Which investment wines are tipped for growth in 2020? Whether you are looking to invest in fine wine for the first time or to strengthen your portfolio, you will want to know what are the best wines for investment in 2020?
As with any asset, the aim is to select those investment wines which offer the most potential in terms of future price performance and liquidity. The important thing to remember is that fine wine’s primary asset characteristic is stable long term growth which in turn provides diversification from more volatile financial markets. In addition fine wine investment benefits include advantageous tax treatment as any gains do not generally attract Capital Gains Tax (subject to personal circumstances – always seek specialist tax advice).
2019 performance may point to top wine investments in 2020
Liv-ex’s Power 100 Report, which ranks the 100 most powerful fine wine brands of the year, provides a useful source of fine wine market information when considering wine investment in 2020. The report sets out a 12 month snapshot (01.09.2018 – 31.08.2019) on a broadening fine wine market and the 2019 edition is the first Power 100 ranking (first published in 2005), where only one Bordeaux First Growth brand makes the top ten list.
Liv-ex Power 100 2019 – Top 10 fine wine brands
|Fine Wine Brand||2019||Average price||Av price growth||No. of unique wines traded on Liv-ex|
|Moet & Chandon||9||£1,427||5.2%||42|
Source: Liv-ex Power 100 Report, 2019
Burgundy accounted for the top three brands in the Power 100 in 2019, producing some of the most valuable wine investments in the world delivering the highest levels of growth. Prieuré Roch, for example, had an average price growth of 51% in the ranking term. Identifying the right Burgundy wines is important in 2020 as, overall, the region’s trend performance drifted in 2019 so identifying those individual brands that are priced for further growth and that will weather a challenging market are key.
Bordeaux’s First Growths still lead the fine wine market in terms of value traded on Liv-ex and major volumes, providing portfolio liquidity. It’s essential to understand that whilst Bordeaux features so lightly in the top ten, the levels of trade have not dropped, the broadening market has impacted share and price performance. Identifying individual Bordeaux wines that are priced for growth is a key challenge as it is important to include blue-chip Bordeaux wines in a rounded investment portfolio and in a wine investment strategy for 2020.
Of particular note this year is the ten year anniversary rescore of the stellar 2010 vintage by key international critics. 2010 is one of the two most highly quality scored vintages of this century, along with 2009. Critical rescores have historically moved markets in particular wines and there is a potential to add value right now – the tastings are planned for the end of January with scores expected to be published by early March. Owners of these wines are well positioned and the best Bordeaux 2010s must be considered for an early purchase in January before the rumour mill gets working and prices start to move.
Champagne and Italian wines have seen strong growth in 2019 and Liv-ex reported their Champagne 50 and Italy 100 indices both grew 2.2% and 4.7% respectively last year. Wines from these regions are currently exempt from US Trade Tariffs imposed last Autumn, and the key brands are important opportunities for growth in 2020.
An investor firstly needs to be clear on their budget for fine wine investment in 2020 and with investment goals such as the potential target returns, desired investment term and attitude to risk, then review the top investment wines to suit. Fine wines for investment are selected for their growth potential based on past performance, current market trend and anticipated returns over the medium to long term. Remember that fine wine investments deliver the best possible returns over the longer term.
Liv-ex reported the following wines as major market movers in December 2019
|Region||Wine||Vintage||November £||December £||Change %|
|Bordeaux||Mission Haut Brion||1989||£13,442||£15,300||13.8%|
|Burgundy||Domaine Leflaive, Batard Montrachet||2013||£3,200||£3,625||13.3%|
Source: Liv-ex Market Report January 2020
Factors For Wine Investment in 2020
- Fine wines enjoying growing demand and regional market trend – investment-grade Champagne and Italian wines are a key focus for growth this year
- Blue-chip, very highly scored Bordeaux wines, in particular Parker 100 pointers and 2010 vintage wines, which are currently priced to offer value and enjoy active secondary markets, are important building blocks to a fine wine portfolio. Top Right Bank wines are of particular interest, prime vintage First Growths and their second wines which could be perceived to be trading at a discount currently should be considered targets.
- Bordeaux’s 2019 en primeur campaign is strategically important for the region – rumours of another high quality vintage but pricing is key
- Emerging Burgundy brands are enjoying new market attention as the trade and consumers seek value in wines of the region. Be aware of Burgundies with prices that have any doubt over sustainability. Very rare wines will generally perform well, especially those with very low production levels.
- US Tariffs are a key influencer – if the muted 100% Tariffs on all EU wines are put in place this will have a significant impact on any fine wine investment strategy in 2020. Iconic Californian wines may be of interest as US domestic buyers potentially seek value creating potential for increased demand globally for these wines.
- One-off unusual events which can create spikes in demand and price movement are important to monitor the market for, for example the critics’ rescores of the 2010 Bordeaux vintage – investors will have to wait five years until the 2015 vintage is rescored to get an opportunity for a similar potential movement on a top prime vintage and 2010 has a higher average score across the board.
- Brexit uncertainty may impact levels of trade and market confidence generally but fine wine should be considered a long term hold and 2020 could be a key opportunity to take advantage where prices have been suppressed to position for long term growth.
The top fine wine brands for investment in 2020
With these factors in mind and the current market conditions, our view right now on brands to be shortlisted for top wine investments in 2020 would include the following:
- Giacomo Conterno Barolo
- Louise Roederer, Cristal
- Dom Perignon
For more information about fine wine investment read our Guide to Investing in Wine and to get our view on which specific wines you should be looking at now or to get started with investing in wine call us on 0203 384 2262, or alternatively, visit our contact page to send a message.