Liquid assets: An introduction to fine wine investment
Though overall global fine wine investment values are in decline, the UK market continues to grow. Over the last ten years around £570 million has been invested into British vineyards, but individuals are also increasingly investing in their own wine collections.
Fine wine is now a mainstream asset for many high-net-worth investors, with 96 per cent of wealth managers expecting the sector to grow thanks to its exemption from capital gains tax and, with its relatively low carbon footprint, its alignment with many people’s environmental, social and governance principles. But how can those new to wine invest wisely?
Tom Gearing, founder and CEO of Cult Wines, created the digital platform CultX, which allows individuals to invest in and trade wines with real-time pricing, verified provenance and global warehousing. He recommends a couple of key strategies: “Firstly, you’re never going to be disappointed if you buy something you enjoy consuming. Collect what you want to drink in the future and even if your investment doesn’t grow as much as you’d like, you’ll enjoy the wine. Secondly, classic world regions like Burgundy, Tuscany and Côte Rôtie are the cornerstone of the collection market.”
Gearing grew up around wine and notes that the landscape is very different to what it was 25 years ago. “The generation who have dominated the fine wine market for the last 20 years are now 60-plus and are reducing their collections or transferring them to the next generation, who often don’t want to drink or keep them.” CultX was formed to attract millennial users, a demographic now gaining senior positions, running businesses and with disposable income, enabling them to trade and invest easily.
“People used to spend years cultivating relationships with merchants, but now we want immediacy and access. We look at someone’s budget and intention – to drink, collect or invest – and generate a portfolio for them. We have 7,000 unique wines currently on sale that people can bid on too.” There is no transport or provenance-proof cost and, as CultX has the wines physically in a warehouse, if you choose to drink one you can have it delivered immediately.
Sam Mudie, founder of Savea, has a different take on wine investment. “Separate head from heart. Invest based on data, not what you like to drink. Invest long-term. Like any market, wine has its downturns, but in the long term it has a reliable ROI of six to 10 per cent per annum. And timing is important. Trend investing can work, but fortune favours the bold. Currently the market is down, so it’s a huge opportunity to buy now – if you’re prepared to go against the crowd.”
Savea is a fintech focusing on investment rather than collection. Its flagship product, SAVW, digitises wines securely via tokenisation, tracking the Liv-ex 1000 wine index to offer asset-backed, instant liquidity with lower fees. “The tokens give you the price performance of a professionally stored, fully insured portfolio. Wine is held by an independent custodian; all ownership records live on a public blockchain. Investors cannot claim individual bottles; they own the index return.”
Like CultX, Savea is making wine investment “frictionless”. Ownership transfers are easy and costs are lower given there is no manual process or human involvement – but unlike CultX, Savea is not selling individual wines.
“We are an investment vehicle. Wines are held by a third-party custodian, professionally stored and insured, with condition reports and photos stored alongside the legal contract, which can be verified by anyone online. This makes it ‘trustless’ – you don’t need to trust Savea, because every single asset and transaction is recorded and visible on a public blockchain, accessible by anyone, anywhere. Essentially, we make investing in wine as easy for you as sending a bank transfer to your mum.”
It may mean fewer long merchant lunches, but platforms like these cater for people looking to invest anything from £500 to £100 million, with everyone getting the same opportunities and access – creating a truly democratic way of trading and investing in wine.