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10 | International investment
A vintage
investment vehicle
Wine is increasingly seen as an attractive, alternative
option to the more conventional forms of investment
by Stacey Lea Golding,
Founder and Director of Premier Cru Fine Wine
F
ine Wine Investment Houses have Fine Wine needs no such attention. Decreasing when Château Mouton-Rothschild was promot-
overnight jumped back into the availability increases rarity and hence can pro- ed from a 2nd growth to a 1st growth wine, the
forefront of investors’ minds in duce excellent investment opportunities. process remains unchanged. Today, however, the
the current unstable global mar- Fine Wine has consistently outperformed all market has The London International Vintners
ket. They offer truly independent other forms of recognised investment. It has Exchange (Liv-ex) - the leading exchange for fine
advice, the flexibility of choice remained the steadiest form of investment, gen- wine. Founded in 1999, Liv-ex runs an internet
and an opportunity to take erally unaffected by recession, interest rate and phone based information, trading and settle-
advantage of a tax free asset class during uncer- changes and stock market fluctuations. It benefits ment platform for fine wine merchants. They
tain economic times. Wine has demonstrable from being stable, tax free, easily realisable, con- also provide valuation services and sell data to
advantages, particularly in a market where tradi- sumable, low risk and portable. both professional traders and wine collectors.
tional investment products have failed to per- The asset class has shown greater and steadier
form. Diversifying domains growth than gold and less volatility than oil.
Stock market volatility brought on by the cur- A core benefit to our hands-on investment strat- Following the 2001 attacks on September 11
rent economic climate has pulled the rug from egy is the flexibility and tax effectiveness on offer when markets tumbled, Fine Wine continued to
under investors’ feet. The ‘crunch’ is gaining to clients. Until recently, investing in the Fine hold its value. The same can be demonstrated
momentum. The global banking system is wob- Wine market has been considered a wine expert’s more recently. For example a case of Chateau
bling. The stock market is on a grim rollercoaster domain only. Wine investment houses are here to Margaux 2000 purchased in September 2005 cost
ride, and even bigger threats to the economy fill the void by offering specialist advice to indi- £3,100. Today’s value lies at £7,400 - 138.71%
loom on the horizon. Confidence is at an all time viduals with little or no knowledge of wine, growth – a price which remained largely unaf-
low. We are, as George Soros puts it, heading into enabling everyone to get involved in this thriving fected in the last few months of banking and
the worst financial storm in 60 years. market. By no means are we advising individuals insurance sector turmoil.
Whilst the situation flickers from one crisis to to withdraw from their current investments, but One could argue, given the economy, that an
the next, many investors are beginning to seek to balance their portfolios through broadening investment class such as Fine Wine has never had
out alternative methods of spreading their port- their range, enabling risk to be more evenly a better opportunity to make its mark. After all,
folio risk to ensure minimum exposure to the spread. with the most significant insurance houses actu-
myriad of macroeconomic problems. Alternative Fine Wine investment is by no means a new ally owning Bordeaux chateaux, this could be
investment management companies are capitalis- concept. It is largely uncorrelated to the stock viewed as a reasonable safe haven that merely
ing on this period of uncertainty by differentiat- markets, and has demonstrated a long history of needs to be better explained to the masses. As
ing their investment product offering to steady growth. It has carried an average annual people’s perception of this form of investment
traditional investment products such as equities. compound growth rate of 17.64% over the past grows, so will its popularity and demand. People
In comparison to other alternative investments, 18 years. do not like to discuss their pension premiums
Fine Wine has clear advantages over the likes of In 1855 Napoleon III effectively started the amongst friends around the dinner table, but
art or property. This ‘asset’ is easily stored and “Fine Wine Index” when he classified the wines they do like to talk about the value of their wine.
generally increases in quality the longer it is left, in Bordeaux on a scale from one to five. He And why not, when you look at these type of
and is not the subject of what’s fashionable and based his decisions on the quality and prices returns?
what’s not. Investing in either art or property realised of each Châteaux wine over the previous Homeowners can now choose to use fine wine
requires expensive maintenance and care, while 100 years or so. Apart from one change in 1973 to repay their mortgages, using wine as an invest-
January 2009 Investment International www.investmentinternational.com
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