Fine Wine is a great Alternative Asset that you can easily invest in either directly of via a Fine Wine fund. This year the fine wine market has shown why it acts as a safe haven investment during turbulent times.
In a market where supply is controlled each fine wine vintage and consumption means that vintage supply is pre-programmed to reduce, the market dynamics point to increasing prices when capital tries to find safety.
Added to this are climate factors. In Burgundy, late frost is causing yields to fall each year, and in Napa the 2020 and 2021 wildfires are threatening supply for both vintages. This year Burgundy may struggle with quality due to the intense heat wave that Europe experienced during the summer.
Liv-ex is the market’s leading trading platform. As such they release data on where key regions are trading. Its widest index is the Liv-ex 1000. Breaking down the Liv-1000 of fine wine we see that the Burgundy 150 rose 2.7% across the third quarter of 2022. However, the standout performers across the quarter were the Champagne 50 and Italy 100. The Champagne 50 saw growth of 8.7% with the Italy 100 rising 3.7%, after a poor Q2. The Bordeaux 500 stepped up its performance after a strained Q2. Its performance driven by steady demand for high quality vintages and the ever steady older, classic vintages.
Looking wider, we can see that the Liv-ex 1000 components have weathered the COVID outbreak as well.
Source Liv-ex.com
The performance of Fine Wine investments is in stark contrast to the major indices in the financial markets.
The FTSE 100 has seen a decline of 2.4% this year. The tech heavy NASDAQ has seen its value shave by 30.4% from its peaks with the S&P 500 see a fall of 19.6%. The DOW is down 10.1%. In Asia, the Hang Seng has seen the largest decline of the major indices of 33.9% and the Nikkei 225 lose 3.9%.
Even Gold, the historic safe haven asset, has seen a decline of 9% this year due to dollar strength.
As the above shows, those collectors who already have positions in the fine wine market have benefitted over the last 5 years and are set to continue over the next as the global financial markets re-adjust to a new normal of high interest rates and the struggle to reduce inflation.
The AssetTribe Fine Wine investment fund aims to aid investors take advantage of the fine wine market with a composition of the most collectible regions of fine wine. Find out more by registering today.
