Investing In Wine And Whisky
10 October, 2013
Wondering what to invest in? Individual stocks, index funds, real estate, precious metals, bonds?
Perhaps you can consider investing in wine and whisky. Investments in wine and whiskey have shown very good average returns over the past 10 years.
The Liv-ex market in London is the main exchange for trading wines. The Liv-ex Fine Wine 100 Index is the industrys leading benchmark. It represents the price movement of 100 of the most sought-after fine wines on the secondary market. The index has gone up from 100 to 300 in a 10 year period, albeit with large fluctuations, representing a return of 11% annually. Only wine merchants or professional wine traders can trade on Liv-ex.
The main advantage of investing in wine and whisky lies in the fact that the returns are not correlated with other financial markets and thus represent a good diversification in ones investment portfolio. Economic and demographic factors result in a built-in upward pressure on prices. The supply for old well aged wines and whiskies cannot instantaneously be increased, it takes time, while in the mean time, in BRIC countries with high economic growth figures the middle class is rapidly expanding. Particularly from China there is a strong demand for high end whiskies and wines.
Wine is more liquid than whisky, in the sense that the market for wine is bigger and it is quicker to sell. Also there is no exchange for whiskies; mostly these are sold on auctions. But the returns on whisky have been even better than those of wine. According to Whisky Highland an investment portfolio created from the 100 best brands of Scottish whiskey would have returned the owner a 300% profit in the last 4 years. A 30- year old bottle of Macallan whisky purchased in 2008 for GBP 260 would be worth GBP 1550 now.
In these times of money being printed out of thin air, with runaway inflation in our opinion just around the corner, almost anything is better than holding your assets in cash or government bonds. Of course prices can go up and down, which is why diversification is key.
The tax advantage of these alternative investments is that there is no capital gains tax in the source country (i.e. the country where the wines and whiskies are stored and traded) on your profits. There might be tax on the investment gains dependent on your country of residence, although it is of course perfectly possible to hold these investments confidentially through a holding company in a tax free jurisdiction.
We have teamed up with a firm specialised in investing in wines and whiskies which serves 700 clients and holds client assets (bottles) worth more than 70 million Euros. They visit the vineyards in France and distilleries in Scotland, meet the managers, the experts, connoisseurs, and opinion makers and have booked very good returns for their clients indeed.
They provide ready made packages with a selection of wines or whiskies, starting from as low as 5000 Euros. Drop us an email if you want to get in touch with them.
« Go Back to Blogs