Believe it or not but just like stocks and shares and gold, wine has its very own index that tracks its performance. It’s called the Liv-ex Fine Wine index.
When comparing the Liv-ex Fine Wine 100 index, with the likes of the FTSE 100 and the gold index over a period of 10 years from 2003 to 2013, wine has certainly held its own and performed well.
While everyone knows that past performance in any market is no guide to the future, the fact that the indices, all rebased to 100 in December 2003 have grown to around 275, just over 150 and a tad over 350 respectively is encouraging for anyone considering wine investment. What this means theoretically, is that had you invested £100 in gold at the start of this period, you’d be looking at a balance of a tad over £350, in wine, around £275 and in the FTSE 100, a tiny bit over £150.
In recent years, we have all accepted that gold is a much more ‘tradable’ investment than it seemed before, with gold buying and selling opportunities popping up all over the high street. What’s more, it’s common for gold to hold its own in a period of economic insecurity because it’s a physical and historically recognised and valued investment vehicle. Having been implied in all sorts of disputes and disasters throughout history, gold is arguably the only asset that has retained its interest and its value over the ages. Often seen as a safe place to run when other investments look to fall, gold has enjoyed a real period of boom in recent times.
So what has caused wine to rise in value so significantly over this period? There are various things that have affected the performance of wine in recent years, but the most significant, not surprisingly is simple supply and demand. The thing about wine is that it is limited in supply. If you are seeking out a rare wine from a certain vintage and there are only a handful of bottles in the world, then you have to accept that you may have to fork out a fortune for it. On the other hand, if you’re the holder of that bottle, then you are in the fortunate position that the power’s in your hands to pretty much set your price.
Demand for wine in recent years has also been affected positively by its growing appeal. Until recently there hadn’t been huge demand for wine from Asia, but this has changed of late. The Asian market has not only grown from an investment point of view, but also from a consumption point of view. Because of the relative wealth and changing tastes of these markets, there are more and more people seeking out quality wines and consuming them. The likely knock on effect of this is that in years to come, sought after wines will be even more scarcely available, helping the price to rise even further.