The market for alternative assets has exploded in the last decade in particular, from collector cards to antiques, and sneakers to classic cars, but one asset class has emerged as a lead performer – fine wine.
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 the 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 the majority 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 has the ambitions and success of top producers from elsewhere. Burgundy has been a star performer over the past decade, the top domaines growing multiples in value, whilst to many people’s surprise Champagne has grown significantly in value during the pandemic, up 37% in 2021 alone*. More broadly the top Super Tuscans have been on collector's radar for some years, Piedmont’s time has arrived and the top reds from northern Spain have been exciting drinkers with the quality coming out of their exceptional old vineyards. 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 and are on the cusp of being joined by others in the coming years in what could be an exciting decade for Australia’s finest names.
When market volatility is rising, or economic conditions point towards challenging times 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 is always in demand with long-term returns strongly underpinned by regular, and ongoing consumption.
A leading innovator in the fine wine investment sector, is London-based OenoFuture, a company with expertise in active portfolio management and with an impeccably credentialled wine sourcing team, headed 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.
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 or releases becomes a significant driver of long-term valuations. Fine wine, broadly defined as those wines for which there is secondary market demand, and which improve in quality over time, is itself a niche part of the total wine industry. 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 like the prestigious Henry Jayer will only go one way…up! It’s also worth remembering that with yields being low in the Burgundy region and demand being stronger than it ever has been – there is only one outcome, asset appreciation, stronger price growth and flourishing dependability.”
- Michael Doerr, CEO
A recent Liv-Ex report (Liv-Ex collates indices on the world’s most traded fine wines), states that fine wine has outperformed the S&P 500 with 13.6% increase over the last 15 years, compared to 7.8% (excluding dividends) for the S&P.
“The potential in wine investment lies in its ability to mimic other asset classes. Like gold, wine can be an exceptional store of value and an effective hedge against inflation during market turbulence. But it can also resemble blue-chip real estate, with potential to double or triple in value over 10 or more years.”
-Justin Knock MW, Director of Wine
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. Fine wine, ironically, is relatively illiquid and can be a comfortable harbour in less volatile waters. Asset-backed, and thanks to legally protected fixed bottle sizes, fine wine is 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 Feb 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.
“Wine is a tremendously exciting asset class that is fascinating, mysterious and yet highly profitable in a world of mundane investment products. It can bring a sense of fresh air to stale portfolios, and a bastion of safety during the turbulent times we are currently experiencing.’
- Ashley Ling, Global Investment Director, OenoFuture
OenoFuture, an Innovative Fine Wine Company
Founded in 2015, OenoFuture 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.
Oeno’s sourcing credentials are underpinned by a diverse team of international wine experts, from France, Italy, Greece, Spain, Australia, and South Africa. Our varied expertise offers us excellent connections and insights into wineries from all over the world. Recently joining the company as Ambassador of Italy is Gabriele Gorelli MW, the first Master of Wine based in Italy, whilst in Spain we work with Almudena Alberca MW, the first Spanish female Master of Wine.
Most recently, we’ve been awarded The World’s No.1 Wine Investment Firm by Investor Magazine in 2021, as well as as Fine Wine Investment Company Of The Year 2019 and 2020 in the European Global Business & Finance Awards.
“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, Head of Investment
Our Unique Approach to Wine Sourcing
By looking into diversified and flexible ways of sourcing wine, OenoFuture has built a portfolio of the world’s rarest and most exquisite wines. This includes purchasing directly from our exclusive wineries, the Bordeaux negociant network (La Place) and acquiring highly sought-after wines from trusted partners in the secondary market that represent a solid investment opportunity for our clients.
As well as wines from traditional regions in France, OenoFuture is known for its particular strengths in fine wines from Italy, Spain, California and Australia which have demonstrated huge potential for growth. And yet, we are always looking out for the next generation of stars and have recently signed exclusive distribution deals for top producers in Piedmont, Mount Etna and in Campania.
“Moving forward we have innovative ideas developing around blockchain to cement our place as the world’s leading fine wine investment company.”
- Sid McNamara-Rajeswaran, Head of Business Development
Diversified Exit Strategies
As with any other alternative assets, it’s crucial to consider options of exit strategies before making an investment. Fine wine, however, is one of the rare asset classes with a full circle cycle, which means it is produced in a regulated quantity, purchased, stored and ultimately consumed.
Oeno’s unique business structure optimises the opportunities in wine for all. In addition to gaining access to the world’s finest and rarest wines, clients investing with OenoFuture enjoy a variety of in-house exit strategies through retail and hospitality buyers of OenoHouse and OenoTrade.