The Fine Wine Market
Estimated to have been first produced sometime between 6,000 and 9,000 years ago and deemed as 'nectar of the gods' in Ancient Greek mythology, wine is one of the oldest produced alcoholic beverages in the world. Drunk and enjoyed by millions across the planet, wine has religious and culinary significance, remaining as one of the most popular choices of alcohol. What is less known however, is that fine wine can be a great investment as part of a portfolio.
Fine wine is considered as an alternative asset, which, by definition, cannot be categorized as a stock, bond or certificate. Enjoying a low correlation with stocks and with lower volatility, coupled with the increasing transparency and liquidity of the market, fine wine is gaining credibility among investors. Furthermore, fine wine is not subject to Capital Gains Tax as it is termed a wasting asset.
Over the last five years, fine wine has outperformed the FTSE 100 index, with Burgundy and Californian wines leading the outperformance.
Source: London International Vintners Exchange (Liv-Ex)
Introduction to Wine
Like with any other investment, stick to what you know. Brush up on your wine knowledge first by reading books and articles, watching documentaries and even enrolling in wine courses. The Wine and Spirits Education Trust (WSET) is a great place for beginners to start, with qualifications covering the basics of wine, from grape varieties to food pairing and storing wine.
Wine is produced all around the world, with Italy, France, Spain and the U.S. leading as the main producers. Wine can be broadly separated into two types of geographies: old world and new world. The former comprises the first wine-producing countries, including Italy, France, Spain and other European countries. The latter, also referred to as the emerging wine market, includes the U.S., Chile, Argentina, South Africa, Australia and New Zealand, among others. It is also worth finding out the difference in the bottle labelling, as old-world wine tend to be labelled with the producer name and vintage, while new-world wine tends to specify the grape variety and area.
Global wine production (hectares)