Every spring since 1989 the Sunday Times has published its list of the wealthiest residents in the UK. Whilst most of us would love to aspire to be an entrant actually its very existence is testament to the fact that the list is a great indicator of the health of our economy. “I’ve never seen such a phenomenal rise in personal wealth as the growth in the fortunes of Britain’s 1,000 richest people over the last year.” said Philip Beresford , compiler of the Rich List. The wealthy have never been richer and more of them are based in the UK than ever before. They include 104 billionaires worth £518.9 billion. The wine market has also produced a select band who feature in the rich list.
So what do these fat cats spend their money on? The answer is tangible assets such as property, cars, land, yachts, helicopters and private jets. Increasingly though the rich are also investing in so-called treasure assets like art, classic cars, gold, silver, coins, stamps and of course fine wine. A recent study calculated that if you had invested in the First Growths between 1900 to 2012 your holding would have outperformed government bonds. In the last 20 years compound average annual growth has been 14.9%. The good news for wine investors is that 13% of all high net worth individuals collect fine wine of which 49% hold it as an investment. One top wine merchant said it was a good time for investors because prices had “backed off and there is a growing consumer base in emerging markets. He also praised Bordeaux for its long, solid track record, its quality and security of supply.
Finally, a specialist Bordeaux fine wine merchant opened an office in the USA last year but has recently benefitted from the sustained rebound in the investable wealth of the world’s HNWI’s in 2012 by 10% to $46.2 trillion. In the USA sales of fine wine for the first 4 months of 2014 are 17% ahead of total sales for 2012 and 2013 combined ! They have also seen sales of fine wine increase by 30% in Asia but also in the USA. So it would seem that despite the mediocre 2013 en primeur campaign Bordeaux is set for a resurgence and the rich will love it right now because they will be buying brilliant wine at a bargain basement price. This is in stark contrast to the equity market which looks like it is heading for a correction.