● 30-page report commissioned by Cult Wines to educate advisers and investors
● Research reveals fine wine experienced 234% growth over last decade
● Predicted shortfall in production as demand increases from wealthy buyers
Intelligent Partnership (IP), the UK's leading provider of research and education on alternative investments, has published the first industry report focused purely on fine wine as an asset class.
This independent report is sponsored by Cult Wines, a specialist in the acquisition, management and valuation of rare wines.
Guy Tolhurst, Managing Director of Intelligent Partnership commented:
"Wine collecting has been a hobby for hundreds, if not thousands of years, but more recently fine wine has been recognised as a genuine alternative asset class, providing significant diversification benefits from mainstream financial markets. This report examines the investment case and the risks and mitigations of what we think is an enjoyable, collectible, tangible asset with a fascinating history and a future worthy of serious consideration."
Cult Wines commissioned the Report to educate investors and advisers about this asset class, and identify the growth markets for fine wine.
Marcus Allen, Head of Global Business Development, commented:
"With investors paying ever more interest in this asset class as a way of effectively diversifying their portfolios, we felt that it was important to work with Intelligent Partnership to commission a report which would provide a balanced, independent and CPD accredited view of the Fine Wine Investment market. This will in turn help the financial adviser community in becoming more educated within this area of investment.
"As a specialist Fine Wine Investment advisory company, Cult Wines has always focused on providing market-leading research and reporting for the sector. With an increasing focus here in the UK and overseas of working with financial intermediaries, it was a natural step for us to commission this report in order to help facilitate these relationships and provide a reference point for the market as a whole."
The Report reveals that strict limitations on supply and rising demand from wealthy buyers in China and India has increased the popularity of fine wine as a wealth store – providing a hedge against inflation, protection against low interest rates and currency fluctuations. The Report highlights research from Morgan Stanley on the mass international wine market which concludes that a worldwide shortage of wine is imminent, with current global demand at around 3 billion cases and total production estimated at 2.8 billion.
The Report also highlights the impact of the crash in 2008, which showed investors that investments which had been considered good diversifiers were actually highly correlated – with sharp negative price movements mirrored across developed and emerging equities, bonds and property. Wine, with its inverse supply and demand curve and only a 15% correlation with the mainstream financial markets, performed better during 2008/09. It cites Knight Frank's Luxury Investment Index which shows that fine wine experienced 234% growth in the ten years from Q4 2004 to Q4 2014.
The latest in IP's series of Real Assets Reports – which includes Rare Stamps & Coins and Peer to Consumer Lending – The Fine Wine Report explores supply and demand characteristics, international buyer profiles, and investment strategies as well as the challenges around valuation and the expertise available to best optimise this portfolio diversifier.
Guy Tolhurst concludes: "The last four years have clearly demonstrated that playing the fine wine market is not without its risks, but that those who use expert advice to identify good value, acquire and divest at the right times, diversify their collections and understand that this is not a short term, highly liquid investment, are likely to learn more about the sector and more fully profit from the potential benefits on offer."