A diverse investment portfolio has proven to play an important role on return, particularly since the outbreak of Covid-19 in March 2020. The need to think more broadly has seen an increasing number of investors move away from traditional investments and seek alternative “hard” assets, such as fine wine, whose underlying intrinsic value tends to drive greater resilience during turbulent and inflationary times.
Fine wine interest and investment saw a considerable uptick during the pandemic. Research conducted by the world’s largest fine wine trader Bordeaux Index found that 73%1 of British fine wine drinkers it polled increased their spending on their favourite tipple during the first lockdown. While this increase may have started as an excuse to treat themselves to a little luxury or replicate experiences of hospitality settings, 38%2 of investors recently surveyed said that they would consider an investment in fine wine to enhance their returns. Interestingly, one in five (20%)2 of investors between 25-34 years old from the survey had already made this transition by November 2021.
This growth of interest in wine as an alternative asset has played a key role in Bordeaux Index’s fine wine trading platform LiveTrade seeing a 50% uptick of new accounts on the platform YoY in 2021 compared to 2020, and indeed growth in trading volumes of c.45%.
Perhaps most importantly, fine wine has proven to offer a reliable return in uncertain times. In fact, 40%2 of those questioned stated that fine wine investment offers long-term stability and the same amount (41%) say fine wine’s resilience makes it a good investment in times of a crisis. Additionally, 37% of investors agree that fine wine investment offers low volatility plus healthy returns – all important considerations for those looking to broaden their investment strategies.
Finally, starting to invest in fine wine is easy. Almost two in five (39%)2 investors questioned report that fine wine offers a greater accessible entry point (as low as £500) compared to other alternative assets, making it an attractive investment choice for those looking to broaden their portfolio. Taking your first steps into fine wine investment is simple thanks to intuitive trading platforms like LiveTrade. You can simply register to use the platform, select a perfect condition wine from an extensive list of investment grade wines, analyse the historical pricing chart to see how the vintage has performed since its release and buy, with the wine then transferred to your own custody account in a pristine storage warehouse.
In terms of the best wines to back this year:
- Champagne – A star performer of luxury wine investments in 2021, delivering strong returns, up by more than 30%. From prestige cuvees such as Dom Pérignon to Krug, champagne is set to continue to see outsized interest throughout 2022, especially if you can get your hands on a stellar vintage such as 2002, 2008 or 2012.
- Bordeaux – A classic investment option remains “blue-chip” claret, which put in a strong performance on LiveTrade in 2021. Its price grew by 15%, with performance across names such as Château Lafite, Château Mouton Rothschild and Château Cheval Blanc makes them great contenders for a confident investment in 2022.
- Burgundy – Trade volumes from the region are up by 35% and strong gains are expected to continue into 2022, as increasing demand meets dwindling supply off the back of a series of reduced harvests, not least the frost-ravaged 2021 vintage. Look out for names such as DRC’s La Tâche in Vosné-Romanée and Domaine Armand Rousseau in Gevrey Chambertin.
- Italy – While not quite hitting the dizzy heights of the Super Tuscans in 2020, Italian fine wines are still enjoying around 30% trading volume growth on LiveTrade and are an attractive investment portfolio option into 2022. Tignanello did particularly well in 2021 and could continue to outperform this year given the strong brand recognition.
Given fine wine’s accessible entry point, history of alignment with inflation, and long-term track record of outperforming equities, it is unsurprising that investors have the thirst to look away from traditional assets and incorporate fine wine into their portfolios.
1 Bordeaux Index survey on fine wine consumption conducted by 3Gem in August 2021. All data, unless otherwise specified is taken from 500 respondents of a representative sample size. All respondents were over the age of 18 and expressed a prior interest in fine wine.
2Bordeaux Index survey on fine wine investment. All data, unless otherwise specified is taken from 2,000 respondents of a representative sample size conducted by 3GEM in November 2021 – all respondents were 18+ and had previously invested money.