How does fine wine make money?
The fine wine market is driven pretty much entirely by supply and demand. Therefore, the logic behind investing in wine can be understood by all investors, even those who have no previous experience in the area. Approximately, just under 2% of the world’s entire wine production is classified as investment grade fine wine and it is only those with globally recognised branding, elite-level quality and incredibly low production that meet the requirements.
Global demand will forever outweigh the production of the top wines of the world, in part due to the constantly changing climate but primarily because producers worldwide impose strict restrictions on how much wine they produce each vintage year. France in fact has strict appellation laws which have been in place since the 1800’s, meaning that regardless of global demand, the vineyards are forbidden by law to increase their production. Going back to the ever-changing global climate and weather conditions, there is no guarantee of future production being of the same quality as the classic vintages of years past. Therefore, once previous vintages have all been drunk up, they can never be reproduced, they’re gone forever.
The wine market is not far removed from that of classic cars or fine art, as demand for fine wine is driven in large part by the wealth of the world. Millionaires and billionaires alike will recognise brands such as Lafite Rothschild or Chateau Latour the same way that the average person will recognise Coca-Cola or Pepsi.
In summary, investment grade wines have incredibly low production and an ever diminishing supply that can never be replenished. This results in prices often increasing naturally, in a steady, stable and predictable manner.
Proven track record
Fine wine investment has a proven track record of providing safe and reliable returns even in the harshest of economic climates.
Secure physical asset
Investors in fine wine own their assets outright in government-regulated bond and have the investment insured against all potential risks to the wine.
Exempt from VAT
Also, If managed correctly, fine wine investments should in most cases be free from capital gains tax too.
You most certainly do not have to be an expert to enjoy the benefits of the fine wine investment market, but you do need to be aware of some very basic, yet important considerations.
Why choose Vinverum?
Invest with confidence.
Hands on or hands off, active or armchair, whatever kind of investor you are, we will tailor our service making your wine investment fit around you and your requirements.
Regulated Bonded Storage
We store exclusively with government regulated bonded warehouses within the U.K and Bordeaux, all of which provide full insurance to market value.