Long-term investment? Wine is at lower risk than stocks

Demand

Thousands Of Years Of Market Demand Continues

Wine is the world’s oldest and most demanded luxury product, and since ancient Greece and the Roman Empire has been sought after by royalty, nobility, and the upper classes. The best and most exclusive luxury wines constitute less than 0.1% of world wine production. The most expensive and rarest wines are also status symbols, and strong growth in the number of rich and super-rich people worldwide means that demand, and hence also prices, increase yearly.

Watch the video: Why Invest in wine?

Stability

Put Yourself In A Strong Position If A Crisis Strikes

The financial crisis is the perfect example of the resilience that wine investment has against crises and hard times. From November 2007 to February 2009, the value of the stock market nearly halved¹,

while the price of wine behaved quite differently. Here, prices merely stagnated after a period of increase. In fact, it never got worse than Champagne falling by only 3.3% at the worst point after the Lehman Brothers crash, and Burgundy dropping by just 0.9%.

In comparison, it took four years from the financial crisis low point for the stock market to return to its pre-crisis level².

The Corona pandemic is also a good example of wine being a strong asset when crisis hits. The stock market also performed well during the Corona crisis, though this was largely driven by global accommodative monetary policies and central banks, prompted by political intervention, supporting both businesses and the market in general. Something that cannot be expected again when the next “black swan” strikes.

Wine as an investment thus offers both higher returns than stocks in the long run, and is exceptionally resilient to crises.

Historically, wine has delivered high returns in good times and preserved capital in bad times. Despite low risk, wine has outperformed stocks over the past 18 years.

Wine can advantageously be included as a low-risk element in an investment portfolio, alongside bonds and other capital-preserving assets, and can help diversify risk and increase returns.

The Financial Crisis 2007-2009

1: From November 2007 and the following 15 months, the value of the MSCI World Net Returns measured in EUR fell by 43.6%.

2: It was not until December 2012, nearly four years after the MSCI World (measured in EUR) low point in April 2009, that the stock market reached the same level as the pre-crisis level back in November 2007.

Continuity

+ 8% Annual Return

The average annual return on wine has been +8 % for the past 16 years, and it is expected that the price of wine will continue to increase at the same rates. This is due to several factors, including limited constant production, increasing demand, ongoing consumption, and rising production costs.

Constant Production

The production of the best and most exclusive wines is very limited. As the world’s best vineyards are already fully planted and their area cannot be extended, increased demand cannot be responded to by increased production, but only by higher prices.
Increasing Demand

Demand for expensive and exclusive wines is increasing significantly. This is because the world is experiencing both strong growth in the number of wealthy people and a rising global interest in wine, particularly from the “new” economies, including the BRIC countries where a new generation of new wealthy persons increasingly demand luxury goods.
Ongoing Consumption

Our daily consumption of wine continually reduces the supply, resulting in price increases for the remaining bottles. Ongoing consumption is, therefore, an important parameter and often a prerequisite for increases in the price of wine. That is why it is vital to bear in mind ongoing consumption when investing in wine.
Rising Costs

Wine is an agricultural product, and when the production of wine cannot be outsourced and the perception is that machines cannot replace the most skillful wine producers, the cost of production increases. Thus, the price of wine will, at minimum, rise in line with the general price movement; hence, wine investment is secured against inflation.

Find answers on frequently asked questions here

Investing

Historically, wine is the best investment

Wine is the perfect investment because the risk is significantly lower compared to stocks. While stocks can rise one day and fall the next, wine delivers stable returns year after year. Even in the face of a historically harsh correction, wine remains an attractive asset. Since 2004, Burgundy has returned 578.5%¹ and Champagne 441.5%², while over the same period equities, with a return of 473.5%³, have strong returns, but with significantly more uncertainty and volatility. Overall, wine gives you a better, safer and more stable investment.

Market Performance Since 2004

1: Liv-ex Burgundy 150
2: Liv-ex Champagne 50
3: MSCI World net total return i EUR.

Capital Preservation

A Strong And Capital Preserving Asset

With a wine investment, you will have an asset that has delivered not only stable and solid returns but also an asset with unique capital-preserving properties. This makes wine a perfect investment whether you wish to increase or preserve your fortune.

Wine has substantial capital-preserving properties because it is an ungeared physical product. It will not lose its worth overnight. In other words, if the wine was sought after yesterday, it will also be sought after tomorrow and will, therefore, rarely lose its value.

Wine prices are also sensitive to external factors, but significantly less when compared to, e.g., stocks. When including the current COVID-19 crisis, the stock market has undergone four corrections^* since the financial crisis in 2007-2009. Every time wine has maintained stable prices, been subject to tiny drops and even nice increases in value. In this light, there are no historical facts to conclude that the price of wine drops when the stock market is in crisis. If they drop, it is only for a temporary and limited time.

This means the wine investor will enjoy stable and solid returns during the good times and strong capital-preserving properties during crises, corrections, and even recession.

*A correction of the stock market is defined by a sudden decrease of the value of more than 10%

Read about how COVID-19 is affecting the wine market

Quality

RareWine Invest’s Anti-Fraud Program Safeguards Your Investment

In line with rising wine prices, and the cost of the most expensive bottles has far exceeded € 40.000, the incentive to produce counterfeit wine also increases. Producing fake wines is a relatively new fact of life, and as the largest provider of investment wines globally, we take this problem very seriously. All wines traded through RareWine Invest are checked by our anti-fraud department. Each day, the most expensive wines in the world come in and out of our warehouse. With daily access comes a great responsibility. Through years of extensive work in this area, we have built perhaps the most comprehensive image archive of rare and expensive wines. Today, the archive contains more than 100,000 high-resolution images of genuine and counterfeit wines, ensuring your investment against counterfeits.

In close collaboration with wine producers and auction houses, we work every day to make the world of wine a safer place.

Our anti-fraud program is one of a kind and is internationally recognized as the best in the class.

Return On Investment

14 Good Wine Investments

Over time, the return on wine investments has justified using the term investment wine. Numerous examples of wines with rising prices have been good investments, and from a broader perspective, wine has historically outperformed the global stock market.

The stock market is said to be effective, and share prices rise and fall daily in line with new information becoming available and the changing mood of the market.

Thus, the stock market is sometimes very volatile, resulting in increased risk.

Wine is much more stable as an investment.

There are far fewer events that affect wine prices to move, and the number of events resulting in falling prices is limited.

Instead, prices increase steadily at a steady pace in line with growing demand and the continuous consumption that reduces the supply.

The wines below are examples from existing, actual portfolios.

The investors have purchased the wines through RareWine Invest based on RareWine Invest’s recommendations.

Valuation prices correspond to the sales price of wines on the global market and have been communicated to the investors via My RareWine Invest.

In 2015, the American business magazine Forbes focused on wine investments and compared wine with stocks.

It compared a portfolio of various investment wines with the market index S&P 500 over 20 years. The outcome was that investment wines had provided twice the return on investment compared to stocks from 1993-2013.

Wine	Purchased	Valuation	Returns
2013 Domaine Leroy Richebourg Burgundy	€2.250 Mar 2020	€10.500 Sep 2023	100% 22% Annual
2009 Comte Liger-Belair La Romanée Burgundy	€2.590 Jan 2019	€4.500 Feb 2021	74% 30% Annual
2007 d'Auvenay Auxey Duresses Blanc Burgundy	€750 May 2020	€5.000 Aug 2024	567% 56% Annual
2012 Coche-Dury Corton-Charlemagne Blanc Burgundy	€2.250 Jul 2020	€5.250 Oct 2024	133% 22% Annual
2017 Bizot Vosne-Romanée Burgundy	€650 Jul 2021	€3350 May 2024	415% 78% Annual
2005 Jacques Selosse Millesime Champagne	€420 Jan 2019	€1550 Jun 2021	269% 25% Annual
Krug Collection Coffret Champagne	€460 Nov 2019	€1900 Apr 2024	313% 38% Annual
2002 Salon Cuvée "S" Champagne	€450 Jul 2019	€1.100 Oct 2023	144% 23% Annual
1996 Dom Pérignon Champagne	€220 Nov 2019	€370 Nov 2023	68% 14% Annual
1998 Krug Vintage Champagne	€130 Feb 2017	€400 Nov 2023	208% 18% Annual
2017 Petrus Bordeaux	€1.300 Aug 2020	€2.450 Sep 2024	88% 17% Annual
2016 Tignanello Italy	€60 Nov 2019	€150 Feb 2024	154% 25% Annual
2012 Sassicaia Italy	€115 Jan 2019	€220 Apr 2024	91% 13% Annual
Brora 38YO 16th release 1977 Whisky	€1.200 Jun 2020	€2.150 Jan 2024	79% 18% Annual

I consider wine investment to be a supplement to other investments. Historically, we have seen fine returns on investments in wine, which I find appealing. Finally, it is also good fun to be able to invest in an area that I’m really interested in.

Johnny V. Jensen

Aalborg

Investment Guide

Get RareWine Invest’s Guide To Investing in Wine

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Why Wine Is The Perfect Investment