August 2012 Wine Investment Report
Well the wine market has had a busy first half of the year, The market has regained some stability this month and last month but first growth prices are still a great deal lower than they were 2 years ago. Lafite Rothschild was the worst hit wine in the last 12 months. We just received new valuations last Friday and a few vintages of Lafite dropped slightly although the drops were not as steep as the previous months, just 1 or 2 percent.
The high prices of Lafite we were looking at one year ago are coming down to reasonable levels again. Whether the prices of Lafite will pick up in the short term or not is unknown at this point but we expect a five year long term outlook is very promising because Lafite will always remain one of the most prestigious wines in the world as a first growth from the 1855 classification.
The rest of the fine wine market prices were very stable looking at latest prices which would suggest that the market has either bottomed out or flat lining. We have been monitoring trading activity through the London and Vintners exchange which Sure Holdings is a member of and the market outside of the Bordeaux super leagues is showing signs of improvement. Wines like Chateau Latour have showed minor increases which is most probably related to recent news about them not selling their wine for 10 years after its made and avoiding en primeur each year on new vintages.
We’ve sent out some very interesting articles lately which give various opinions of the market. If you are not registered on our homepage please do so you can receive timely information on the fine wine investment market.
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If prices for Bordeaux wines HAVE reached the bottom then there could be growth on the horizon which would be very good news, especially for us as investors because a market upswing from a downturn can be a big opportunity. If the market remains flat then we will continue to invest in other areas of the wine market that are showing growth. .
There is a chance that prices will start rising soon and start to come back at some point but we don’t want to be too optimistic on Bordeaux because the market has lost a lot of confidnce . The global economy and stock market downturn has affected a lot of investments and commodities there are many investors looking at losses in their portfolios on the stock market.
Wine is still considered a safer haven than many other types of investments and holding cash in the bank is not giving much faith to investors either because of currency fluctuations, it is easy to lose money on exchange rates just by holding money in cash at the moment.
This could potentially mean new money coming into the market as investors look for safer havens to keep funds. Also with India’s recent news on lowering import taxes they become a large source for consuming fine wine in the near future if they go ahead with these plans.
As a wine investor wine should be treated as a 3 -5 year investment. You can allocate it as your retirement nest egg or your children’s college fund. Have you thought about what kind of plans you have for your own wine portfolio?
The beauty is you can add to your portfolio whenever you have spare funds to put away until your retirement and over time it should grow and appreciate at a higher rate than inflation. The advantage to this investment strategy is you do not need to put yourself under pressure with a large investment at any time and if you need funds for a rainy day you can sell one case at a time rather than your whole portfolio.
The long term view for fine wine remains strong as consumption for up and coming economies like China and India continues to increase, as long as we continue to pick the best wines in the world for investment and follow the growth areas in the market.
With all that has happened in the market we changed our strategy, as I said its important for us to move with the market – Buying has been stronger in Rhone Valley, Champagnes and Burgundy wines. Even second growth Bordeaux wines are not as affected as first growth Bordeaux.
Burgundy are priced around 4-5000 pounds per case but top vintages can go for close to 10k per case.
Second growths are much cheaper than the first growths. In fact they are half the price of first growths, but the returns look promising, the same applies for the other areas I have mentioned, all look remarkably under valued when compared to first growths.
We have been negotiating on some very interesting parcels so please look out for our next recommendation and make sure you have registered to receive our updates..