Investors in the Far East are increasingly putting their money into collections of fine wine, as global equity and capital markets remain a risky prospect.
Recent analysis by a European fine wine investment house has revealed a growing level of interest by Chinese, Japanese and Filipino investors in the fine wine market – a market that has historically been reserved for European and US connoisseurs of wine and specialist and knowledgeable investors, interested in the broad ‘alternative investment’ arena.
China, in the last five years, has seen the rate of wine consumption grow exponentially. Chinese palates are slowly but surely adapting, learning the complexities attached to wine and making it a greater understood commodity, according to London-based Premier Cru Fine Wine Investment.
It said in light of the economic downturn, wine had rapidly moved from a status symbol to a serious asset opportunity. The Philippines – the third largest wine drinking nation in Asia – has launched the world’s second largest multi-million dollar wine storage warehouse, and the wine investment market has taken off.
According to portfolio specialists at Premier Cru, the sudden incline in wine as an investment stems from the culmination of the strength of the wine market (versus the stock market) in the last six months, the historical outperformance of wine as an asset class in previous economic downturns, and the valuation of the yen pegged against sterling.
Gavin Saffer, of Premier Cru, said: “Historically a wine’s lack of price volatility has proven it to be a solid alternative to the stock market, in times of downturn. It is an asset that improves over time and it has consistently outperformed all other forms of recognised investments.
“Investment in wine over the last seven years has produced an average annual return of 16 per cent, easily outstripping the performance of western stock markets over the same period. What’s more, there is no capital gains tax on fine wine investment. The culmination of the history and security behind this form of investment has attracted a new breed of investor from territories spanning as far as the Philippines, seeking to step away from traditional forms affiliated by shady human intervention and the banking sector.
“Savvy Japanese investors are now placing significant orders with leading wine investment companies, in order to take advantage of the ‘ripe’ market conditions. Due to its geographic positioning, London is the capital of the wine market and investors seeking top level inside advice on turning a cellar are looking to specialists who manage en primeur through to Grand Cru.
“It is apparent that the Chinese are drinking Chateaux Lafite as their number one choice, a vintage that only the very wealthy can afford. The Chinese’s second choice seems to be Carruades De Lafite – the second wine of Chateaux Lafite. It was remarked that both Chateaux Talbot and Chateaux Palmer are favourable also.
“Vintages vary, with the first growth Lafite 1982 the most popular depending on price, aside from this other popular vintages are, 86, 96, 2000, 2003 and 2005. As you can see they are drinking some very young wines like the 03 and 05. In order for one’s palette to grow and appreciate fine wine, drinking young vintages is a good place to start.”
From an investment point of view, Premier Cru said it felt this would create a shortage of 2003 and 2005 vintages.