How To Maximise Your Wine Investment Returns

LUXURY INVESTMENT / Wine And Whisky

How To Maximise Your Wine Investment Returns

Now that you have added fine wines to your portfolio, Aarash Ghatineh – Global Head of Sales at Cult Wines – offers insights on how to make sure they bear fruit for you

Written by WEALTH Team on 22 March 2017

How can you ensure the highest possible financial yield from the wines in which you’ve invested? Does the brand matter? Are second labels worth a look? We break down fine wine investments and reveal the numbers. Here are seven strategies to help you maximise your wine investment returns – as shared by Aarash Ghatineh, Global Head of Sales at Cult Wines.

Leverage the brand

Ghatineh suggests holding Bordeaux First Growth wines within a portfolio as they have historically been the focus of the secondary wine market in terms of volume and value. He adds that if the first label is renowned enough, this will probably filter down to the second label – making the latter a worthwhile consideration.

Petit Mouton – a second wine from Chauteau Mouton Rothschild – is a good example. “Due to its small production of less than 3,000 cases a year, it can be harder to acquire than the grand vin,” says Ghatineh. “This is not reserved solely for big Bordeaux brands and their seconds, but can be applied to other regions too,” he adds.

Cult Wines’s Second Wine Index – featuring a range of second labels from the Left Bank First Growth – has been up 63.4% since June 2014.

How to maximise your wine investment returns

Buy wines with an active secondary market

“Do not neglect the importance of purchasing wines that offer value, alongside criteria that indicate an increase in demand,” advises Ghatineh. He says having strategies that offer easy liquidation to provide greater flexibility for trading is equally important. “By analysing price flows, regional trends and buying patterns – we can identify certain wines for investors, safe in the knowledge that we will be selling into a particular market,” he adds.

Ghatineh noted an increasing order book for Clerc Milon from Hong Kong and Russia in 2016. “Both markets typically only purchase wines when bottled rather than at En Primeur release – therefore, our strategy is to acquire all non-physical stock for this estate with a view to selling them post-bottling into these active markets,” he reveals, adding that the latest physical vintage for Clerc Milon is the 2014 – which increased 77% in the last 12 months.

Buy Burgundy

“In the past decade, Burgundy wine prices have consistently increased as demand far outstrips supply,” reveals Ghatineh. The Burgundy 150 Index (representing the top performing wines from Burgundy) has increased by over 200% since 2003.

Both the LVXINV (Fine Wine Investables) and Burgundy 150 Index have outperformed the S&P 500 and FTSE 1000 Equities Index (table below).

Fine wine investments performance

Fine wine investments performance Source: Cult Wines’s Fine Wine Investment Guide

*Source: Cult Wines’s Fine Wine Investment Guide

Buy Bordeaux

Liv-ex Fine Wine 50 – an index that tracks the last 10 physical vintages for the Bordeaux Left Bank First Growth – climbed 25% in 2016. “A long-term investor will be well-placed to include 2009 and 2010 Bordeaux estates in his portfolio as both are modern greats,” says Ghatineh.

Look outside of France

While France takes up the lion’s share (80%) of investment-grade fine wines, there are other regions that are equally interesting – such as Italy. A wine inciting much excitement is Barolo. “It is often coined ‘Italy’s Burgundy’ because of characteristics such as limited supply as well as commonalities with Nebbiolo and Pinot Noir,” Ghatineh shares.

In numbers: Fine wine investments

In numbers: Fine wine investments

Check prices

According to Ghatineh, investors can check prices using search engine Wine-Searcher or work with companies that use Liv-ex to provide independent valuations. “Also, work with a company that protects your interests from a pricing standpoint,” he advises. “Provided provenance is guaranteed, there is no reason why you should be overpaying for your investment-grade wines.”

Work with an expert

While you can do your own wine investment, nothing beats working with a specialist. “In last 20 years, people have bought wine and held on to them without recognising their worth and the right time to exit,” reveals Ghatineh.

Engaging an expert like Cult Wines will not only prevent such scenarios from occurring, but also ensure a holistic end-to-end approach that includes identifying wines that are underpriced and under-represented.

aarashghatineh

When building a wine investment portfolio, it is important
to put aside any preconceptions – approach your portfolio objectively
in order to maximise your returns.

AARASH GHATINEH

Global Sales Director, Cult Wines
wealth, investment
cultwineslogo

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