I believe strongly that Fine Wine represents a burgeoning asset class with very favourable supply and demand dynamics for long term capital appreciation, however, the notion that it's also a "safe haven" is misleading.

Since the Financial Markets Crisis of 2007-2009, there has been much print dedicated to Fine Wine being a safe haven investment, bolstered by colourful charts held up as statistical justification.  Unfortunately, these price histories do not factor in the foreign exchange risks inherit when investing in Fine Wine.Almost all investible wines are denominated in EUR, the French with a bit of Italian producers, make up the overwhelming majority of any Fine Wine index, and those producers sell every year, the same wine in the same currency...  EUR.  However, Fine Wine prices and indices are quoted in GBP. 

This anomaly comes from the UK's heritage in trading wine and the UK being the ONLY country in Europe (and pretty much the world) that allows private persons to hold their wine In Bond, i.e. - deferring excise duty and VAT until consumed.  From the beginning of 2007 to the end of 2009, GBP to EUR went from 1.50 to 1.11, a drop of over 25%, but Fine Wine prices in GBP are often quoted as dropping from 20-25% during the same period.  In EUR terms Fine Wine lost nearly half its value, but when converting returns into GBP, the gains made from being invested in EUR against GBP mask the extent of losses on the investment in wine. 

This Fine Wine is a Safe Haven investment sales pitch happens each time we have a big drop in the value of GBP to EUR, such as Brexit when GBP to EUR went from peak to trough 1.46 to 1.09, and again recently with Coronavirus when it dropped from 1.20 to a low of 1.06 in two weeks.  It is important to note that the Fine Wine industry is completely unregulated, there are no investor protections in place like with other assets classes.  

To repeat, I would argue strongly that Fine Wine has a very attractive supply and demand dynamic to warrant investing for long term capital appreciation, but I believe it's wrong to consider investing in Fine Wine on the basis of it being a safe haven investment.

For more information or if you would like to discuss further, please email me at matt@winebourse.com

Best regards,

Matthew Starr
Co-Founder & Managing Director
WineBourse Limited