Fine wine proves the best investment

Fine wine proves the best investment

With an increase of 24% last year, the Knight Frank Fine Wine Icons Index rose nearly three times as much as classic cars (up 9%) and six times third-placed rare coins.

Nick Martin, founder and executive director of Wine Owners - which compiles the Fine Wine Icons Index for Knight Frank - explains why wine performed so strongly last year.

"This goes back to the extraordinary Bordeaux bubble driven by the Chinese for the great 2009 and 2010 vintages. When that burst in late 2011, we saw deep declines in the prices of classed growth Bordeaux - and remember; they drive the market. Sentiment turned negative and liquidity evaporated. Then in 2015 the market turned a corner with Bordeaux up 8%.” 

“But 2016 was completely different. In the Spring, the top Bordeaux chateaux offered their 2015s, the first great vintage since 2010, and the top Bordeaux blue chips lifted the entire market 9% to the end of June. Then we had Brexit and a much cheaper pound encouraging more buyers back into a market which was already growing fast. The First Growths rose a further 18% between June and November 2016, which meant a yearly increase of over 30%.”

Wine's general success was in stark contrast to most of the other sectors in The Wealth Report, whose Luxury Investment Index reported an annual growth of just 2%. This was despite a year that saw individual auction records tumble: a Ferrari 1957 335 Sport made €32m, a 1941 Patek Phillipe watch US$11m and the famous 14.62 Oppenheimer Blue diamond US$51m.

As for 2017, the outlook for wine remains strong, as Burgundy 2015 and Rhone 2015 were both acclaimed vintages and we have both iconic Northern Italians and a reputably outstanding Bordeaux 2016 yet to come.

Published: 02 March 2017

Article by Bryce Wilcock
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