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Fine wine used to be the preserve of tweed-clad connoisseurs and their cavernous cellars piled high with top vintages from Bordeaux’s finest chateaux. Not anymore. Today your average fine wine investor is just as likely to be a budding young entrepreneur saving for the future, a hardworking tradesman with a successful small business or a retiree looking to maximise that retirement pot.
Companies such as OenoFuture are making it easier than ever for both new and experienced investors to enjoy market-beating returns that consistently average 10 to 11 per cent per annum. “Fine wine investment companies always like to trot out the well-worn line that investors should diversify 1 to 10 per cent of their portfolio with fine wine,” says Daniel Walker, OenoFuture’s Head of Investment. “The truth is that wine is a remarkably safe and stable investment that is proven to outperform 98 per cent of other investments. To give a quick example, Liv-Ex’s Burgundy 150, which tracks the prices of top Burgundy wines, shot up 76.95 per cent over the past five years, while the FTSE 100 fell by -14.3 per cent over the same period.”
“Fine wine is an accessible market open to both new and experienced investors alike thanks to fine wine investment companies like OenoFuture. Our investors can enter the market with initial investments which vary from as little as £5,000 to six or seven figures, making it truly an opportunity everyone can benefit from.”
The current turmoil and uncertainties associated with Covid-19 have hit many investors hard. Does fine wine hold hope for those badly affected by the crisis? “I’ve heard countless stories of investors who’ve lost their entire life savings over the past few months,” says Walker. “However governments decide to respond to Covid-19, there is little doubt that quantitative easing and increased borrowing are on the cards.”
As we’ve seen, both traditional stocks and shares and newer alternatives like cryptocurrency are inherently risky – the value of Bitcoin dropped 37 per cent within 24 hours in March 2020, while Donald Trump wiped $31 billion off Amazon’s value in 2018 by criticising the company’s tax arrangements.
Fine wine quite simply plays on a different field to these types of investments. While stocks can rise and fall for any reason, including a simple Tweet by a prominent politician, the value of fine wine is determined by plain old supply and demand. Demand for fine wine around the globe is rising, especially as more developing countries develop a taste for luxury products.
At the same time, supply remains extremely limited due to the artisanal nature of fine wine production. And since wine is made to be consumed, every time a bottle of rare and sought-after wine, such as Domaine de la Romanee Conti La Tache, is drunk, the price of the remaining bottles will increase.
This simplicity is why fine wine tends to hold its value and bounce back quickly after economic downturns. During the 2008 recession, the Liv-Ex 100 index which tracks the prices of the most sought-after wines on the secondary market dipped by 20 per cent, yet took less than two years to return to pre-recession levels. In contrast, the FTSE 100 dipped by 47.82 per cent and took more than five years to return to pre-2008 levels.
So, exactly how does one invest in fine wine? Walker recommends seeking out a reputable wine investment company with a proven track record in the market. “I always recommend that potential investors do their research before jumping into the market,” he explains. “If it looks too good to be true, it probably is. Succeeding in the fine wine market depends on selecting the right bottles to invest in and being absolutely sure of their provenance. At OenoFuture we have a dedicated fine wine team which includes Master of Wine Justin Knock and Italian wine expert Daniel Carnio, whose insider knowledge allows us to secure rare and sought-after wines direct from the wineries themselves.”
“At OenoFuture our ethos is centred around making money with our clients, not from our clients. Our company has been named Europe’s Top Fine Wine Investment Firm two years in a row at the Global Banking & Finance Awards and we’ve made it our mission to make investing in wine as easy and as profitable as possible. In seasons of intense fragility, wine offers welcome stability which is why we’re seeing record numbers of first-time and seasoned investors turning to us for help.”
Unlike other fine wine investment companies, OenoFuture’s unique business model offers investors the ability to sell their wines directly to restaurants and private collectors. Rare bottles are sold to London’s on-trade through the OenoTrade arm of the business, and the company is opening OenoHouse in the heart of the City, where visitors will be able to sample the world’s finest wines and purchase bottles.
“This closed loop makes it even easier for investors to exit the market when the time is right, ensuring that even armchair investors can enjoy serious returns,” explains Walker. “For new or experienced investors buffeted by current market uncertainties, fine wine can offer a very simple and profitable solution. Napoleon might well have been talking about wine investment with those famous words ‘in victory you deserve it, in defeat you need it.’”
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