Wine Investment

Presentation - Fine Wine Investing with Utopian Investors Group Cyprus Page

Luxury investments (such as art, jewelry, classic cars and fine wine) have become a popular alternative for investors over the last twenty years.

The Knight Frank Luxury Index (KFLI) reported substantial growth in wine investment, making it the top performing option for investors.

The report noted:

Wine, up 25%, was the top performer in the index thanks to strong growth in the key Bordeaux, Burgundy and northern Italian markets. No other asset class achieved double-digit growth across the past twelve months.

This trend is set to continue, which is why more and more people are considering wine investment as an alternative to the usual commodities.

What are investment-grade wines?

Unlike the ordinary wines sold in supermarkets and off-licenses, investment-grade wines are of a superior quality and get better (and rarer) with age. They are made to exacting standards by only the finest chateaus and winemakers in the most prestigious regions.

At present, around 60% of the world’s investment wine is produced in the Bordeaux region, where some of the oldest and most established pedigree winemakers are located.

The other 40% is divided up among:

● Burgundy (20%)

● USA (10%)

● Italy (5%)

● Champagne (2%)

● Australia, Spain and Germany (2%)

● Rhone (1%)

Why are investment-grade wines valuable?

Only a limited number of superior-quality wines are produced each year. This is because there are only a few winemakers in the world with the right pedigree. However, there are plenty of wealthy people around the globe who wish to consume or collect superior-quality wine. Essentially, it’s this low-supply/high-demand that gives investment wine its value.

Another value-factor is the vintage. If it was a particularly special year in terms of grape quality, this can bump up the value and make it highly collectible.

Then take into consideration the increasing rarity of the wine. To illustrate it in simple terms let’s say a highly esteemed winemaker has produced a thousand bottles of fine wine in a golden year for grape harvesting in that region, making it quite a rare vintage.

Five hundred of those bottles get snapped up by wine investors, and the other five hundred are purchased and consumed by wealthy wine drinkers and connoisseurs, meaning there are only five hundred bottles left in existence.

In twenty years’ time, due to some investors selling up to wine drinkers or consuming it themselves, the number of bottles might have decreased to 300, making the wine even rarer. Not only that, the wine will have improved with age. So, these remaining bottles will, in theory, be more attractive to buyers and fetch a high price when put on the market.

If you’re really excited about getting into wine investment but are held back by your lack of knowledge, we will ensure you will be introduced to a professional provider. 

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