Strengthen financial planning with fine wine

Strengthen financial planning with fine wine

“Investment in fine wine is all about performance – I believe in it so much I joined the team in 2011.

"With an annual growth rate of 14% in the last 15 years, you should too.” Austin Healey, Leicester, England, British Lion.

•    In the last 12 months to 30th April 2017 the fine wine market (Liv-ex 100) grew over 19%.

•    Both the Barclays Wealth and Knight Frank annual wealth reports clearly indicate “significant” investment in fine wine by High Net Worth Investors.

•    Liv-ex, the “stock” exchange equivalent of the fine wine market, strengthens liquidity – forgive the pun!

•    Vin-X launches its specialist fine wine investment platform for professional advisers and their clients.

Financial planners are increasingly adopting investment strategies to include tangible, alternative assets such as fine wine, with proven performance history and the ability to diversify and strengthen portfolios. 

Martin Pruszynski, Head of Procurement at Vin-X, says: “These investments are becoming increasingly attractive to global investors with growing demand from the UK, China, USA and other developing markets. It is a fact that the fine wine market has consistently delivered long-term value to investors.”

Indeed, Liv-ex reports that its key index, the Liv-ex 100, which measures the one hundred most actively traded fine wines on the exchange, has recorded 14% annual growth over the last 15 years. In 2016 the index rose more than 25%, outperforming the FTSE 100, S&P 500, gold and other assets. 

Pruszynski adds: "Even though the UK and American stock markets have reached record highs, Liv-ex reported in early May that the 12 months to 30th April 2017 saw the Liv-ex 100 index growth at 19.8% outperforming the FTSE and the S&P500 by nearly 5%.

"Fine wine even outstripped gold, often seen as a safe haven asset, in the period by a notable 10%. In fact fine wine as an asset class has outperformed all the major indices over the last 10, 20 and 30 years!”

The economic fact is that every year there is an ‘absolute’ finite supply of investment-grade wine created by around thirty producers worldwide.

Lafite Rothschild is one of the most sought after luxury brands in the world and has one of the highest production levels in the market, but even they only produce approximately 15,000 cases a year to satisfy discerning drinkers and collectors.  

Growing international demand and severely constrained supply combine to give a lucrative investment, helped by an active secondary market and a product whose supply is constantly diminishing as corks are pulled.

In this virtuous circle rare vintage wines only get scarcer and, as a consequence, more valuable over time.

So as an asset what does fine wine have to offer?

Investor benefits: 

•    Performance: a stable investment, whose performance is not directly correlated with volatile financial markets with an impressive track record of delivering strong long term growth that outperforms other asset classes.

•    Tax advantage: profits on fine wine sales are generally exempt from Capital Gains Tax, subject to personal circumstances.