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Millennials are the new buyers responsible for growth, or decline in luxury investments. There are many different categories in the asset class where the millennials are more interested in investing. This generation is spending on expensive dinner dates and has an unquestionable buying power. They constitute the largest buyer market, and in the largest wine market like US where the annual sale of wine goes beyond $62 billion, more than 40 percent of the consumers of wines are millennial (2015 data).
Fine wine continues to provide superior risk-adjusted returns. The Alternative investment report 2019 find the growth in fine wine was superior to various other categories of hedge funds, real estate, art and commodities. It is a physical asset sharing many features and risks with other alternatives remaining uncorrelated with the core financial markets. The report found the other alternatives delivered negative returns in 2018, whereas, fine wine continues to deliver 9.2 percent and hedge funds delivered -4.8 percent and commodities -13.8 percent.
Wine futures provides the option to invest upfront, not on physical bottles but on future price where the physical bottles are shipped for three years and do not require storage expenses. Futures are, mainly, based on predictions in advance and profit is dependent on the factors such as knowledge of the winter, climate, crops, harvest etc.
Some investors buy pre-arrivals where the wines are not officially released in the market. The buyers pay a lower amount as compared to the market rate and turnaround time for gains can be fast.
Having a greater knowledge of the product provides the opportunity to invest in open markets, where the buyer has a clear sense of volume of production and has the idea of the quality. These can be bottles high in demand and the ones that sell faster as they arrive in the market.
Some buyers invest in vineyard where long-term investment can be made. It requires a greater knowledge and expertise in harvesting and other operational details.
Wine trader in the UK are preparing for Brexit where they said despite pressure there are fears that all imports from the European Union will come under the VI -1 custom declaration that is a time consuming procedure, and in case of no-deal pound may fall, which may lead to loss in parity with euro. EU is ready to offer a long extension of the Article 50 negotiation until the end of 2019 to avoid no-deal. The IMF warned the situation of no-deal can hit global economy where slowdown in growth can be up to 70 percent in 2019. However, the US president unveiled the plans to impose tariffs on wine, plane and cheese, which will hit goods worth over $11 billion. President Trump tweeted over the new tariff announcements - the EU has taken advantage of US for many years and now this will stop.
To find out more about fine wine investment, check 99 Alternatives at (http://www.99alternatives.com).
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