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Special Report

Wine and Champagne Investing - June 2012

Published by Investment Adviser | Jun 25, 2012

When it comes to investing in fine wines, investors appear to be concentrating on French produce alone and may be missing out on grapes grown in Austria, Italy and Portugal, according to research published by professors at the University of East Anglia’s Norwich Business School.

Dr Apostolos Kourtis, lead author of the report and a professor at the school, says: “The investment market deals mostly with French wines, but we found that diversification across the different varieties of French wine is not that effective.

“However, our results suggest that diversification across other wine-producing countries is likely to be much more efficient in reducing overall investment portfolio risk.

“This is probably due to the fact that fine wine prices are sensitive to climate variations at a geographical level.”

Wine market

The fine wine market, which is now valued at approximately $4bn (£2.6bn), has experienced fast-growing demand from Asian and Far Eastern markets, according to the University of East Anglia’s experts. It has had a tough time of late, however, suffering falls in 2011 which have only in the past few months began to stabilise.

Andrew della Casa, director of The Wine Investment Fund, says: “2012 has seen falls in the prices of the biggest names in the wine market, the

so-called ‘first growths’ of Bordeaux. Château Lafite has been the weakest of these.

“Anyone expecting the market to be boosted by the 2011 en primeurs looks likely to be disappointed. Early prices have been over-ambitious for what is an average vintage at best.

“Château Latour’s announcement that it will not offer en primeur from 2013 has interesting longer-term implications: it might drift out of the spotlight, although, on the other hand, the brand might gain greater cachet from being less accessible.

“On balance we believe the move is probably positive for prices of back vintages of Latour.”

Jenny Lowe is features editor at Investment Adviser

IN THIS REPORT
  1. How to invest in fine wine

    Investors must grapple with a whole range of issues to maximise their fine wine returns

  2. Considering British winemakers

    Producers in the UK have found a niche where they can compete with the best winemakers in Europe

  3. Giving a portfolio diversity and fizz

    Prestigious vintages and cuvées can offer investors a good long-term alternative to everyday investments

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