A number of wines have traded at all-time highs since the UK’s EU referendum and the subsequent “Brexit boom” for the fine wine market continues to roll on with the year to date stats for all of Liv-ex key indices riding high.
Most of these wines have been Bordeaux reds with noted individual performances reported by Liv-ex including Talbot which has the most vintages that have traded at fresh highs since Brexit (eleven), Palmer (ten) and Lynch Bages (nine) close behind. Outside of Bordeaux, Sassicaia has the most vintages (eight) that have traded at all-time highs since Brexit.
The market has now seen nine consecutive months of positive growth, risen more than 11 per cent since Brexit and 20 per cent since the start of the year. Investors are returning in full force from both traditional and new markets as the commodity is evidently being used as a currency hedge in the current volatile environment.
The obvious question is how long can this level of growth go on for?Firstly, nobody has a crystal ball in the current global, never mind domestic (UK), environment and we are yet to feel the effects of the outcome of the US presidential elections to take place in only 2 months. But whilst uncertainty prevails one thing is certain, tangible investments, with finite supply like fine wine, will continue to offer a safe haven.
Can investors new to the market still enter at a price that will deliver an attractive return on investment?Yes we believe strongly that they can – but let’s not forget that fine wine will never be a short-term hold. There are opportunities to profit over the short term but these are not the norm and should not be the investment target. Over the medium to long term fine wine has outperformed equities, property and other asset classes, there is plenty of data and market commentary supporting this fact.
The fine wine market suffered a negative cycle since the market peak 5 years ago in 2011 with prices stabilizing in 2015 and at the start of 2016 we witnessed the ‘first real green shoots of recovery’ that really felt that the market had turned and we were looking at an environment to support sustained growth. What was not anticipated was the outcome of the Brexit vote and the demand for fine wine post this event. With astute selection right now investors can buy some of the finest wines in the world still priced at a significant discount to previous market highs as a result of the recent negative cycle. The timing really is right and the case is very strong to be including fine wine in your investment portfolio.
For more information on the market and the current best opportunities contact the Vin-X team now on 0203 384 2262.