The market for alternative assets has exploded in the last decade, from collector cards to antiques, and sneakers to classic cars, but two asset classes have emerged as lead performers – fine wine and whisky.
According to Knight Frank’s ’s luxury investment index 2021, investment-grade wine has risen 13% in price in the first half of the year, making it frontrunner of all luxury investments including Scotch whisky and Hermès handbags. London is the global centre of the fine wine investment industry, with strong connections to the most important trading markets in North America and Asia, and with critical access to European producers where most of fine wine is made.
Historically the wines of Bordeaux have been the bedrock of the fine wine market, but as production excellence has spread so to have the ambitions and success of top producers from elsewhere. Burgundy has been a star performer over the past decade, Champagne has grown significantly in value during the pandemic, up 37% in 2021 alone. More broadly the top Super Tuscans have been collector’s radar for some years, Piedmont’s time has arrived and the top reds from northern Spain have been attracting investors’ interest. Performance in the New World has been dominated by the top Cabernets from Napa, but Australian drinkers will not be surprised to know that Penfolds and Henschke are highly desired by global investors.
When market volatility is rising, or economic conditions point towards challenging time or fears of recession, savvy investors understand that fine wine’s unique and varied attributes can offer remarkable capital preservation, real value growth and an intelligent way to diversify a portfolio away from more volatile assets. Time has shown that through both good times and bad, fine wine and whisky are always in demand with long-term returns strongly underpinned by ongoing consumption.
A leading innovator in the fine wine investment sector, is London-based Oeno Group, a company with expertise in active portfolio management and with an impeccably credentialled wine sourcing team, formed up by an Australian Master of Wine. A novel feature of Oeno’s offer is access to its extensive network of top restaurant and trade clients (OenoTrade) and luxury central London boutique (OenoHouse), which provide profitable liquidation pathways for investors during their investment lifecycle and offer wineries the opportunity to supply their best wines at their apex of maturity – services which other wine investment companies are unable to match.
Founded in 2015, Oeno Group is a personalised wine investment advisory service that adopts a contemporary approach to wine investment, born out of a vision to make the fine wine market accessible to all regardless of their exposure to or experience of the industry. Our varied expertise offers us excellent connections and insights into wineries from all over the world. In Spain, they work with Almudena Alberca MW, the first Spanish female Master of Wine.
A Rarity by Virtue
What makes fine wine unique among all luxury assets is ongoing consumption, and with annual vintage conditions playing an integral role in a wine’s quality and price it becomes clear that increasing scarcity of specific vintages becomes a significant driver of long-term valuations. Overall, fine wine is considered to represent just the top 1% of the annual USD$400bn global wine industry.
“With the secondary fine wine market breaking all price records over the previous year and being totally unaffected by global turbulence due its minimal correlation, I anticipate that ultra-rare and highly desirable gems will only go one way…up! We are true pioneers in fine wine and whisky investment trailblazing a path through under-the-radar producers and revolutionising the way collectors interact with this unique market.”
- Michael Doerr, CEO & co-founder
Excellent Hedge Against Market Turbulences
In traditional stock, bond, commodity and currency markets volatility can be significant, especially during periods of strong socio-political upheaval, and the deep pools of liquidity that allow these markets to function can make for an uneasy ride for the individual investor. Asset-backed, fine wine and whisky are resistant to inflation by stealth (shrinkflation) and can thus be a wonderful store of value during inflationary eras and stable influence during volatile times.
When COVID-19 first struck markets in February 2020, the S&P 500 dropped by 25%, while the Liv-ex* 1000 index for fine wine slipped by merely 4%. Whilst the S&P recovered strongly, it was nonetheless a traumatic journey for many at a time when such a recovery was deeply uncertain. Similarly, during the 2008 global financial crisis the Liv-Ex 1000 dipped by just 0.6% compared to a stomach-heaving 38.5% for the S&P 500 and in the two years that followed the fine wine market boomed.
“OenoFuture is proud to offer an all-inclusive, impeccable wine investment service by bringing together some of the world’s most qualified wine experts.”
-Daniel Walker, director and co-founder
Whisky is generating quite the buzz in the investment world. With its excellent return on investment and exemption from capital gains, this highly sought-after alternative asset class continues to see incredible growth year after year.
In 2019, a 60-year-old bottle of Macallan whisky - distilled in 1926 and bottled in 1986 - fetched an awe-inspiring £1.5m, making it one of the most expensive bottles of alcohol ever sold (second to Craft Irish Whisky Co.’s, The Emerald Isle Collection, sold for $2m).
Typically, annual returns for investment in rare whisky bottles range from 8 - 10%. Secondary markets have seen strong growth in recent years, with auction sales recording a whopping 40% rise in value from 2018 - 2019.
One of the most exciting benefits to whisky investment is that despite economic uncertainty, whisky’s value continues to flourish, making this sumptuous spirit one of the few tangible assets whose future remains exceptionally bright. Even during the recent pandemic, the 2020 Whisky Market accrued £3.8bn in sales, unphased by the global lockdown.