This article was written by Daniel Carnio, CEO of Oenofuture.
- Uncertain times ahead
With Brexit looming ever larger on the horizon, investors are rightly feeling nervous and uncertain about what the future will hold. The facts make for grim reading; during what has been dubbed Red October $8 trillion has been wiped off global markets, the FTSE is at its lowest level since 2007, and former UK Prime Minister Gordon Brown warned in September that the world economy was “sleepwalking into a future crisis”.
In these unsettling times, fine wine represents a safe harbour for those looking to shelter from the storm until a clearer picture emerges of the implications of Brexit and the global economic situation.
- Excellent Potential Returns
Fine wine represents a sound investment in these uncertain times because prices are not correlated to any other asset or market. Instead, prices are normally dictated by supply and demand with limited production and rare fine wines offering excellent potential for savvy investors. With the ever-growing appetite for fine wine in Asia and the limited quantities produced by the world’s top estates each year, the future is looking very bright indeed for investors who have the foresight to get ahead of the game.
- Seek Out Alternative Regions
In addition to the high potential for rare and limited production wines, the fine wine investment market is opening up to new and alternative regions. The Liv-ex has just added two new indices for Port and California. This is a strong indication that the fine wine investment market is becoming more nuanced and recognising that bringing alternative regions into the fold will bring rich reward. This suggests that these alternative regions will become increasingly important in the future, offering investors even more options when it comes to making wise investments.
- Increasing Demand For Fine Wine
In Asia purchases of bottles of wine over $200 in value has increased by over 70% over the past year, hinting at the incredible demand for fine wine in markets like China, Hong Kong and Japan. On a yearly basis 118 billion glasses are consumed in China alone and with global wine production at a 60 year low since 1950 prices are looking very strong. According to Forbes, the price of wine set to increase by 20% in 2019 and even the legendary Warren Buffet has recommended that a percentage of every portfolio should be in wine.
- A Win-Win Investment
With stock losses of 74% predicated in the aftermath of Brexit, investors will need a little something to ease their pains. Fine wine investment has the unique advantage over other investments that you can always drink your stock if things go wrong! Leaving the joking aside, with such demand across the globe and limited production capabilities, fine wine investment represents a solid alternative to the volatile stock market and one that can always be enjoyed if you decide to cash in on your investment by pouring out a glass or two of something delicious!
