Tap into China for fine wine returns(1)
China is playing a growing role in the global market for fine wine as wealth shifts from west to east
Fine wine has long been a palatable investment. But as wealth shifts from west to east, there is even more reason for investors to hold it in their portfolio.
While wine consumption in the west is declining amid recent global economic woes, wine sales in China have been experiencing an impressive 15 per cent annual increase in the past several years, according to US-based consultants AT Kearney.
Thanks to a rise in affluence in China, fine wine now represents an additional opportunity for investors who are looking to get more diversified exposure to the country’s economic growth.
“Wine has become a symbol of a desirable urban lifestyle, which shows sophistication, vitality and social status,” observes Howard Abe, a specialist in consumer goods and retail at AT Kearney.
Between 2009 and 2010, as its booming economic growth continued, China saw a 34 per cent increase in imports of wine to 125.1m cases, according to International Wine and Spirit Research (IWSR). This represents a phenomenal increase of roughly 32m cases in just one year.
Richard Harvey, global head of wine at auction house Bonhams, says: “It’s the west that’s investing and the Chinese that are buying in the fine wine market at present.
“There’s obviously an increasing number of wealthy people who are looking to buy the trappings of wealth, of which fine wine is one. I think it’s fair to say that more fine wine is drunk in China as a percentage than in the west,” he says.
According to William Grey, investment manager at The Wine Investment Fund, approximately 50 per cent of the fine wine sold in the UK is exported to Asia.
“It tends to be the billionaires who are drinking bottles of wine which are worth £3,000 each at the very top end. Our average is about £300 a bottle. The fine wine market goes to the highest bidder, and they have the highest concentration of wealthy individuals.”
But why is fine wine such an attractive investment proposition?
According to Mr Grey, because of its physical qualities, fine wine keeps its value.
