"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.
JENNIFER FORD
Investment Strategist with 12 years of investment experience at Goldman Sachs Asset Management and J.P. Morgan Asset Management
Contact: +44 (0) 2039 2545 15
[email protected]
Given your background, how are you putting your equity investment experience to work?
There are lots of parallels between investing in equities and in wine, how to think about the micro and macro dynamics that may impact the investment portfolio, where you’re exposed and where you’re taking risks. Education and demystifying the investment process are crucial to bringing the clients on the journey with you. Investing in wine isn’t just about investing in what you know or what you like, but rather identifying opportunities that will generate investment returns.
How did you get into wine?
Besides being an avid consumer, I have tracked wineries all over the world, from Napa and North Fork in the US, to Stellenbosch and Franschhoek in South Africa, and of course Tuscany and Bordeaux in Europe. So keen in fact I ran the Marathon du Médoc and blissfully fueled up at every one of the 23 stations along the way. The passion behind winemaking is contagious.
What do you think are the main characteristics of a well-established wine portfolio?
We take individual investment objectives into consideration and build a portfolio that is suited to their risk appetite and investment horizon. Diversification is key, to achieving the right balance of blue-chip stocks with rising stars. Maintaining a long-term outlook is also crucial, and not be deterred by macro or economic uncertainties. Take 2020 as an example, if one exited their investments or held off investing, because of Covid or US tariffs among other things, in all likelihood, they would have missed out on returns in an environment of weak liquidity and would not have capitalized on the upside when sentiment came back.
Advice to someone new to wine investment?
Partner with an investment manager you trust and be patient – wine investing is for the long term and it will pay dividends!
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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:
