Wine, like gold bullion, rare coins, fine art and other collectibles is seen by some as an alternative investment other than the more traditional investment holdings of stocks, bonds or cash. It has been associated with low levels of risk and stable returns thanks to its unique characteristics as an asset.
Over the past year, the value of investment wines has grown by 20%, as more investors diversify their portfolios. The handful of Bordeaux and Burgundy estates in France (which are considered investment grade wines) produce wine in relatively small quantities, which ultimately limits supply every harvest and diminishes as a consequence of consumption. Demand on the other hand, particularly for attractive estates, tends to outstrip supply.
Taking into consideration that this year's harvest will be “the smallerst since 1945” according to the French agriculture ministry, the cost of European wine is set to soar. Bordeaux which covers 25% of all Appellation Contrôlée vineyards in France, has a significant impact on the figures
Data from Liv-ex, the global marketplace for fine wine which produces indices that track the wine market, show that the 10 best performing wines over the past five years have increased in value by an average of 150%.
The best performer, Petit Mouton 2011, has jumped by 165% followed by Krug, Vintage Brut 1990 (162%) DRC, Grands Echezeaux 2006, (152%) Armand Rousseau, Gevrey Chambertin Clos St Jacques 2006 (152%), Solaia 2004 (150%), DRC, Tache 2004 (149%), Dominus 2004 (148%), DRC, Grands Echezeaux 2007 (145%), Calon Segur 2007 (139%) and DRC, Tache 2008 (136%).
Liv-ex was founded in 2000 by former stockbrokers James Miles and Justin Gibbs. The Liv-ex Fine Wine 100 – composed of wines from eight different regions – is recognised as the industry benchmark.