Wine investors see high returns amid rising demand, experts say

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  • Fine wines and rare spirits are becoming increasingly popular luxury assets.
  • Such investments generate high returns, owners of America’s oldest wine store told Insider.
  • Great wines are also seven times less volatile than other luxury assets.

More investors are turning to fine wines and rare spirits as an investment asset, according to the owners of Acker Wines, America’s oldest wine store and largest auction house in wines to the world.

The company has experienced “spectacular growth and an increase in demand for fine wines,” chairman John Kapon told Insider.

This comes as investors recognize the high returns from investments in fine wines and their relative stability.

While other luxury assets like watches and cars posted gains of 5% and 4%, respectively, great Bordeaux wines, for example, outperformed these returns in the last 12 months through June. 2021.

At the same time, The Drinks Business reported that the average price of Hermès Birkin handbags fell by 3%, while the average price of premium wines increased by 13%.

But it’s not just Bordeaux wines that are in high demand, Rupert Millar, editor-in-chief of Liv-ex, the global fine wine market, told The Drinks Business: “As to which wines have benefited the most. , this ranges from classic French regions (Bordeaux, Burgundy, Champagne, etc.), to the increasingly popular labels of Italy and the United States, which are taking increasingly large shares in the trade in volume and value.”

People are increasingly noticing that wine is a high performing asset to store and is seven times less volatile than other luxury assets, according to Kapon. For example, when markets were down in March of last year, wine didn’t really budge, he said.

Kapon added, “The other part of the wine economy is that there is an imbalance between the supply and demand for good wine.” The already limited supply of wines is decreasing every year as people drink it, but the number of people interested continues to increase.

Due to such a supply-demand imbalance for investors, wine also offers a solid asset in times of inflation. According to Kapon, “wine performs exceptionally well during a period of long-term inflation and acts as an excellent hedge and store of value.”

But fine wines aren’t the only type of alcohol that people are increasingly investing in. Spirits are catching the attention of young consumers, especially as more people have started drinking great whiskey during pandemic lockdowns from COVID-19.

“Whiskey has become another active collector’s item over the past five years, like wine, and many investors are seeing the returns and entering the asset class, further propelling the prices of the best rare whiskeys,” said Kapon.

“With restaurants and bars closed, vacations out of the question and generous stimulus packages pumping money into the economy, people found themselves with extra cash to spend and luxuries. such as good wine, which can be easily enjoyed at home, ”said Millar.

Tod Bradbury, Head of Rare and Collectible Whiskeys at Justerini and Brooks, based in London, told Forbes that individuals had a lot more free time during the pandemic and started drinking more, especially good whiskey, as a result.

But with an increasing number of people drinking great whiskey, the supply is naturally being cut off. This supply-demand imbalance, as in the case of great wines, has worked in favor of investors, which makes it an attractive asset.

Looking ahead, Kapon said a huge demand for fine wines means Acker is on track to hit more than $ 200 million in global sales this year.

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