Luxury assets continue rapid growth, but which is the best?

Steve McConnell - Vin-X BloggerWine, watches and other luxury goods are the toast of BRIC investors 

Luxury Good InvestmentWine, watches and other luxury goods are the toast of BRIC investors in the last 5 years or so, with Brazil, Russia, India and China registering a CAGR (Compound Annual Growth Rate) of 22.4% in this area since 2007. Real luxury assets can provide stability and diversity to any portfolio, but which investment is the best one? 

According to wealthinsight.com’s recent report, some have fared better than others. Classic cars, once praised for its exceptional growth and capital gains rates, have “not made the transition into an asset class,” owing to the complexity of the market. Fine art, while continuing to grow, remains inaccessible for many, and even the best fine art collection is extremely illiquid and difficult to sell. So how have investments in wine been doing?

According to the Liv-Ex October Market Report, as the market begins to pick up steam following the traditional summer breather, changes in demand from the secondary market are leading to new opportunities and fresh approaches. The report states that “as fine wine traders seek out new markets the breadth and depth of the market has grown… this increased liquidity might suggest that as a whole the market is becoming more healthy and less narrowly focussed.” Indeed, though Bordeaux remains the top dog with an 80% market share, the USA’s record market share of 2.6%  and the continuing rise of the Super Tuscans and Burgundies suggest that what was once a sleepy, slow-moving market is rapidly becoming more dynamic.

When taken in conjunction with the historical strengths of wine as an investment, and the value to be found amongst wines whose prices have fallen in the correction, now is the perfect time to be looking into wine investment both for first time buyers and long-term traders. Now more than ever, however, navigating this evolving market successfully requires expert advice, and one should always consult a wine investment professional when looking to invest.