News - 13. March 2020

How Does COVID-19 Affect Wine Investment?

In light of the recent development across the world it is appropriate to put COVID-19 in relation to wine investment and bring some answers

How Is Wine Investment Affected By COVID-19?

Given the recent developments in the stock market as a result of COVID-19 in particular, is it natural to ask the question of how wine prices are affected?

First and foremost, it is important to keep in mind that developments in the stock market do not necessarily reflect the price trend for wine, although one must assume that wine prices will also be adversely affected.

No Historical Correlation Between Stocks And Wine

Since the financial crisis in 2007-2009, we have experienced four corrections in the stock market, including COVID-19. In those scenarios, the wine market has reacted with stability and small declines - or even increases. So there is no immediate historical evidence to conclude that wine prices necessarily fall in line with the stock market.

On the other hand, there is no evidence to conclude that wine prices will rise in the near future. As a result of large sections of society shutting down social activities, events, bars, and nightclubs, we will undoubtedly experience less demand and consumption of wine and spirits for a limited time.

We also look at a global pandemic, which undoubtedly creates uncertainty and lack of efficiency in the market, which can also negatively affect the prices of wine and spirits - losses that have historically been significantly less than for example stocks.

What does corona virus mean to wine investment

Enjoy A Good Night’s Sleep

At a time when the stock market is facing an uncertain future and attracting high-risk profiles, wine represents a safer haven. If you are the type in demand of low risk and stable return, then wine can be the perfect investment for you because in times of crisis wine has been far less at risk of decline than stocks have.

Although in a snapshot the world may seem to be going low, one must keep in mind the basic principles of wine investment. It is still about supply and demand, limited production and growing wine interest, increased wealth and the desire to buy good wine worldwide. These basic assumptions have not changed at this time, nor have they been with previous corrections or crises.

In other words, wine investors should forget about worrying and enjoys a good night’s sleep. Wine is historically significantly less volatile than stocks while wine is an actual, non-leveraged product that ultimately cannot go bankrupt.

Stable Returns From Wine

Historically, and despite the world's crises, wine represents solid returns in the long run. Despite the Coruna virus, trade war and similar scenarios, wine is and will be a long-term investment. As long as the basic assumptions have not changed, you can still look forward to the same expected returns over a 5-10 year period, which emphasizes wine’s strong capital preserving properties.

Watch or review the video with CEO Anders Børsen, CEO of RareWine Invest on COVID-19:

Business as usual on the wine market

Business (Almost) As Usual At RareWine

We at RareWine and RareWine Invest naturally follow the recommendations of the authorities and take the necessary precautions to take our share of the responsibility. Practically, this means that from today almost every employee are working from home. This means we are working almost as usual and continue to be accessible to both customers and business partners so that everyday life continues as normal as possible for the benefit of everyone.

If you have any questions related to wine investment you are always welcome to reach out to us. Use the contact form below.

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