Plan to build the right fine wine portfolio
James Pala MD Sure Holdings
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I hope you are keeping well and healthy and 2016 has started off well for you and your family.
At some point in your life, whether it is today while reading this article or in the past, you have a desire to buy fine wine as an investment. You had a vision to own a large fine wine portfolio. Buy and sell on a regular basis and have something you can look forward to in your retiring years as your “nest egg” that as a result of your successful investment making decisions during your lifetime came through positively.
The fine wine market saw a four year decline from 2011 to 2014. The Chinese buyers moved on to fine art or shopping in Japan because of the currency or they were too busy buying property In the centre of London. This sucked the life out of the wine investment market and we saw major declines on some of our favourite investment wines.
BUT all is not lost, you see we had a good year last year, 2015 was the turning point, although it was hard to spot, since not all the wines in the market showed an increase. I didn’t shout too much about it because I was waiting for confirmation that the market had turned around. I can safely say it has turned a very positive corner, not only did it have a good year last year, but the last three months I have seen the overall wine market outperform very well.
It has outperformed the stock market – Although that’s not difficult. But it is very obvious to me that there is new money coming back into the wine investment market due to investors losing in the stock market and bailing out. And these are global buyers, no longer Chinese investors. I know I keep saying this, but it is so important to reiterate and very true!!
It may be some people would think I am biased in my opinions about the fine wine market. Yes my comments can be bullish, but it does not deter the facts that are in front of us. The London Vintners exchange tracks the fine wine market globally and they also reported the last three months of increase in the fine wine 50 index which is the top 50 investment wines. (Mainly the wines we have invested in the last 15 years!).
These happenings compelled me to write you this note. Because it is a very big opportunity for you to enter into the fine wine investment market and recover any of the losses you may have made in 2008 or 2011. Yes they were painful, I also experienced these losses myself in my own wine investment portfolio which also made me cautious. But the wine market is not dead, it is a huge and buzzing investment and consumers market that is thriving. Never will people stop drinking the most expensive wines in the world, not as long as we live anyway:)
Have a think about these scenarios:
A) if you bought one case of first growth wine for roughly 4000 pounds, every four months, that would be an investment of 12,000 pounds per year. If you did this consistently for 5 years, you would have a wine investment portfolio of 60,000 Pounds. Plus compounded growth on the portfolio between 7 – 10% per year, you would be looking at an 80,000 pound portfolio – That is 115,000 US Dollars.
B) You bought 5 cases of first growth wine for 4000 pounds, every four months that’s an investment of 20,000 or 60,000 pounds per year. If you did this consistently for 5 years, your wine investment portfolio would be 300,000 pounds. Plus compounded growth on the portfolio between 7-10% per year, you would be looking at a portfolio of 395,000 pounds. That is 565,000 US Dollars.
C) You bought 5 cases of first growth wine for 4000 pounds, every 2 months that’s an investment of 20,000 or 120,000 pounds per year. If you did this consistently for 5 years, your wine investment portfolio would be 600,000 pounds. Plus compounded growth on the portfolio between 7-10% per year, you would be looking at a portfolio of 785,000 pounds. That is 1.12 Million US Dollars.
Remember your wine portfolio is not for me or Sure Holdings, it is for you and your family and your plans for the future. We are simply on your team and the team you know that you can trust and rely upon to still be there in 10 years from now.
We have kept our margins so low over the years, we never increased our profit margins, with the only goal of providing you with the best price when you enter into a wine investment so that you get out with the best possible returns you can. Most wine companies charge three times more than us. I’ve always been hard focused on recommending a wine that is the lowest price in the world. After all if you buy a wine which is already losing money due to margins you paid when you bought it then how can I expect you to make a good return?