Wine Investment: Diversifying and De-Risking Portfolios

WINE INVESTMENT:

DIVERSIFYING AND DE-RISKING PORTFOLIOS

According to the Office for National Statistics, the UK economy is currently 21.8% smaller than it was at the end of 2019. This decline prompted investors to look outside traditional asset classes to fortify and diversify their portfolios. Notably, against this backdrop of market turbulence, the fine wine market has continued to thrive, with little correlation between it and the wider economy. Wine investment differentiates, de-risks and strengthens investment portfolios. Up until recently, the wine industry’s lack of financial transparency had prevented it from benefiting from the investment drive that has buoyed nearly every other business sector. Gradually however, the wine market has become less ambiguous, and is gaining traction as a lucrative, alternative investment avenue that can protect and enhance wealth. Though there is strong evidence of increased transparency, wine investment is still an unregulated market, and it is crucial to choose a company with a trustworthy track-record and reputation. Step forward award-winning OenoFuture, shaking up the fine wine investment industry, offering expert knowledge to clients and building lucrative portfolio strategies to match. OenoFuture goes beyond its competitors, paying for the cost of storage and insurance at market price all within its offering. Using a London City Bonds state-of-the-art storage facticity, which is temperature and humidity controlled, investors wines are in safe hands. OenoFuture researches the market and offer various exit strategies, making it easier for investors to enjoy market-beating returns that consistently average at 10% to 15% per annum. But why invest in wine to begin with? Firstly, wine markets are experiencing strong growth, according to the latest wealth report from consultancy Knight Frank. Fine wine topped the charts in its latest Luxury Investment Index, outperforming other collectibles like high-end watches, cars, jewellery and art. Knight Franks ‘fine wine icons index’ rose in value by 13% in the 12 months to the end of June 2021, highlighting that wine is surpassing other forms of investments. Watches were the nearest challenger, with this index up by 5%, followed by cars, up 4%. This presents an exciting opportunity to investors. Secondly, investing in wine is more profitable than leaving money in the bank. It is safer than investing in cryptocurrency. It offers reliable returns. While stocks can rise and fall for many reasons, the value of fine wine is determined by plain old, dependable supply and demand. Pricing is mostly determined by the simple supply and demand economic model. Demand for fine wine around the globe is rising, especially as more developing countries acquire a taste for luxury products. From an investment perspective, wine is part of a wider investment portfolio. It will help anchor other investments. Offering a consistent, steady growth forecast, wine is considered a

medium to long term investment, and a must on any comprehensive, profitable portfolio. Thirdly, wine is a discontinued asset. Top wineries such as Chateau Latour and Mouton Rothschild only produce a limited number of cases of wine a year, approximately 20,000-30,000. Pair that with the fact that as wine gets consumed, it means an already scarce asset gets even scarcer. As soon as a vintage is bottled, you can’t get the vintage back. Unlike other luxury commodities, supply cannot be increased. Once the production in a given vintage comes to market, that’s it – there will never be any more. Over time this already limited supply will reduce as the wines are consumed. Fine wine is one of the only luxury commodities that can be used and enjoyed just once. The result is a perfect inverted supply curve that is truly unique to fine wine. The is hugely important from an investment perspective. If sales increase for Range Rovers or Hermès handbags, it’s straightforward to raise production to meet demand. With wine, it’s quite the opposite- as demand grows the inverse supply curve accelerates. On the demand side, too, wine has some beneficial characteristics. Fine wine, by definition, improves with age. Consequently, as it matures and enters its prime drinking phase, it becomes more desirable and therefore subject to greater demand. Also, the finite quantities produced, ever decreasing through consumption, ensure predictable growth in the long-term with an inverse supply curve. OenoFuture offers a multi-layered exit platform and a unique consumption exit model. One option is trade. OenoTrade sells wines to a network of Michelin-starred restaurants and top hotels and bars, offering a watertight market exit strategy for investors. Clients retain the rights as full legal holders and must give permission to trade. In July, OenoHouse, a wine bar at the Royal Exchange, a place where wine lovers can sample and purchase rare and iconic wines from all over the world, opened its doors. This unlocks another exit avenue to investors, selling wine directly to consumers. Iconic wines served at the launch included Château HautBrion, Château Lafite Rothschild, Château Mouton Rothschild, Château Latour and Château Margaux. OenoFuture is also expanding globally, across Europe, the US and Asia, bringing these world-wide opportunities and retail exits to investors. While increasing exit capabilities and raising profit for their clients, OenoFuture is also the first wine investment company to have an in-house anti-fraud unit. They verify each wine bottle, producing a high-tech hologram label guaranteeing authenticity. Wine is a safe and stable investment, where risk is substantially lower than investing in the stock market, and it is proven to outperform 98% of other investments. Where share prices may increase one day and decrease the next, wine provides steady returns year after year, and very rarely decreases in value. Since 2004, wine has yielded a return of 247%, whereas, over the same period, the stock market, with a return of 129%, has provided a significantly lower yield. Wine is a better and more reliable investment than both property and stocks. The time is nigh to invest in wine. Demand for fine wine is increasing. This increased demand cannot be placated by increased production, only by higher prices. Cheers to that!