right decisions in fine wine investments.

We are the perfect place to get started in fine wine investments. Because of our focus on high-quality wines, Cru Wine is an excellent resource for anybody seriously interested in the wine industry. Since we love wine and know a lot about it, we can recommend excellent investments in wine that will meet your specific needs.

Cru Wine Ltd.

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