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EMERGINGMARKETS
“Without doubt the next big
growth story will be India.
Not only does fine wine
match their tastes for tangible
assets, but the increase in
wealthy Indians is strong”
Marcus Allen, Cult Wines
Wine’s globalisation will doubtlessly
continue, with new wealth looking for
luxury, status and pleasure coupled
with potential investment benefits.
Knight Frank predicts that HNWI Growth
will be strongest in developing regions,
with Africa’s ultra-wealthy population
rising by 59% in the next ten years and
Kazakhstan set for a 114% increase in
UHNWIs in the same period, and other
CIS countries also predicted to do well.
The demand is being driven by
the very rapidly growing wealthy
emerging from Russia, Japan
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and
an increasing interest in these goods
from other nations such as Brazil and
particularly India. In fact India could
be a candidate for the next emerging
fine wine market, especially if the
EEA and India do a deal on tariffs that
would benefit wine through lowering
import duties
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: 4n mid-2013, in an
effort to enter a free trade agreement
(FTA) with the European Union, India
offered to drastically cut Customs
duties on wines and spirits to 40% from
the current 150%. The EU wanted a
reduction to 30% and the Indian wine
makers sector was very much against
allowing in imports at a much cheaper
price.
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As a result, no agreement
was reached and high import tariffs
remain, but the potentially huge impact
of political decisions such as this, is
highlighted by the huge boom in the
Chinese/Hong Kong market when
import duties were slashed in 2008.
When we look at the amalgamated
expectations for growth in UHNWIs,
the MINT (Mexico, Indonesia, Nigeria,
Turkey) countries, with average
expected uplift of 76% over the
next decade, narrowly defeat the
BRIC countries (Brazil, Russia, India
and China), which have an average
forecast growth of 72%. However,
they both far outstrip global
average forecast growth (34%)
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.
The expansion of the middle classes
in these regions, along with the
opportunities for significant new
wealth, put these nations on the list
of those which may take an increasing
interest in the fine wine market.
In fact, a recent paper by the IMF
demonstrated a close correlation
between fine wine prices and emerging
market industrial production,
suggesting that, as developing nations
wealth grows, the demand for fine wine,
presumably from the newly wealthy in
those regions, follows suit, increasing
consumption and pushing up values of
remaining vintages as collectors items,
status symbols and wealth stores.
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Cult Wines sees growth in both the
emerging and traditional markets, with
Marcus Allen, Head of Global Business
Development predicting that, “Hong
Kong, Singapore and mainland China
will maintain their positions as strong
growth markets with South East Asia,
in particular Thailand, Philippines
and Indonesia, growing significantly
also. Renewed optimism from North
America with regard to Bordeaux will
bring US buyers back and in addition
we see South American buyers starting
to make an impression on statistics.
Without doubt however the next big
growth story will be India. Not only
does fine wine match their tastes for
tangible assets, but the increase in
wealthy Indians is strong”. Certainly,
Bloomberg’s June 2014 article suggests
that current conditions could support
the prediction, stating that “About 86
percent of Indians’ household assets are
in real estate and tangible investments
such as gold, the highest rate among
16 countries tracked, Zurich-based
Credit Suisse said in an October 2013
report” and that “Ultra-high-net-
worth individuals in India, defined as
having assets of more than $30 million
excluding primary residence, are
estimated to grow 98 percent through
2023 from last year’s 1,576, compared
with 28 percent growth globally”
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.
EMERGING MARKET INFLUENCE
(1998-2011)
Aug
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Aug
Aug
Aug
Aug
Aug
Aug
Aug
Aug
Aug
Aug
Aug
Aug
Aug
Feb
Feb
Feb
Feb
Feb
Feb
Feb
Feb
Feb
Feb
250
225
200
175
150
125
100
75
50
400
200
100
50
Production of top chateaux (indexed)
Live-ex Fine Wine Investables USD (RHS log)
Emerging market industrial production (LHS)
Source: Liv-ex
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