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Betting on India Amid Brexit

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As you’ll know, the Asian market has been an interesting topic of debate among wine investors since the explosion of the Chinese middle class over the last two decades. Heading south west of Beijing, there’s a young but flourishing fine wine scene developing in northern India in Chandigarh, just four hours from New Delhi by train. Whether this is a colonial hangover or an uprising desire to quench an authentic Indian thirst, one thing we know is wine is there on the subcontinent and it’s there to stay. Grapes are particularly luring to the younger generations it seems as they opt for wine in restaurants and bars over other alcoholic beverages.

For investors from Britain, there is one issue which comes up in discussions – what about Brexit? By now you’re probably sick of reading about the impact of Brexit on Sterling and the possible consequences of this on business overseas. The one prevailing point which is worth iterating is that the evidence of previous sterling declines is that the fine wine market benefits as prices become cheaper for foreign investors. In the event of a ‘no deal Brexit’ which most people seem keen to avoid, sterling’s decline will be partially offset by rising wine prices, so under this ‘least likely’ scenario (least likely because most people seem keen to avoid it, no other reason), foreign investors are partly hedged.

In summary, if there is a Brexit deal then investors can expect sterling to rebound 10% and foreign investors will immediately make a currency turn. Where do we get that from? Well, last month Sterling firmed up simply because an amendment to take ‘no deal’ off the table was being debated in Parliament. Once a deal is actually struck, there is likely to be a rallying rise. Fine wine prices tend to be tied to sentiments of economic well-being among the populace, which means that a no deal scenario would represent short-term chaos. Presumably then, a deal would signal short-term stability.

It’s an exciting time to bet on India for fine wine investments, opportunities are rife and the marketplace is buzzing thanks to a young demographic taking the lead. The best case scenario would be a deal Brexit but who know when that brouhaha will come to a conclusion?

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