Wine Investment: The Port in a Storm

Peter Shakeshaft - Vin-X blog Vin-X examines wine investment’s potential role as a safe haven in times of trouble

One of wine’s most appealing attributes is its status as a sort of international currency, much in the same way gold is regarded: As a tangible asset with inherent value, it is far less susceptible to market fluctuations and drops, especially in times of economic difficulty or market uncertainty. One great way to examine this is to look at incidents which have seen mainstream markets post significant losses, and to compare what happened in the wine market during the same period. Let’s start with the FTSE 100:

FTSE 100

The three events highlighted above were economic disasters, to the extent that looking at the graph above, the FTSE has still not returned to its pre-dot com bubble levels, even after more than a decade. One might be forgiven for assuming that wine must have followed a similar path during this period, but look at the graph below:

Liv-Ex 100

None of these events caused anything like the turmoil suffered by the mainstream markets. This is because the value of wine is not dependent on other elements: its worth is inherent. If the US Federal Reserve changes interest rates, that doesn’t mean a case of Château Latour 2000 goes down in quality: this is what allows wine to function not only as an excellent asset for investment and capital growth, but also a powerful means of portfolio diversification for canny savers.

It should also be pointed out that wine bears NO correlation to mainstream markets, unlike other safe haven investments which display inverse correlation. Take gold, for example: yes, in times of trouble, gold will jump in value accordingly. However, this also makes gold as an asset much more volatile: it is unlikely to enjoy long term, steady growth, and will suffer more bubbles along the way. While this makes it a great way to potentially make some short-term gains, it cannot compare to wine’s long term stability and consistency. When it comes to long term stability, wine really is one of the safest places to invest.