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Opportunities are Infinite
2018 was a record year for stocks and was considered to be a record-breaking year for fine wine market as well where it had two strong gains as the Liv-ex 1000 grew 10per cent over the last year and Burgundy gained over 35 per cent. Other famous brands in the category include the bottle of Domain Romanee-Conti 1945 that was auctioned for US$ 558,000. The market share of Bordeaux declined 68 per cent in 2017 to 59 per cent in 2018 as the investors were trying to improve their scope and encompass a number of smaller production estates. In the classic luxury investment category, Bordeaux is considered better than gold due to higher returns and lower unpredictability in price.
Luxury asset class have done exceptionally well in the last decade where luxury cars gained 258 per cent and it was the only investment able to give a better return like a rare whiskey that gained over 582 per cent in the same time (in the US dollars). The NASDAQ returns were 330%, while, S&P delivered 250 per cent. Sotheby record finds the most expensive cars sold in 2008 was a 1963 Ferrari 250 GTO auctioned for $28.5m, and the 1962 Ferrari 250 GTO sold for $48.4m, after ten years.
In both the asset classes - wines and cars, scarcity remains the key driving factor for demand. The investors should be careful while buying such luxury products like the car as the model should be free of rust and should possess original parts and good looks.
Nevertheless, in the case of wine, one should try to gain knowledge about the various types of vintage drinks. The UK is one of the key markets for Bordeaux future, and the US started a business in the category in the last year and now, China and Asia are the markets which may see a growth in demand, although, the region prefers vintage en-primeur ready to drink.
Fine wine market may see buoyancy as it is moving towards the bull market where Brexit may create a new demand as the buyers are taking defensive investment positions in tangible assets like gold, wine and cars.
The US itself is the biggest buyer of EU wines - that accounts for only 16 per cent of its imports. The trade war led to the imposition of extra taxes on imports where the latest retaliatory taxes became effective on June 1 putting an additional 15 per cent tariffs on US wine and increasing the total cost by 54 percent, on the top of preexisting 37 percent, which will increase the total price by 91 percent in China as compared to US rates.
It has been an important market for the industry due to the sheer size and potential where the growing middle class and the new millionaires create greater demand. The last year duties resulted in fall in exports from the US to China by 25 percent, furthermore, China has moved on to alternative sellers like New Zealand, Australia, Europe and Chile, who have renegotiated some new deals to allow their products to enter their markets at zero tariffs.
To find out more about classic wine investment, check 99 Alternatives at (http://www.99alternatives.com).
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