Wine as an investment tool

Prices for the world’s leading types of wine stay high, and can be viewed as an alternative form of an investment. The sector was also hit by the global economic crisis, with a downturn by 20% by the end of 2008. However, recently the sector has shown robust signs of recovery with a rise of more than 5.5 per cent last month, demonstrating a 12 per cent increase in the first quarter.
The prices for the top Bordeaux wines are near peak levels; The London International Vintners Exchange (Liv-ex) sees demand rising in China and Hong Kong as one of the main reasons.
Wine can be regarded as a form of an alternative investment. It is possible to invest in a wine fund or buy stock from a merchant. If you choose to deal with the wine merchant, there will be a number of expenses to consider: merchants charge a management fee per year or as much as 5 per cent of the total value of the wine in advance. You must also take into account the cost of storage and commission charges.
Wine funds are not cheap either, and the choice is quite limited. Fund managers can charge as much as 2 per cent and expect to give away a chunk of your profit.
However, not many advisers are willing to consider wine as a serious contender in their investment portfolio.
The wine market is not regulated and can present all sorts of danger.