The year is 2019 and despite all the political drama, this could well be a vintage period for fine wine investors. If you’re actively seeking opportunities for growth and under-priced treasures, there are diamonds hiding in dirt ready to be dug up and polished. The equity markets around the world were volatile last year and onlookers are predicting a similar shaky outcome for the rest of ’19. All of this adds up to mean that the alternative investment assets are being viewed as safe places to invest. Fine wine has the advantage of being a physical asset because in times of crisis, investors look for investment and consumption potential. There are safe-haven attributes to fine wine assets.
Just take a look at the performance of Liv-ex Fine Wine 1000 index; it easily trumps many of the world’s equity indices in the short-term and the long-term. Moreover, it surpasses all major equity indices over the last 15 years – that includes the bright lights of NASDAQ, for example. Does that put things into a different perspective? Of course it does. There is every reason to anticipate for this trend to continue and for fine wine to be the top performer. If equity markets rebound, it will be because fear around economic growth has dissolved which will inevitably lead to an increase in the consumption of fine wine. If there is no rebound and the equity markets stay dwindling, the fine wine assets will benefit from their status as physical assets. They are dynamic, safe and dependable investment opportunities and will remain as such.
Investors should take into account currency fluctuations when deciding where to get their fine wines from. London is the fine wine centre of the planet which means everything is denominated in pound sterling. When Brexit was announced and the pound dropped, it had a positive impact on the recently released vintage 2015 Bordeaux wine. The devaluation of the currency made fine wine even more attractive. Any situation which weakens the currency is good news for fine wine prices, and stimulates foreign investment because much of the purchasing from abroad is denominated in dollars or Euros. The prime minister of Britain has affirmed that the near future of the pound is stagnancy at best, and analysts envisage a fall of around 25%. This would make fine wine a very cheap investment for foreign players and it presents the assets as arguably the best hedge against a no-deal scenario.