3
OPENING STATEMENT
Welcome to the first industry report focused purely on
fine wine.
Wine collecting has been a hobby for hundreds, if not thousands of
years, but more recently fine wine has been recognised as a genuine
alternative asset class, providing significant diversification benefits
from mainstream financial markets. This was proved by its strong
performance during the 2008 financial crisis and following
recession.
The supply and demand characteristics are also positive. The very
best wines are highly restricted in supply and therefore the supply
curve for these wines is almost perfectly inelastic. Over time as they
are consumed the price of the remaining bottles rises. Additionally,
quality improves with age, further increasing consumption and
inevitably increasing the rarity and desirability of remaining
bottles. Hence, the pure enjoyment of owning and drinking
fine wine plays into the potential investment benefits, creating
conditions where very high returns are possible. And a growing
number of newly rich individuals are seeking to demonstrate their
wealth and status, boosting demand.
Moreover as tangible assets, fine wine can act as a wealth store,
providing a hedge against inflation, protection against low interest
rates and currency fluctuations.
Nevertheless, these benefits do not come without their difficulties
– the sector is complex, with only a small percentage of world
wines capable of improving in bottle and trends moving with
new markets, tastes and the influence of critics. Consequently,
valuation can be difficult as assets are unique and there are no
revenue streams allowing for conventional valuation models such
as discounted cash flows. This has deterred many from involvement,
including a large proportion of mainstream advisers.
However, wine investment specialists such as Cult Wines are
on hand to make the asset class available to those who lack the
knowledge and experience to confidently participate in the market.
This report examines the investment case and the risks and
mitigations of what we think is an enjoyable, collectible, tangible
asset with a fascinating history and a future worthy of serious
consideration.
GuyTolhurst
Managing Director
Intelligent Partnership
COPYRIGHT © INTELLIGENT PARTNERSHIP 2015
EDITORIAL
Lisa Best
CREATIVE
Mar Alvarez
SUB-EDITING
Guy Tolhurst
Daniel Kiernan
RESEARCH
Samantha Goins
Derek Skrzypek
MARKETING
Alex Evans
Michelle Powell
PRINT
Four Way
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