The best way to approach fine wine investment is to target the top 1% of the market, fine wines in the Burgandy and Bordeaux regions are where most investment-grade wines are produced, using finely honed skill and wisdom learned over generations to produce classic wines every year. that shine brighter still in certain vintages.
It is our job here at Sovereign Cellars to target the top 1% of the market by selecting the correct chateaux and the right vintages that can show 10% – 15% returns and sometimes even more in some cases.
Our returns on investment grade wines are backed up by This is money and Knight frank and many other respected sources, this is money report:
“Since 1988, Liv-Ex investable index has delivered a compound annual growth rate of around 10 per cent, reflecting total gains of well over 2000 per cent.
While an impressive 30-year performance record may draw attention, the role wine can play in an investment portfolio is more nuanced. Less than 1 per cent of the wine produced around the world is considered ‘investment-grade’ due to its quality, brand equity, limited supply, vintage appeal and ageing potential.
Wine is an uncorrelated asset, meaning investors can use it as a low volatility hedge against upheaval in bonds or equity markets.
Wine is also a physical, tangible asset, like property or gold, which typically means it performs well against inflation.
The Knight Frank 2024 Wealth Report revealed that:
Fine wine assets recorded average growth of 146% over the 10 years to the end of Q4 2023
Fine wine performance was second only to whisky, outperforming cars, watches, art, and other luxury assets monitored by Knight Frank
Fine wine is produced in limited quantities, the appellation controlee put in place in 1855 in Bordeaux for example limits production based on the acreage of a chateaux, so for example Gordon Ramsey’s favorite wine Petrus is only produced in vintages limited to 2000 cases per annum due to the size of the vineyard.
Supply is then further diminished by the wine being consumed or changes in weather patterns affecting crop yield the year a wine was produced, for example:
Up to 90% of some Bordeaux vineyards have been hit by a damaging mildew fungus in 2023, The mildew has been reported in several areas of France:
“We have some areas where the damage has reached 90%, meaning that we have vineyards that won’t be harvested at all,” Antoine Peron, a vineyard advisor who is in contact with 300 winegrowers in the Bordeaux Families cooperative.
I want to start investing in where it is stored.
Our clients’ wines are primarily stored in an HMRC bonded storage facility, the temperature and humidity is the climate is controlled, and the wine is protected from vibrations, reassuringly the wines are insured up to full market value.
Fine wines are stored in a client’s own name inside the bonded warehouse and we simply facilitate the buying and selling of wines, in the same way you would use an estate agency to purchase a property and then sleep soundly at night because you now own that property you can do the same using Sovereign cellars services knowing the wine is in your name.
Another huge benefit to buying and selling wine in bond is the fact that Fine wine is classified by HMRC as a Wasting Asset and accordingly any profits made from investing in wine are exempt.
