Wine is more than just a drink, it can also help you get a stable return on your investment.
Knight Frank Luxury Investment Index reports that investment in the wine category grew by 16% in 2021, with the top wine market continuing to expand.
▲ Furlon Wine Industry / Furlon Wine Academy
Over the past year, the lucrative returns on investing in top wines have surpassed the UK FTSE 100, the US Dow Jones and gold.
Investing in wine is and will be a good choice.
The top wine market still has growth potential
The "2022 Boutique Wine Market Outlook Report" released by cult wine, a world-renowned wine investment institution, mentioned that the global boutique wine market will continue to develop, and the rally in 2021 will continue to 2022, and economic growth and increasing supply and demand imbalance will make the price of famous wine continue to rise.
In the face of inflation, volatile financial policies and the spreading COVID-19 pandemic, investment markets such as stocks often fluctuate, while top wines have achieved positive growth every month, showing a very stable investment characteristic.
The data shows that in 2021, French Burgundy wines increased by 25%, champagne increased by 31%, the increase is very eye-catching.
As a collectible physical asset, top wines have been very stable and prominent over the past few decades.
In the case of uncertain prospects for the world financial market in the future, top wines can continue to play the role of "investment safe haven" and are very attractive and stable income projects.
Fluctuations in production exacerbate the imbalance between supply and demand
Climate change and increased weather extremes are bound to exacerbate the imbalance between supply and demand for top wines.
Although global warming favors those cold appellations at higher latitudes, allowing grapes to ripen earlier. However, the increase in extreme weather has also greatly affected the yield and quality of grapes in some appellations.
According to statistics, the global production in the three years of 2019-2021 is lower than the historical average.
France is the largest producer of investment-grade wines, but in the spring of 2021, after the vines sprouted, European countries such as France suffered severe frost disasters, which directly led to a 22%-27% decline in wine production this year.
Looking across the ocean, the smoke from the california wildfires can affect the flavor of the wine, which is likely to make many top wineries choose not to release the 2021 vintage.
With many of the world's closures unsealed, the restaurant industry reopening its doors, and consumers have more opportunities to spend their savings, the demand for top-quality wines will only increase, and may even exceed demand.
Affected by production fluctuations and supply and demand, whether it is the top wine that is already in circulation in the market, or the upcoming famous wine, the price is expected to rise.
Which wines are worth investing in?
Choosing the right wine is crucial for investment.
According to a report by The London International Wine Exchange Liv-ex, the number of wines that could be traded on its platform hit a record high of 10,798 as of the end of October 2021, exceeding the full-year record of 2020.
Without a doubt, the biggest increase in the top wines of 2021 came from the regions of Burgundy and Champagne.
Well-known wineries such as Domaine de la Romanee-Conti and Domaine Leroy remain one of the most popular long-term investment options.
However, climate disasters can reduce the production of Burgundy wines by 50%, and with global investors scrambling for it, if you're interested in investing this year, it's a good idea to start early.
The Champagne market has exploded in recent years, with overall prices up 68% over the past 3 years.
In particular, the decline in the production of vintage Champagne has led to an increasing demand in the market, further exacerbating the scarcity of top champagnes. As a result, the prospects for investing in Champagne are very good.
As for Bordeaux, it remains the cornerstone of top wine investment.
The second, third and fourth grades of the left bank, as well as the high-quality and low-yield "garage wine" on the right bank, still have good appreciation potential.
In addition, the new world production area also has a certain upward space, the most representative of which is the American California wine.
Compared with other New World appellations, California wines have received many full 100 point ratings, and there are many highly sought after "worship wines" in the appellation, so they have greater long-term growth potential.
Under the influence of many factors at present, in the future, individual iconic wineries and representative wineries of various appellations will most likely promote the price growth of the entire wine market.
The next investment outlet has quietly appeared, whether you can catch it or not, it depends on you.
This article was edited by Fulong Wine Academy
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