A Prized Asset

The last instalment of our three-part series on Man & Wine explores fine wine’s rise to “real asset” status. Last week we discussed wine’s path towards luxury, from a popular drink conquering global markets to a prized possession of the elite and royalty. In the 21st century, wine took on yet another dimension, capturing the attention of investors and traders. Its journey from table to portfolio is explained below.

Emerging Markets

As fine wines rose in value post-2000, the opening of emerging markets in Asia, particularly China, accelerated demand. The Médoc Crus Classés of Bordeaux became symbols of wealth and success, and from the mid-2000s, Chinese appetite for them – as luxury goods and as collectibles – seemed insatiable.

Transparency

The millenium also brought with it new transparency in wine pricing. Liv-ex 100 – the fine wine price index of reference – offered wine merchants and wholesalers a more standardised pricing model for the world’s greatest wines. These indices enabled investors to track the performance of wines over time, compare their returns to traditional asset classes, and rely on consistent data for investment decisions. Thus the practice of “wine trading” was normalised.

Auction Frenzy

Simultaneously, auction houses such as Sotheby’s and Christie’s also played a role in positioning wine as a valuable asset and collectible. Ultra-rare bottles frequently achieved record-breaking prices between 2010 and 2019. These high-profile sales highlighted the prestige of fine wine, though not without controversy over fakes, or the crucial matter of provenance.

The New Era

The multi-purpose, frenzied buying of fine wines from a diverse array of regions continued until mid-2022, when the after-effects of the global pandemic, and geopolitical uncertainties slammed the breaks on wine trading. Today we live in a new era of fine wine, wherein purchases are polarising, and selection for the long-term is key. More recently, the impact of climate change has further highlighted the rarity of long-standing wine brands. Unpredictable weather patterns have disrupted yields, underlining the urgency for preserving fine wine’s golden era of production as a tangible asset, and a piece of history to be remembered.