Global Markets Media - Wine Investment 2008. Peter Lunzer - December 2 nd , 2008. Wine Investment 2008. Outlook for Wine Investment in 2009. The key areas to consider regarding the prospect of predictable returns from investment grade wines. Assessing demand.
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Peter Lunzer - December 2nd, 2008
Outlook for Wine Investment in 2009
The key areas to consider regarding the prospect of predictable returns from investment grade wines.
Any significant changes to supply.
Key developments in the market.
Rising stars of Bordeaux.
Looking for signs of an overheated market.
Finite supply for a Global Demand.
Constant and growing global demand for a finite and diminishing supply.
Wine features very humbly among all the extravagances enjoyed by wealthy individuals:
Lear Jet 60XR - £12,500,000.
Sunseeker Yacht 105 - £4,900,000.
Chateau Petrus 1990 - £28,500 per case; Chateau Lynch Bages 1990 - £1,500 per case.
Demand for wines that have a brand.
Consumers are looking to impress others as much as enjoy the content of the bottle:
Brands such as Chateau Lafite are powerful and growing in popularity.
The majority of producers have not achieved brand status.
Demand from consumption.
Who is currently buying fine wines to consume:
Investment industry demand.
What has been the influence of the Wine Investment World?
Merchants offering advice or are actively involved in fund management.
Investment advisers from City / financial backgrounds.
Investment advisers from the wine world.
Changes to Supply
How much wine is there in the market place and how is the supply changing?
Initial assumption of stock availability of investment grade wines - Estimate is between £6bn to £8bn globally.
Annual contribution from a high quality harvest - Estimate is between £1.5bn to £2bn.
Who owns the stock?
Biggest single change to the market in the past 6 years has been the Chateau keeping back a higher than ever percentage of production - especially since the 2005 vintage which was in such short supply that prices rose steeply for longer than normal.
What effect will there be from stock ownership altering from many individuals to a small number of large scale investment funds ?
Key developments in the market
There are a number of developments which will influence the future of wine pricing and availability.
Emergence of new wine funds.
Understanding why Bordeaux remains prominent compared to:
Global transparency of pricing.
Rising Stars of Bordeaux
Château Lafite Rothschild
Château Mouton Rothschild
Rising Stars of Bordeaux
Château Lagrange, St.-Julien
Château Langoa Barton
Château Malescot St. Exupéry
Château La Lagune
Château Marquis d'Alesme Becker
Looking for signs of an overextended market
Some prices from Liv-ex as at 30th November 2008
Finite supply for a Global Demand!