Fine Wine Investment Performance in the 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.
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 15% per annum over the past 25 years, with quiet periods (e.g. 1998 to 2002) being more than balanced out by the busy ones (e.g. 2005 to 2007).
It is undeniable that the best wines have proved to be sound long term investments over the past twenty years, though it is important to remember that one has to take the long term view. While the fine wine market had an exceptionally buoyant couple of years from 2005 to 2007, and Berrys’ customers who bought top end Clarets at the right time will have done very well indeed, wine prices are not immune to economic malaise and the global financial crises did bite in October 2008 and at roughly the same time in 2011. At both times prices – notably those of the top 2005s in 2008 and top 2008s in 2011 – dropped off from their peaks.
Global economic meltdown aside, the correlation between the financial and fine wine markets is traditionally relatively small. Prices for some of the top wines, notably the first growths and Lafite in particular, have shown some volatility, but the market as a whole has been resilient when compared with more traditional investment markets.
The reason for this is relatively easy to explain: fine wine is a tangible asset, it is a luxury product that we 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.