Tag: Fine Wine

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Marchesi Antinori acquires iconic Napa Valley’s Stag’s Leap

Stag's Leap
  • Marchesi Antinori has taken full ownership of Napa Valley’s iconic winery Stag’s Leap.
  • Stag’s Leap laid the foundation for the emergence of cult wines after winning the Judgement of Paris in 1976.
  • Antinori’s innovations in the ‘Super Tuscan’ revolution of the 1970s and recent acquisition of Stag’s Leap position both for continued success in the fine wine investment market.

Marchesi Antinori, one of the oldest and largest wine companies in the world, has gained full ownership of the iconic Napa Valley estate Stag’s Leap. Wine Spectator has reported that the current sale includes ‘the winery, the brand and inventory, and close to 300 acres of Napa vines, including the Fay and S.L.V. vineyards’.

Antinori has held a minority stake in Stag’s Leap since 2007, when Ste. Michelle Wine Estates purchased it from founder Warren Winiarksi.

Some of the most prominent wineries owned by Antinori include the Super Tuscan Tignanello and Guado al Tasso, as well as Antica Napa Valley.

Stag’s Leap performance

Stag’s Leap was among the pioneering Californian wineries that laid the foundation for the emergence of cult brands.

It was its S.L.V. Cabernet Sauvignon 1973 – the winery’s second vintage, and first produced at the estate and in commercial quantities – that won the Judgement of Paris in 1976. Stag’s Leap put Californian wine on the map by winning over its French competitors, which included the First Growths Château Mouton Rothschild 1970 and Château Haut-Brion 1970.

In the fine wine market, demand for Stag’s Leap has grown considerably over the last decade, with prices for its Cask 23 increasing 59% and for S.L.V. – up 61% on average.

The brand has been helped by the relative value for money it offers compared to other Californian ‘cult wines’. The average price per point for S.L.V., for instance, is just £19, compared to £472 for Screaming Eagle Cabernet Sauvignon.

The 2014 vintage has enjoyed particularly strong price performance. Stag’s Leap S.L.V. is up 80.5% since release. Cask 23 has risen 77.4% over the past two years, placing it among some of California’s biggest risers.

Antinori’s overarching impact

If Stag’s Leap has greatly contributed to the emergence of California’s cult wines, Antinori’s innovations played a large part in the ‘Super Tuscan’ revolution of the 1970s. Both have managed to re-define ‘fine wine’ outside the confines of Bordeaux, in USA and Italy respectively.

With history that can be traced back to 1385, Antinori has been one of the most successful wine companies. Its Tignanello ranked as the 49th most powerful wine brand in the world, due to high trade volume and value. Liv-ex noted that it was helped by the remarkable value for money it offers being ‘the cheapest Italian wine in the top 100, with an average case price of £1,076’.

While it is yet to be seen how the full acquisition of Stag’s Leap will play out, it seems like both Antinori and Stag’s Leap are poised for continued success and reaching new heights in the fine wine market.

 

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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Jancis Robinson MW releases Bordeaux 2022 scores

Bordeaux En Primeur 2022
  • Jancis Robinson MW and James Lawther MW reviewed the 2022 Bordeaux vintage.
  • Both critics found the reds to be extremely impressive, with surprising freshness.
  • Mouton Rothschild, Lafite Rothschild, Cheval Blanc and Pétrus received the highest scores.

Jancis Robinson MW and James Lawther MW reviewed the 2022 Bordeaux vintage and released a series of articles, covering the whites, red-bank and left-bank reds.

Both critics found the wines to be ‘extremely impressive’, with ‘amazing freshness’ given the hot and dry growing season.

In terms of the En Primeur tastings, Jancis remarked on the ‘record number of visitors’, with ‘Americans and Asians back in force’. According to her, the numbers at the UGC tastings were ‘even higher than in spring 2019, when the 2018 vintage was presented almost a year before pandemic lockdowns’.

This gives greater confidence in the success of the En Primeur campaign, which commenced last week.

Left-bank reds

According to the report, the 2022 harvest was the earliest on record, with most of the Cabernet Sauvignon and Merlot on the left bank picked before the end of September. Despite the early harvest, the grapes’ maturity reached optimal levels. The sugar levels were similar to those found in recent years, while the phenolic ripeness was comparable to or even higher than previous vintages.

Alcohol levels on the left bank were on the high side, with 14% to 14.5% being a regular occurrence. However, the wines were often balanced with freshness.

Lawther wrote that he ‘found the characteristics of most of the appellations respected’, with Margaux being more varied.

Right-bank reds

According to Robinson, Merlot did exceptionally well in 2022, with high sugar levels, deep color and ‘no shortage of tannins for a long life lurking below the alluring surface’.

Lawther also proclaimed the grape variety to be ‘the star of the vintage’. He added that ‘Cabernet Franc was also successful on the right bank in 2022 adding colour, floral fragrance, freshness and length’. The critic claimed that ‘combined with Merlot it has produced some stunning wines, even away from the limestone plateau – witness Cheval Blanc, one of the wines of the vintage’.

White wines

The hot and dry growing season led to lower acidity levels in the whites, which translated to lack of freshness in some. Robinson further revealed that Sauvignon Blanc and Sémillon were picked earlier than ever before since Bordeaux University records began. Domaine de Chevalier Blanc stood out among the dry whites, while Château Suduiraut received the highest score of 18+ points among the Sauternes.

Top-scoring wines

The First Growth Château Mouton Rothschild topped the list of the highest-scoring wines from the 2022 vintage. Lawther described the palate as ‘truly amazing’ and questioned if this isn’t ‘a modern 1986’.

Château Lafite Rothschild, Château Cheval Blanc and Pétrus followed with 18.5-points.

So far, Lafite and Cheval Blanc have been two of the favourite wines of major critics, also boasting potential 100-points from Jeff Leve, Jean-Marc Quarin, and James Suckling.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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Five low-risk assets to hedge against inflation

Low-risk assets against inflation
Low-risk assets against inflation

As purchasing power slowly drains, investors with low-risk tolerances are feeling the sting. At the time of writing (May 2023), UK inflation sits at an uneasy 10.1%. With the average savings account interest at a flimsy 0.23%, cash is going backwards. Meanwhile, high inflation munches away the future value of bonds and debt like a deranged Pac-Man. This represents a real problem for wealth managers. In a constantly shifting sea of interest hikes, inflation, and market shocks, how can they maintain and strengthen lower-risk portfolios without going too overweight on equity? How can they keep the cautious risk profile intact without endangering returns?

This article examines five overlooked assets for cautious investors, which have a history of punching back against inflation.

Gold

In the fight against inflation, physical gold is surely Mohammad Ali. Gold tends to increase in value as inflation rises. According to World Gold Council data from the past 50 years, when inflation is above 3%, the gold prices jump by 14%.

This asset class has the added benefit of being universally accepted. Unlike interest-generating assets or fine wine, precious metals can be included in Shariah portfolios.

Not only is gold inflation-resistant, but it is also classed as a low-risk asset, which must be a welcome relief for low-risk investors. Arguably, gold is even less risky than cash, as its value is intrinsic.

However, that doesn’t mean that there aren’t bubbles and market corrections. Over the past years gold’s performance has shown more volatility alongside the public markets.

Fine wine

There are several reasons why fine wine kicks back against inflation. It’s a physical asset. The market is global and wealthy, often relatively unaffected by market shocks. Plus, buyers are usually passionate, so they are unlikely to panic-sell. Perhaps most importantly, bottles are unique, and they deplete over time.

The steady returns can help to smooth overall portfolio volatility and reassure clients. According to an index that tracks the performance of 1,000 fine wines from different regions (Liv-ex 1000), investors have benefited from average returns of 40.3% over the past five years. By contrast, the FTSE 100 delivered just 4.8%. You can see the performance of your preferred wines here.

However, there are downsides. Although wine shields against inflation, it can be difficult to sell quickly. For clients who need to urgently access funds, this asset might not be ideal. What’s more, clients only realise returns after they sell. Unlike with bonds and shares, investors cannot enjoy gains and stay invested.

One solution for wealth managers could be to offer a mix of assets with different liquidity. For example, by combining fine wine, gold and inflation-linked bonds in one portfolio.

Sustainable energy

As the prices of raw materials tend to be the first to rise, commodities are often used to predict and hedge against inflation.

Traditionally this asset class includes oil and non-renewable energy sources. But with the rising regulations and scientific warnings, this may not be a wise or future-proof investment anymore. The EU, for example, is in the process of amending the Energy Efficiency Directive so that 45% of all European energy will be renewable by 2030. The Green Deal also imposes carbon taxes on dirty providers. Already, around 29% of the world’s energy comes from clean sources, and that figure is likely to increase over the long term.

While green energy can be higher risk, it’s not as precarious as non-renewables. In the same way that whale oil plummeted in 1860, investors left holding fossil fuel stocks in twenty years’ time could find themselves with stranded assets.

Inflation-linked bonds

Unlike other debt instruments, inflation-linked bonds are pegged to the recorded inflation levels. So, even in high-inflationary environments, they should retain their value.

A huge advantage of inflation-linked bonds is that they can usually be traded quickly. This could be helpful for wealth managers looking to balance out the illiquidity of fine wine or property.

However, the success of these assets hinges on the accuracy of the indices. Sometimes the consumer goods selected and measured can lead to artificial results. For example, the UK index contains DVD players and MP3 players. These are probably cheaper than they would have been a decade ago, but it is not because inflation is lower.

Affordable property

Property is a classic inflation-resistant investment. But what kind should today’s cautious investors go for? Property addressing the UK’s housing crisis could be fruitful. Despite strong demand, there is currently a shortage of over 4 million homes.

Another interesting area for low-risk investors to consider could be affordable student accommodation. Applications to universities tend to rise during recessions. After 2008, they increased 31% in the UK. And since 2020, they have reached record-levels. KPMG anticipate a 16% increase in the number of undergraduates searching for rooms by 2030.

The risk is relatively low, as in many cases, the accommodation will be handled and managed by the university itself. Yields for investors average at around 5% for London-based lets and 4% for accommodation outside the capital.

But a word of caution, the buy-to-let market is becoming less lucrative every day, with high interest rates and increasing regulations. In the current climate, some are wondering if the money would be better placed elsewhere.

Chartering a new course

Record-levels of inflation are transforming the investment landscape. What made sense yesterday no longer adds up today.

This article aims to help spark ideas for wealth managers. It presents five potential lower-risk investments, that also have famous inflation-shielding qualities.

As wealth managers re-balance portfolios and seek new assets, they can also make the world a better place. Now is the ideal time to incorporate social and environmental factors into the investment strategy. After all, to truly future-proof portfolios, we need a healthy planet.

Discover five ways fine wine investments are good for the environment.

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

 

 

 

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Wine Advocate’s top-scoring Bordeaux 2022 wines

Wine Advocate Bordeaux 2022 - Château Canon
  • Bordeaux 2022 is a vintage of ‘potential greatness’ but also ‘heterogeneity’, according to the Wine Advocate’s En Primeur report.
  • The reviewers, William Kelley and Yohan Castaing, found potential for perfection in eight wines, and included a list of En Primeur recommendations.
  • Kelley noted that the second wines ‘merit more serious consideration than usual this year’.

Potential greatness and heterogeneity

During the En Primeur trade tastings last week, and following James Suckling’s report, another major publication released its assessment of the 2022 Bordeaux vintage – Robert Parker’s Wine Advocate. William Kelley and Yohan Castaing reviewed 459 wines ‘after several weeks of intensive tasting and hundreds of visits to wineries’.

The critics found ‘potential greatness’ in this vintage that has surprised many, but also ‘heterogeneity’.

Kelley explained that ‘Bordeaux has produced some monumental wines in 2022, but unlike many of the great vintages of the 20th century, the year was not a rising tide that raised all boats’.

He added that ‘at its best, this is a vintage of remarkable concentration, energy and harmony’. According to him, ‘the accumulated experience of 2015, 2018, 2019 and 2020 meant that intelligent winemakers were ready to harvest at the right time, a choice of decisive importance’. However, he noted that ‘the less-successful wines are jammy, astringent and rustic’.

The vintage heterogeneity means that buyers will have to be selective; 2022 ‘is not a year to buy blind,’ the critic argued.

Top-scoring wines

The critics found potential for perfection in eight wines, with Canon, Les Carmes Haut-Brion and Montrose coming on top (99-100 points).

Among the three, Les Carmes Haut-Brion has been the best performing investment wine over the last five years, up 56%, while also having the lowest average case price. Castaing singled it out as ‘a strong candidate for the title of wine of the vintage’.

One First Growth, Château Latour, was also among contenders for perfection, although the wine is not released En Primeur. Meanwhile, Château Mouton Rothschild, received 96-99 points. Kelley called it ‘a brilliant wine that likely sits somewhere between the 2019 and 2020 in quality’.

Kelley also noted that second wines ‘merit more serious consideration than usual this year’. In 2022, they ‘often exhibit similar structure and texture to their grand vin counterparts’.

Apart from their top-scoring wines, the critics made a list of En Primeur recommendations to buy, which included Branaire-Ducru and Langoa Barton.

En Primeur pricing

A great vintage usually translates to expensive releases.

However, Kelley suggested that there were grounds ‘for optimism with regard to pricing this year,’ if the chateaux take into account the global economic uncertainty and the state of the secondary market.

He remarked that ‘it is not always necessary to purchase great Bordeaux as futures,’ as sometimes older vintages might represent better value today.

To spot the best value opportunities and explore the historic performance of any fine wine brand, visit Wine Track. Our tool provides a clear overview of a fine wine’s track record, including critic scores, average price and investment returns.

 

WineCap’s independent market analysis showcases the value of portfolio diversification and the stability offered by investing in wine. Speak to one of our wine investment experts and start building your portfolio. Schedule your free consultation today.

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Q1 2023 Fine Wine Report

Q1 2023 Report
Q1 2023 Report

Our Q1 2023 report has now been released. The report examines how the global financial turmoil of the first quarter impacted the fine wine market, the factors affecting demand, and the best performing wines and regions. Download your free copy today.

Key findings include:

  • Mainstream markets had a rollercoaster quarter, but fine wine remained relatively unaffected.
  • Fine wine prices have risen for two consecutive months after a slow start to the year.
  • Several Bordeaux 2011s enjoyed heightened demand and rising prices in light of Chinese New Year.
  • The Burgundy 2021 campaign was met with mixed sentiment from the trade due to low allocations and high prices.
  • Axel Heinz has left Ornellaia to join Château Lascombes and bring fresh life into the estate, which has been underperforming the Super Tuscan in recent years.
  • The spotlight is now on Bordeaux, with the En Primeur release of the 2022 vintage, which has been described as ‘very promising’.

Click below to download your free copy of our quarterly investment report.

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Fine wine as a value and growth asset

Fine wine value and growth asset

Fine wine offers the benefits of different asset classes. As a long-term investment, due to the inherent premise that it gets better with age, fine wine would traditionally fall under the ‘value asset’ category. This is especially true as investors tend to buy and hold wine for decades before selling at a premium. 

However, since fine wine is a highly sought-after and depleting investment, it shows tremendous growth characteristics too. Over the past year, fine wine has delivered strong returns, with some bottles increasing in value by as much as 550%. This makes it more akin to growth assets. 

Could fine wine be considered both a value and growth asset?

Value assets have intrinsic value and are usually undervalued

When investors talk about value and growth assets, they are generally referring to publicly-traded stocks. This could mean huge blue-chip corporations like Coco-Cola, Microsoft, or Tesla, or it could be little-known and up-and-coming stocks. Generally, the market is extremely efficient and so finding an underpriced stock is hard work. Those who dedicate time and research to discovering these undervalued assets are known as value investors. 

Warren Buffet is perhaps the most famous value investor of all time. “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price,” he declares. For Buffet, seeking intrinsic value is the only real way to invest. Perhaps that is why he is such a fan of fine wine investments. Buffet has reportedly said that every portfolio should have at least a 1% allocation to fine wine. 

The value of fine wine can’t be measured the same way as a stock

To understand whether an investment offers good value or not, investors usually need to crunch a lot of numbers. But the process is a little harder outside of the stock market. Unlike traditional stocks and shares, analysts would be hard-pushed to calculate the price-to-earnings, debt-to-equity, or price-to-book ratios of fine wine. 

Firstly, this is because bottles, casks or barrels of fine wine do not offer “earnings” in the stock market sense. Bottles cannot pay dividends, and so buyers instead collect all their returns when they sell the asset.

Secondly, prices are variable. As fine wine is usually traded privately or through prestigious auction houses, the final sum is not always predictable – especially if you have two or more extremely passionate bidders in the room. As a result, bid-ask spreads are significantly greater than you’d find on the stock market. 

Finally, forecasting these values can be unreliable because in some cases wine prices are not always publicly available. However, as industry leaders, we do have a lot of this information. If you would like to get an insider idea of the latest auction results and performances, check Wine Track. 

While we may not be able to scrutinize the value of fine wine in the traditional sense, we can analyse the general trends and characteristics. From here, we can see how they hold up against traditional value stocks. 

Fine wine shares many of the long-term characteristics of value investments

As an asset class, fine wine behaves like a value investment. Some of the main characteristics are the “buy low, sell high” strategies, the long-term investment horizon, and stable financial returns. 

  • “Buy low, sell high” strategies 

Value stocks are generally underpriced on the market, meaning investors expect to make profits over time as the asset realises its true worth. This is remarkably similar to fine wine investments. Many purveyors will purchase the wine en primeur before it is even bottled to secure the best price.

At the time of writing, wines such as Domaine d’Auvenay have already delivered returns of nearly 8,500% over a ten-year period. This shows the incredible power of buying wine early, and holding. 

  • Buy and hold over the long-term

As the adage goes, fine wine gets better with age. High-quality Bordeaux, for example, takes 20-30 years to mature. Successful investors will generally buy and hold fine wine over the long-term. 

This approach mirrors the “value” philosophy perfectly. As Buffet himself warns, “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes”.

  • Steady returns

Stability is another key characteristic of value investments. These assets should be able to sail through all kinds of market storms with minimal or zero disruption. Fine wine has delivered exceptionally stable returns over the last year, holding up against recessions and incrementally gaining value despite stock market chaos. 

Fine wine has compelling growth attributes too

On the face of it, fine wine seems to be a value investment. It is a steady long-term asset which gains value over time. Yet, despite its famous stability, this investment has also delivered some impressive short-term returns and it is an alternative asset, which push it more into the growth category. 

  • Fine wine is an alternative asset 

Investors looking for growth assets tend to accept volatility risk, as part of the trade-off for superior returns. Because of this, they are more inclined to look away from the reassurance of the stock market to find new revenue streams. Increasingly, unlisted property, private equity, hedge funds, high yield credit, long-duration bonds and alternative debt are finding their way into growth funds and portfolios.

 As an alternative asset, fine wine seems to fit snugly into the “growth” category. Yet, unlike these investments, fine wine is generally not volatile. 

  • Exceptional short-term returns 

Wine can, however, deliver exceptional short-term returns. Over just five years, fine wines such as Hubert Lamy have seen values increase by 1,223%. This is an extraordinary performance. To put this it into context, it took value stock Coco-Cola 24 years to deliver returns like this. 

Some fine wines are even demonstrating market-beating returns in extremely short timeframes too. Some brands like Hubert Lamy have enjoyed increases of over 450% in just three months. If you’d like to explore the greatest gains and losses in the industry, Wine Track is a useful resource. As you read, please remember that experts do not recommend investing for less than five years. 

Fine wine offers the best of both worlds 

Fine wine is a fascinating alternative investment because it seems to offer the best of both value and growth without the downfalls.  

Fine wine is a buy-and-hold asset which increases in intrinsic value over several decades, while offering historically-superior returns. It also holds up well in recessions and fights back against inflation. These are all classic characteristics of value investments. 

Meanwhile, some bottles have proven to be extremely lucrative over the short-term. These boosts in value are likely to continue as climate change ramps-up demand for scarce flavours. High gains in short periods of time – especially from alternative assets – are usually more commonly associated with growth investments. 

Therefore, fine wine is an incredibly versatile asset, suitable for different kinds of investment strategies. Whether you’re looking for value, growth or both, fine wine could help you reach your goals faster. 

Explore your investment options

 

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Collectable Assets to Help Shield Inflation and Boost Diversification

Collectable Assets
Collectable Assets

The “60% stocks and 40% bonds” rule is outdated. While this approach may have offered stable and diversified returns several decades ago, in today’s difficult economic climate it’s not enough. This is where collectable assets come in.

To preserve and grow wealth, strategic investors must hedge their portfolios with alternative sources of value. One way to do this is with collectable assets. As a unique form of asset class, collectables offer investors extraordinary diversification and inflation-shielding properties – perfect for today’s economic storm. What’s more, many of these assets – like jewellery, classic cars, and art – can be enjoyed while they hold their value.

In this article, we’re looking at the six most popular collectable assets globally[1], and what to consider as you explore your options.

Art

As with most collectables, original art is about more than simply the financial return. Art is a passion asset – it represents a unique timestamp in our history, emotions, and popular culture. But there are great investment benefits too.

Original art is unique, and – just like with fine wine – rarity is highly prized. Famously, Leonardo di Vinci’s “Salvatore Mundi” was auctioned for a record-breaking $475 million[2].

Importantly, original art is also inflation-resistant. This is an excellent quality for the current economic climate. Unlike cash or bonds, the investment return will not erode over high-inflation periods because it has intrinsic value. Instead, market demand is driven by the artist, story, quality of the work, whether it represented a new technique, mindset or time, the materials and of course, the way it looks.

However, this doesn’t mean art is immune to volatility. The art market has trends and bubbles too. In 2018, for example, the resale market for art by Damien Hirst was declared a “bloodbath” as the hype ended and investors lost millions[3]. Before diving in, pay close attention to any potential risks in the market.

Research from Unbiased found that overall contemporary art has delivered annualized returns of 7.5% to investors since 1985[4]. Another index, created by Masterworks suggests blue-chip paintings (the crème de la crème of art) increased in value by 13.8% each year since 1995[5]. However, each artwork is unique and so individual returns vary significantly.

In today’s market, NFTs (non-fungible tokens) and sustainable processes are trending strongly in the art world. The average collector invested $46,000 in digital art last year and would be willing to pay more for environmentally-friendly works[6].

Whisky

As well as an appreciation for the craft and heritage, there are compelling investment benefits to whisky. Firstly, like all the collectable assets on this list, it is a great hedge against inflation. This helps to offset some of the losses from cash, debt, and bond instruments.

Secondly, it’s a booming market, as whisky has become popular. Just like fine wine, this has largely been fuelled by younger investors.  In 2021, the Knight Frank Luxury Index even named this liquid gold as its best-performing asset class[7]. Over the previous decade, Scotch whisky racked up impressive returns of 428% on average. In July 2022, one rare bottle pulverised all records, going for a whopping £16 million at auction.

Thirdly, whisky is increasingly perceived as reliable. Since Brexit and the war in Ukraine, many investors have turned to whisky as a more dependable and palatable choice of beverage. Naturally, the ingredients come from Scotland, so global grain and raw goods shortages should not hinder production. What’s more, the whisky trade looks set to increase, as the UK government draws up new deals with India.

Just like fine wine, one of the greatest benefits of whisky is that it is classed as a “wasting asset” and is not subject to capital gains tax. If you’d like to find out more about this tax break, you can download our free guide.

To get an idea of the financial returns of whisky, we can look at two indices. The BC20 index reported 14.36% returns for the asset in 2021[8]. And the SWI’s year-on-year historical performance sits at 12.5%[9]. Of course, whisky is a buy-and-hold asset, meaning that investors should not try to “flip” it, but rather hold the asset for years.

Classic cars

Of all the passion investments, classic cars are probably among the most loved. Collectors are often people who would tack magazine cut-outs of Ferraris, Maseratis and Bugattis to their walls as teenagers, and dream of buying the car one day. They tend to be looking to fulfil a lifelong dream as well as investing. Perhaps for this reason, the price tags are usually emotional, and they can make for uncertain investments.

The factors which make a car a worthwhile collectable asset closely mirror the art market. The historic significance of the model, rarity, beauty, racing history or associations with celebrities all add to the value.

HAGI (Historic Automobile Group International) tracks the market with several indices. Their findings show that between 2008 – 2021 the average price increased by 264.49%[10]. However, this doesn’t appear to factor in the cost of repairs, renovations, or storage. Even if you plan to restore a classic car yourself, the associated costs can exceed the end-value.

As you plan your investment strategy, scrutinise the financials of classic cars, including tax implications. For example, selling a classic car for a profit will incur capital gains tax, as well as road tax and MOT. Certain countries also have combustion engine regulations and low-emission zones that could make it difficult to drive your car. What’s more, incoming legislation around petrol cars may affect the desirability of the vehicle.

Diamonds

They’re forever, they’re a girl’s best friend … but are diamonds really a good investment asset? Looking at the Idex Diamond Index, on average, the precious stones have delivered returns of 8% over the past five years[11]. Natural blue diamonds have particularly fared well, with one rare 15-carat blue diamond selling for $57.5 million in April 2022[12].

As with most collectable investments, quality, rarity, historical significance and whether it was owned by a notable person, all make a difference to the value. For jewellery, connections with royalty can especially add lasting value[13]. When considering diamonds, scrutinize the following “Cs”: Carat, clarity, cut, colour and certificate[14].

However, there are some risks for diamond investors too. The market is notorious for its bubbles. Between November 1st 2021 and March 7th 2022, for example, prices suddenly jumped by 17% and then fell back down.

Investors should also be aware that this asset – while not directly impacted by inflation – does tend to stumble following a crisis, although it usually bounces back quickly. This indicates that during a recession is a good time to buy. As the prices tend to drop in the rough diamond market first, investors may be able to use this information to predict trends and inform their selling strategy on the secondary market.

Watches

Watches are a relatively new investment vehicle, and the market is white-hot. They really began to take off during the first months of the pandemic. Between January 2020 and April 2022, the value of used luxury watches jumped by around 115%[15]. According to the Watch Charts Market Index, prices surged from $25,420 on average to $54,461 in less than two years[16].

Today, however, the market is cooling. Prices have dipped back down to $39,397 on average[17]. After this burst, it is also extremely difficult now to access an investment-grade watch unless you have exceptional contacts or a broker. However, with patience and research, it is still possible.

For investors looking for a wearable investment, a classic brand like Rolex, Patek Philippe, Audemars Piguet or Breitling could be a good inflation-resistant option.

Fine wine

Of course, our favourite collectable asset to preserve and grow wealth is fine wine. Unlike diamonds, the value of fine wine does not tend to dip with recessions. On the contrary, after the 2008 financial crisis and the 2020 pandemic, it soared. From April 2020 until September 2022, prices steadily increased by over 40%[18].

Like whisky investments, fine wine also benefits from a generous tax break. Investors are exempt from capital gains tax, meaning they can keep significantly more of their profits. This tax perk applies to very few investments, and certainly none on the publicly traded stock market. It helps investors to preserve, reinvest and grow their wealth faster.

Like all the collectable assets on this list, fine wine is also extremely inflation-resistant. As the market is quite closed and determined by passionate investors, it is not directly impacted by the ebbs and flows of the wider economy.

Better still, unlike newer whisky and watch trends, fine wine is one of the oldest investment assets. Over centuries wine has proved its place as a valuable source of wealth growth and preservation. Today, it is even more stable than gold.

Invest with passion

Perhaps most importantly of all, fine wine is a revered and much-loved product. Who could imagine a world without a sparkling Moët Hennessy Champagne, or a beautifully bold Bordeaux?

When you invest in collectable assets, you are not simply making a financial decision. You’re helping to preserve and cherish that which you love about life. Whether it’s a vintage Porsche or a stand-out piece from your favourite artist, your wealth can revive your most meaningful moments in history. With investments like fine wine, you can also help to preserve and nurture the planet for future generations too.

If you’d like to discover more, getting started with WineCap is simple and straightforward.

[1] Source: Knight Frank

[2] Source: Art in Context

[3] Source: Art History News

[4] Source: Unbiased

[5] Source: Masterworks

[6] Source: Art Basel

[7] Source: Knight Frank

[8] Source: Braeburn

[9] Source: Insider

[10] Source: Investopedia

[11] Source: Idex Online

[12] Source: Forbes

[13] Source: Bloomberg

[14] Source: New Bond Street Pawn Brokers

[15] Source: Watch Charts

[16] Source: Watch Charts

[17] Source: Watch Charts

[18] Source: Liv-ex

 

 

 

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Is Fine Wine the New Gold?

is fine wine the new gold
Is Fine Wine the New Gold?

For more than 6,000 years gold has been revered and collected by people hoping to store, preserve and even grow their wealth. But in recent times, the stability of gold has been called into question. Prices have been on almost as much of a journey as the stock markets. Whether it’s because Central Banks are buying record amounts of the precious metal, or because investors are trading emotionally, the asset is no longer such a dependable source of alternative value.

In this article, we’re taking a closer look at gold’s investment performance over the past year, and how it compares to fine wine.

Gold is becoming more volatile

Investors have been on a tumultuous journey. Over the past year, the price of gold plummeted by -21% between March and October[1]. Then it rose again by +15% from November through to January. At the time of writing (January 2023), one ounce of gold costs $1,868[2], but economists are already predicting further movements ahead.

Performance of gold over the past twelve months

Over 2023, a range of factors is likely to influence the price of gold. The mild global recessions, geopolitical uncertainties and continued high inflation levels will probably increase its value. But on the other hand, pressure on commodities and the gradual easing of inflation could bring the prices down. Over the next year, it’s unlikely that prices will remain stable.

Gold is becoming increasingly correlated to the stock market

As gold usually rallies in a recession and falls during periods of prosperity, investors have traditionally added this to portfolios as a hedge. When the stock markets are down, they look to their gold investments to buffer some of the losses. However, over the past few years, something strange has happened. Instead of gold going up when the markets go down, the two are starting to correlate.

Fine wine delivered returns that were uncorrelated to the market

By contrast, over the past year fine wine have exhibited the very characteristics that investors usually look for in gold. Performance has been stable, steady and – best of all – uncorrelated to the stock market. The graph below shows the comparison of fine wine (green), gold (red) and the S&P 500 performance over the past year.

Unlike gold, the fine wine index (Liv-ex 1000) didn’t demonstrate any periods of correlation with the wider stock market during 2022. Overall, wine steadily trended upwards, slightly increasing when the wider markets plummeted and slightly dipping when the wider markets soared. This makes fine wine an exceptionally stable diversifier for investors. Not only did it hedge portfolios over 2023, but it also helped to smooth out overall volatility.

If you’d like to analyse the performance of fine wine, you can find the prices for regions, bottles, wines and more on Wine Track.

Is fine wine the new gold?

While it may not be exactly true that fine wine is the “new gold”, over the past year this asset class has been significantly more stable and less correlated to the wider market. It’s provided investors with a more calm and smooth positive performance than gold, throughout the economic storm.

Like gold or property, fine wine has intrinsic value and compelling inflation-resistance. As a tangible asset, it will almost always be worth something – unlike stocks, bonds or cash which could crash. But different from gold, the kind of buyers who invest in fine wine are not cut from the same cloth as stock market investors.

Fine wine is generally bought and sold in exclusive private markets, far away from public trading forums. The asset is also usually purchased and treasured by passion investors, who tend to hold it for decades. By contrast, more people seem to be “flipping” gold and property, which ramps-up volatility.

So, is fine wine the new gold? Not really… If you’re looking for stability, alternative returns, and uncorrelated market value, we think it’s superior.

[1] Source: Monex

[2] Source: Monex

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Fine Wine as a Wasting Chattel

Fine Wine as a Wasting Chattel

From April 6, the British government will move to reduce the deficit through a number of measures, including very significant changes to capital gains tax thresholds. However, investors may find that “wasting chattel” investments could be a worthwhile solution to this.

From the new financial year 2023-2024, the threshold for paying capital gains tax (CGT) will be slashed, from £12,300 to £6,000 this year, and then again to £3,000 the following year – a full 75% fall. This added tax burden will inevitably eat into investor returns. However, the category of investments known as “wasting chattel” is exempt from CGT altogether, meaning that any gains made on these investments will allow investors to keep more of their profits.

Wasting chattel investments are assets with a predictable useful life not exceeding 50 years and can include things such as art, furniture, vehicles, and most importantly, fine wine. These may provide investors with a tax-efficient way to profit.

If you’re looking to balance out tax losses and protect your portfolio against inflation, then allocating more of your portfolio to wasting chattels may be a smart move. Collectible assets such as fine wine are often inflation-resistant and have a long history of good returns. They can therefore provide a much-needed buffer against the current economic environment; helping ensure the long-term success of your portfolio and the security of your financial well-being.

In these difficult economic times, adaptability is paramount, and it is essential for investors and portfolio managers to remain flexible by considering all investment tools and vehicles. Wasting chattels kick back against the upcoming tax hits, and can be an excellent option.

If this sounds like something of interest to you, why not schedule a consultation with WineCap? Our wine investment experts would be only too happy to guide you through the process.

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Chinese Wine Imports on the Road to Recovery

Chinese wine buyers, tasting wine

Chinese wine imports have begun their revival as borders reopened to international travel following three long years of Covid restrictions that isolated the world’s most densely populated country.

As families reunite and look forward to a much needed period of recovery, the wine trade breathes a collective sigh of relief after surviving 2022, the year that saw the wine industry “hit rock bottom in both import and domestic market[s]”

An article, published by China’s leading wine news site Vino Joy News, examines the potential for a rebound in Chinese wine imports which dropped significantly in 2020 due to the successive lockdowns of the pandemic. The decline in corporate activities and cultural gatherings which usually drive crucial sales peaks saw revenues affected drastically. Experts are positive that the recent lifting of Covid restrictions will rejuvenate the market akin to the swift recovery of the restaurant industry since December’s relaxation of pandemic constraints.

The key factor driving this optimism is the increased demand for better quality wine from China’s increasingly affluent middle class. This is set to be further boosted by the recent relaxation of import tariffs, making wine more affordable for Chinese consumers. This year’s Spring Festival has seen revenues spike which suggests that other events like the Mid-Autumn Festival and National Day will have a similar effect.

Though there is a potential for the relaxation of Chinese food and beverage standards this is unlikely to affect the fine wine market, and overall the long-term outlook for Chinese wine imports remains very promising.

A key indicator of the market’s recovery will be the upcoming Chengdu wine fair in April, an event considered “a bellwether of China’s drinks industry” and likely a strong reflection of the country’s enthusiasm for fine wine.

With any luck, this will be the year that sees this major player in the fine wine market return to form.