Fine Wine Investment Performance in recent decades
Investing in wine is by no means a new phenomenon. Many years before fine wine became truly global in the mid-1990s, wily buyers would often buy more than they intended to drink, selling the excess at a later date to fund new purchases.
In today’s market, as the global demand and consumption of the World’s finest wines increases, opportunity exists to build a collection of wines to provide a financial return over the longer term.
Whilst it is difficult to find totally accurate records and therefore data, it is fair to say that the prices for the very best wines have risen by an average of over 10% per annum over the past 25 years, with quiet periods (for example 1998 -2002 and more recently, falls in the market from late 2011 until late 2012) being more than balanced out by the busy ones (e.g. 2005 to 2007 and late 2008 until mid 2011).
The best wines of Bordeaux, Burgundy and a small number of iconic wines from other regions have proved to be sound investments over the past twenty years, though it is important to remember that one must take a long term view. The fine wine market enjoyed an exceptionally buoyant period from 2005 to 2007, and Berry Bros. & Rudd customers who bought the best wines from Bordeaux at the right time will have done very well indeed. Wine prices are not immune to economic malaise however, and the global financial crises did bite in October 2008 and again in 2011. At both times, prices – notably those of the top 2005s in 2008 and the top 2008s in 2011 – dropped off from their peaks.
Since the last quarter of 2012 we have seen a slow stabilisation of the market. Throughout 2013 prices remained relatively flat, certainly with regard to the finest wines of Bordeaux. Popularity for the finest Bordeaux wines remains high but as established and emerging markets mature and develop, interest in other regions has increased. Whilst Bordeaux should remain the key focus, wines from other countries and regions may have a larger role within the broadening market. The finest wines of Burgundy, Rhone, Champagne, Italy and the iconic wines of the New World are now a consideration for the collector and investor alike.
From the latter part of last year and into 2014 we have seen a strengthening of market confidence. Activity has increased in recent months, with many buoyed by the perception of value within the market. With a long term view, potential opportunities can be found throughout the market.
The fundaments behind wine investment are relatively simple; fine wine is a tangible asset, it is a luxury product that many aspire to own, consume and know more about. For many people it's much more useful than gold, and easier to enjoy than art. Interest in wine is growing at all levels. Most important is supply, which is limited; the supply of any particular vintage of, say Ch. Margaux, is constantly diminishing and in the case of younger vintages is constantly improving and so desirability increases.