Trade wars and Chinese demand in Fine Wine  

The advantages of wine investment are – finite supply and growing demand in the emerging markets and weak pounds where sterling is declining, which can make it affordable to foreign buyers. It has its own stock exchange Liv-ex where a global set of traders can provide reliable opportunities with double-digit growth. 

These are tangible assets, which can be held at storage, and the growth can be in the range of 8 to 12 per cent compound. The luxury index by Knight Frank shows it was a top performer with 25 per cent growth in 2017, where the key growth markets were Bordeaux, Burgundy and northern Italian markets. 

The higher amount of investment-grade wine is produced in the Bordeaux region with 60 per cent investment, and the 40 per cent include Burgundy, US, and Italian brands, Champagne and others. Historically, Roman brought them to France, where they planted Bordeaux and drank and worshipped, that bear a resemblance to the Eastern traditions, but investment grew in the past few decades. 

In the last few years, Chateaux are considered to be the finest, where it accounted for over 70 per cent of the market.   Such deals can be tricky as there are many providers who can sell fake deals; hence, one should search for the right broker before paying for it.

Chinese buyers seeking alternative sellers 

The property consultancy Vineyard Intelligence found Chinese are buying vineyards in France, where over 7300 such units producing Bordeaux had been acquired by the Chinese.  Australian Treasury Wine Estate recently delivered growth where it asserted the increase in luxury wine demand in Asia led to an increase in group net sales by 16 per cent. The imposition of trade tariffs on Chinese products by the US increased the price of Chinese imports and led to turmoil in the exports as well.  China was a key buyer of American farm produce - soybean and corn, and it is seeking trade deals elsewhere, whereas it will be reducing wine imports, even as, before the imposition of tariffs, 90 per cent of produce from California went to China.

Diversification 

Typical investors seek options in border horizon – mutual funds, stocks, and bonds. Financial advisors are too heavily dependent on equities, which raise over-expose risks due to higher volatility, and this can be reduced by diversifying into collectables, which have a low correlation with the traditional asset classes. Diversification is essential to ensure safety where passion investment provides the opportunity to hold personally the items of million dollars that are unlikely to lose money even in the condition of a market crash. Oil, property, collectables, precious metals and wine offer investors attractive opportunities to get double digital growth yearly, where some asset classes such as wine provide a low risk and high yield option.  

There has been a greater demand for such products in China and other emerging markets, while the supply is limited.  The latest trends in alternative assets aim to promote tax advantage where the investors in the US are holding such assets in self-directed individual retirement accounts.    

To find out more about fine wine investment, check Asset Class Pedia at (https://assetclasspedia.com/).