As interest in alternative asset investment grows, investing in fine wine is becoming popular. With the traditional Bordeaux region a stable and predictable way to diversify and grow an investment portfolio is this a better option than backing Burgundy?
Following the great success of Burgundy’s 2010 vintage there has been a sharp rise in interest in it from those looking to invest in fine wine.
However, the Board of Premier Cru Fine Wine Investments Ltd. (“Premier Cru”), the world’s leading fine wine investment adviser, forewarns investors to avoid backing Burgundy investment wines and focus on the traditional Bordeaux region as a more stable and predictable way to diversify and grow an investment portfolio.
Investors are being warned to be very careful if they are inexperienced in this particular region as whilst the wines are incredible and the market is well established, the prices are significantly higher than even the best Bordeaux Clarets. This coupled with the volatility in Burgundy and small buying market makes this a far higher risk strategy than the traditional Bordeaux.
To sell you Burgundy wine investment can be a very lengthy process as there are simply not that many buyers for wines at £10,000 per bottle.
Premier Cru feels that Bordeaux wine investment remains the best option with a market that is mature, liquid and which carries a strong secondary global market. Barriers to entry are also lower than Burgundy.
Paula Golding, Managing Director of Premier Cru commented: “The Bordeaux wine market has a tendency to recover quickly; had you invested at the beginning of 2009, following the 2008 market fall and subsequent financial global turmoil, your cellar would have been showing a 15-20% profit by the end of the same year.
“We are seeing the same scenario playing out again; now is the time for investors to take advantage of depressed prices of select Bordeaux vintages.”
Premier Cru believes the fine wine market will return to growth, as it always does.
Bordeaux will always be the preferred option for the fine wine investor and although it is not a viable time to buy 2010 Bordeaux, it points to the ultimate opportunity of pre-2006 vintages, which can be picked up at good value and are expected to perform well through 2012 and beyond.
MoneyHighStreet comments: “Clearly many investors are looking at wine investments as a good alternative asset to diversify or boost their returns. The wine collectables market though is highly specialised and you may be best to seek advice from a wine broker.
“Clearly Premier Cru are looking forward to Bordeaux wine continuing to be a strong market to consider.
“If investing in wine, be aware of the cost and complexities of storing the wine. If it is stored incorrectly it could be rendered worthless. It is unlikely that your standard home insurance will cover your wine collection and you will need to make sure you protect your investment with suitable insurance cover.
“Please remember too that the value of wine can go up as well as down – albeit if prices do fall at least you do have the potential to drown your sorrows by opening a bottle or two!”
Fine wine investments are not regulated under the Financial Services Act 1986.