The wine investment market is characterised by its stability, increased diversity and high returns, which are particularly valued when traditional markets underdeliver.
Long considered a niche, the global fine wine market has considerably grown in size over the past two decades and has attracted more and more investors. This, in turn, has contributed to greater price transparency (making it easier to discover the price of a wine) and market liquidity (making it easier to sell it), which have facilitated the trade of fine wine. The more wines that have been in demand, the more prices have risen, creating something of a virtuous circle.
But the fine wine market is not without its intricacies. Below we examine the importance of market data, the returns you can expect from wine investment and the reasons why the market is growing.
What is the ROI on wine?
Fine wine prices are currently at record levels so there is arguably no better time to be involved in the wine investment market. The globally recognised Liv-ex Fine Wine 100 index, which monitors the price movement of the 100 most sought-after fine wines in the world, has risen 307% over the past two decades. The broader Liv-ex 1000 index, which tracks 1,000 wines from around the world, has seen even greater returns: 361% since its conception in 2003.
Individual wines have risen by different amounts, like the First Growth Château Mouton Rothschild 2000, which has appreciated over 800% in value since release, or Domaine de La Romanée-Conti Romanée-Conti Grand Cru 2010 – up by over 1,000%. Such rare fine wines impress with their stellar performances, but there are other more widely available alternatives that can deliver your desired return on investment (ROI). There are currently over 12,000 different wines that can be considered investment worthy.
While ROI is dependent on the wines you choose to invest in, there are additional factors such as provenance, storage and the time of buying and selling that will affect your profits. Reliable market data can help you make informed investment decisions.
Is wine a risky investment?
Wine is a low-risk investment. Physical assets like fine wine are stable sources of value in times of uncertainty. While stock markets can crash and share prices can collapse overnight, tangible assets do not cease to exist. As a low-volatile investment, fine wine delivers stability and consistent returns. It is a proven way to strengthen and diversify an investment portfolio. Additionally, wine is not reliant on a single economy and it can be traded internationally.
Fine wine also tends to perform well in inflationary environments due to its inherent tangibility and scarcity. It is a combination of investment and luxury good, which benefit from rising global wealth.
Is wine a good investment?
Fine wine has a proven track record as an investment. A quick look into the history of the fine wine market shows how it has delivered stability and returns during the 2008 financial crisis, Brexit, the Covid-19 pandemic and other global events that have shaken equities.
As a passion investment, fine wine benefits from global demand. Wine is, after all, one of the oldest beverages in the world and its appeal has never waned. Its inherent value only adds to the strength of the fine wine investment market.
Interested in speaking to one of WineCap’s investment experts, now you know the wine investment market’s fundamentals?