Why Wine Is The Perfect Investment

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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 the world’s total 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 year after year.

Watch the video: Why Invest in wine?

Investing

Historically, Wine Is The Best Investment

Wine is the perfect investment as the risk is substantially lower than for investments in the stock market. Where share prices may increase one day and decrease the next, wine provides stable returns year after year and only very rarely decreases in value. Since 2004, wine has yielded a return of 247%1, whereas, over the same period, the stock market, with a return of 129%2, has provided a significantly lower yield. That makes wine a better and more reliable investment than both real estate and stocks.

 

Market Performance Since 2004

  • Wine+ 247%
  • Stocks+ 129%

1: An index composed of four Liv-ex indices: Bordeaux 500 (10%), Burgundy 150 (40%), Champagne 50 (30%) and Rest of World 50 (20%) rebalanced on a monthly basis, converted to EUR.

2: MSCI Europe net total return in EUR.

Continuity

+ 8% Annual Return

The average annual return of 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 a combination of several factors, including limited constant production, increasing demand, ongoing consumption, and rising production costs.

  • Constant production

    Constant Production

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

  • Increasing demand

    Increasing Demand

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

  • Konsum

    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.

  • Inflationen

    Rising Costs

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

Stability

Put Yourself In A Strong Position If A Crisis Strikes

The financial crisis is a perfect example of the resilience of wine investments in relation to crises and difficult times.

From May 2007 to February 2009, the value of the stock market was more than halved1, whereas, during the same period, wine never lost more than 15% of its value.

Merely half a year after the peak of the financial crisis, wine prices were again at the same level as before the crisis.

By comparison, it took five years from the peak of the financial crisis until the stock market had fully recovered and returned to the same level as before the crisis2.

Wine as an investment provides both a higher return than the stock market and is also particularly resilient during times of crises.

From a historical point of view, wine has yielded high returns during good times and has preserved capital during hard times.

Despite a low risk, wine has delivered better returns than both the stock market and real estate over the past 15 years.

Wine can with advantage be included as a low-risk element in an investment portfolio similar to bonds and other capital-preserving assets and can contribute to spreading risk and increasing returns on the investment.

1: From May 2007 and the following 21 months, the value of MSCI Europe Net Returns measured in EUR dropped by 52%.

2: At the beginning of February 2014, five years after MSCI Europe Net Returns’ was at its lowest (measured in EUR) in February 2009, the stock market was at the same level as the pre-crisis level back in May 2007.

The Financial Crisis 2007-2009

  • Wine
  • Stocks
Capital Preservation
Capital Preservation

A Strong And Capital Preserving Asset

With an investment in wine you’ll have an asset that has not only delivered 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 strong capital preserving properties because it is an ungeared product. It will not lose its worth overnight. In other words, you can say 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 to a significantly less extent 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 small drops and even nice increases in value. Seen 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 the strong capital preserving properties during crisis, 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
Quality Assurance

RareWine Invest’s Wine Detective Safeguards Your Investment

In line with rising wine prices and the fact that the price of the most expensive bottles has far exceeded € 30.000, the incentive to produce fake wine also increases. Producing fake wines is a relatively new fact of life and, as the largest provider of investment wines in Scandinavia, we take this problem very seriously. All wines traded through RareWine Invest are checked by our wine detective, who in connection with this work has built one of the world’s largest image archives of rare and expensive wines. Today, the archive contains more than 100,000 high-resolution images of both real and fake wines, which ensures your investment against counterfeits.

Wine detective Mads Pedersen works solely with quality assurance and anti-fraud at RareWine. In close collaboration with wine producers and auction houses, among others, he works every day to make the world of wine a safer place.

Mads Pedersen is today among Europe’s most skilled in his profession, and his anti-fraud work is internationally renowned.

Return On Investment

14 Good Wine Investments

Over time, the return on investments in wine has justified the use of the term investment wine. There are numerous examples of wines with rising prices that 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, therefore, rise and fall every day in line with new information becoming available and the changing mood of the market.

Thus, at times, the stock market is very volatile, and this results 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 in connection with their quarterly report for Q4 2018.

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

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

Wine Purchased Valuation returns
2008 Chateau Le Pin (OWC3) Bordeaux €1.030 Jul 2002 €2.000 Jan 2019 94% 11% Annual
1998 Chateau Petrus (OWC6) Bordeaux €2.450 Dec 2016 €3.000 Jan 2019 22% 10% Annual
2013 Domaine Leroy - Richebourg (OWC6) Bourgogne €2.250 Apr 2017 €4.250 Jan 2019 89% 46% Annual
2013 Domaine Leflaive - Montrachet (Loose) Bourgogne €4.400 Dec 2016 €7.000 Jan 2019 59% 26% Annual
2010 Bernard Dugat-Py - Chambertin (OWC2) Bourgogne €1.500 Okt 2016 €2.300 Jan 2019 53% 21% Annual
2013 Armand Rousseau - Chambertin (Loose) Bourgogne €800 Jun 2017 €1.200 Jan 2019 50% 29% Annual
2014 DRC Assortment (1*R, 1*LT, 1*RC, 1*GE, 1*E, 1*RSV) (OWC6) Bourgogne €19.500 Jun 2017 €27.000 Jan 2019 38% 24% Annual
1998 Krug - Vintage (OC6) Champagne €155 Okt 2014 €220 Jan 2019 42% 9% Annual
1995 Charles Heidsieck - Blanc Millenaires Brut (OC6) Champagne €60 Dec 2014 €115 Jan 2019 92% 17% Annual
2002 Salon - Mesnil Cuvée "S" (OWC6) Champagne €310 Feb 2018 €420 Jan 2019 35% 42% Annual
1996 Krug - Clos du Mesnil - magnum (OWC1) Champagne €3.300 Aug 2017 €4.500 Jan 2019 36% 26% Annual
2007 Louis Roederer- Cristal (GB1/OC6) Champagne €106 Jan 2015 €145 Jan 2019 37% 8% Annual
2004 Bruno Giacosa - Barolo Riserva Rocche Falletto (OWC6) Italien €475 Mar 2017 €850 Jan 2019 79% 39% Annual
2014 Weingut Keller - Keller Kiste (assortment) (OWC12) Tyskland €2.800 Aug 2017 €5.300 Jan 2019 89% 60% Annual
Johnny V. Jensen.JPG

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

Prospectus

Get RareWine Invest’s Free Guide To Investing in Wine

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