When it comes to investing, the first thing that comes to mind is often profit yield, and then risk. We seldom make an investment decision based on our interest or hobby. But why not while returns from property, stock and other mainstream markets are no longer guaranteed?
Not too long ago the idea of investing in wine was nearly unheard of. Now it is gaining traction with investors who look to diversify their portfolios.
Hong Kong’s wine industry has its competitive edge. The authority’s abolition of wine tax in February 2008 has opened the door to a bewildering array of vintages for all price brackets, which further assisted by a spectrum of wine auctions in the city. Hong Kong is a gateway to the exploding Mainland Chinese wine market, which constitutes the world’s fourth-largest red-wine-drinking population.
“Maintaining current knowledge and understanding of the market is a great deal easier and more enjoyable if it is something you appreciate or pursue as a hobby. If investing for speculative purposes—which we prefer you didn’t—then stick with classics with a proven record for asset growth, such as top ranked Bordeaux and Grand Cru Burgundy. A handful of icon New World wines also do well, such as Penfold’s Grange, Opus One and Screaming Eagle,” said Hong Kong based Master of Wine Debra Meiburgin an interview with Gohome Luxury Living Magazine.
Meiburg recommends a five for five for novice investors: “Start with five cases of First Growth—the Premier Cru or First Growth status is a classification of the finest wines primarily from the Bordeaux region of France—with the view of holding the investment for at least five years. In today’s market, the prices are roughly in the vicinity of US$10,000 per case, although it greatly depends on the actual wine and vintage. Stock your collection primarily with reds, as they not only survive the long haul but most actually improve with age. There are many good quality wine merchants to advise you, such as Berry Bros. & Rudd, Altaya, Rare and Fine Wines and Ponti.”
“Historically over the long term, wine has shown strong annual growth and is considered to have low volatility and limited correlation with mainstream assets. The Hong Kong government has made significant efforts to promote fine wine in the city via a range of initiatives, including inviting well known auction houses into the city. Coupled with world class storage facilities, the conditions are very favourable for collectors in this market.”