Your Investments
the wine investment market, with a number of Chateaux, vintages and stages (en primeur or in bottle) to invest in. This diversity is a rare opportunity in the investment world. Whilst gold is simply gold, and silver is simply silver, with wine you are given the selection of a number of options. For people with large amounts of funds to invest in, the Premier Cru, or First Growth wines, can cost around £10,000 per case, but for those with less investment capital, Second Growth wines, which are still of
high investment quality, can be purchased for as little as £1-2000.
Those are the foundations that make wine a solid investment and what makes it a great investment are certain conditions that are apparent this year.
American wine expert Robert Parker is the leading global authority when it comes to appraising the quality of wine and in particular his review of the investment grade wines of Bordeaux are much anticipated by the market. Parker’s scores grade the quality of wine out of 100 points, in which investment quality wines generally command a score of more than 90 points and the truly extraordinary rate between 96 – 100 points.
Wines are scored each year at en primeur stage (following the previous Autumn harvest); for example the 2011 en primeur tastings are expected imminently. These wines will remain in cask for up to three years and will then be tasted and scored again as they go into bottle. The 2009 vintage was scored at the beginning of March and Parker has determined that 2009 is recorded as the best vintage in modern times; awarding a record 19 Chateaux the perfect 100. These scores have a huge impact on the investment market and have already driven up prices as investors clamber for the finest wine ever made.
The effect Parker’s scores can have on the investment market are immense. In just 24 hours following Parker releasing his scores, the market value of the 2009 Bordeaux moved in excess of $100 million. When this is investigated in terms of individual Chateau, this effect is quite remarkable. The Cos d’Estournel for example, jumped up by approximately 35 per cent in three months, from £2,595 at the end of 2011 to £3,500 following the release of Parker’s scores. The Smith Haut Lafitte, meanwhile, nearly doubled in value overnight, increasing from a price of £700 pre-scores to trading
price of £1,300 once the scores were released.
Equally history has a habit of repeating itself which further suggests that 2012 could be a very good year. Wine investment has only seen three corrections in the market; 1998, 2008 and last year in 2011. Following the first two corrections, what followed was two to three years of strong growth, meaning there is no better time than the present to enter the market.
Elsewhere, though the Eurozone
remains locked in crisis, the BRIC countries continue to show impressive growth, in particular in China, which is having a huge knock on effect on the wine market. China recently reported that its economic growth had slowed but was still at 8.9% in the fourth quarter for 2011. Indeed growth from the year as a whole was down from 10.3% in 2010 but still remains strong at 9.2%. The rapid growth has seen a significant amount of new wealth develop in the country, thus breeding a new affluent class who are unafraid to show it off. In recent years there has been a huge amount of fine wine consumed in China. The effect is twofold; not only is there a greater demand which drives up prices but also the more that gets drunk, the rarer it becomes which again impacts on value. Tax changes expected in India later this year could potentially instigate a boom in fine wine importation there too adding to the global appetite for an already infinite supply, presenting a further significant opportunity for investors.
Fine wine is increasingly a valid investment option for the man on the street and more investors are turning to wine. With all of the conditions mentioned above in place, the time has never been better for investors to move into the wine market for the first time.
Ultimately, if the world does end in 2012 (as some might predict!) then at least during the Armageddon you are left with a commodity that you can drink!
www.vin-x.co.uk 37 entrepreneurcountry
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