Fine Wine Market Performance

Fine Wine has outperformed almost every other major financial index over the past two decades; below we have provided some market analysis of the long-term performance of fine wine.

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Outperformance of FWI versus World Equities

The most convincing factor of the viability of fine wine investment to provide absolute returns to investors is that wine has produced positive absolute returns in every return single-5 year holding period since the first period in record (dec-09 to dec-14) except until the last two data points.

The forward 5-year return of Liv-ex 1000 follows a U-shape, with the highest forward rate of return at the end of 2008 and 2013 and the lowest return during the period of 2010 – 2011. As expected, the fine wine market has consistently delivered a positive absolute return over any 5-year return. More importantly, of the total 57 Five-Year periods that we covered (2008-2018), only 9 periods experienced negative returns.

market performance chart1

FWI gives diversifying benefits to a portfolio of Global Equities

Besides outperforming Global Equities in investment returns, FWI also gives diversifying benefits as the correlation of the fine wine market to Global Equities is only 0.24

Learn more about Fine Wine Vs. Global Equities in our Fine Wine Vs. Global Equities report. 

market performance graph2

Fine Wine returns become less volatile over time

The Liv-ex Fine Wine 1000 Index tracks 1000 wines from across the world (comprises 7 sub-indices: the Bordeaux 500, the Bordeaux Legends 50, the Burgundy 150, the Champagne 50, the Rhone 100, the Italy 100 and the Rest of the World 50) and provides reliable data back to December 2003. The graph below has taken this data and analysed the Annualised Returns for a 3-year, 5-year, 7-year and 10-year hold in order to demonstrate likely performance behaviour

market performance chart3

As the table and graph demonstrate, fine wine returns become more consistent and less volatile the longer it is held. This occurs as a result of the fundamental principles that drive fine wine prices – a demand/supply imbalance.  Fine wine has a perfectly inverse supply curve which is exacerbated over time as the available wine is consumed and diminished.

To learn more about fine wine as an investment class and how it could help you reach your investment objectives please get in touch, or for further reading material – download a copy of our free wine investment guide by filling in the form below.

Liv-ex 1000 since Dec.2003

Average Annualised Return

Volatility (s.d.)

3-Year

9.03%

7.62%

5-Year

7.73%

5.75%

7-Year

7.59%

4.42%

10-Year

7.61%

1.46%

About the author
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Yijun(Lena) Lu
Research Analyst
Direct Phone: +44 (0) 207 1000 967

Lena joined Cult Wines in early 2018 having previously completed several internships in the finance industry, including in a venture capital fund and the Investment Banking arm of China Securities, as well as passing her CFA level II qualifications. The experience in the investment industry combined with her passion for fine wine enables her to view this market with a fresh and unique perspective. In turn, this positions her unequivocally capable of identifying opportunities and risks in this complex market, using quantitative and scientific economic methods.

She graduated from the University of Toronto with bachelor degree specializing in finance and economics, and she has successfully passed the CFA level II exam. She is also pursuing the WSET level 3 designation. Outside of work, she loves exploring new gastronomical experience. On the wine front, Yijun has a passion for the wines of Germany, Bordeaux and especially Champagne.

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This essential Fine Wine Investment Guide will take you through the complete, transparent and informative journey of Wine Investment.