Fine wine investment surges in 2010Alternative asset class boosted by Christmas rally

07 January 2011


The value of fine wine has surged in 2010

The price of fine wine as an investment asset class has risen dramatically over the past year, according to new data from Liv-Ex, the index that tracks the price of the alternative asset.

The Liv-Ex 100 index, which tracks the price of the 100 most sought after Bordeaux wines, returned 40.5% in 2010, in contrast to 9% from the FTSE 100 and 11% from the FTSE All Share indices, which track the price of equity investments.

What’s been driving the wine price surge?

The Wine Investment Fund, a leading collective investment scheme that allows investors to place their money indirectly into fine wine to get access to its growth, believes there are four keys issues that have driven the price of fine wine over the past year.

Andrew della Casa, director of the fund, stated that prices of older vintages were pulled up by strong Asian demand (mainly from China) and by the extremely high prices asked for the latest vintage which came to market. Indeed, a case of 2009 Chateau Lafite Rothschild is currently selling at around £16,000.

With this in mind, currency movements between sterling and the Chinese Renminbi drove prices further. Finally, with inflation a looming presence and fine wine’s attractiveness as an asset on which you don’t have to pay capital gains tax, investor demand for physical assets has increased prices.

I'm thinking of investing. Will wine prices continue to rise?

This is largely dependent on the quality of the vintages that come from the Bordeaux region for 2010 and the rate of economic growth in the emerging markets like China, where demand for fine wine has elevated its value.

With Chinese New Year approaching, prices are expected to increase in the short term but della Casa has forecasted growth of around 21% for 2011.

For more on investing in alternative assets and a full guide to fine wine investment, check back to at the end of January.

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