Source: https://www.thetimes.co.uk/ — Dominic Walsh
The rampant inflation that is devastating household budgets is enough to drive one to drink. Some investors looking to hedge against inflation are doing exactly that, acquiring rare wines and whiskies as investments.
Bordeaux Index, a leading wine and spirits merchant, said there had been a sharp rise in interest in wine and whisky as “hard assets” with investors “seeking out proven stores of wealth against the backdrop of high inflation”. The Bank of England forecast last week that inflation would reach 13 per cent later this year.
Fine wine market prices were up 10 per cent in the first six months of this year, driven by “super-rare blue-chip Burgundy”, which was up 26 per cent. Some individual wines rose by 50 per cent.
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Whisky prices rose by 12 per cent. In contrast, the FTSE 100 share index fell by 3 per cent in the first half of this year, while on Wall Street the S&P 500 slumped by 22 per cent. Gold, a traditional safe haven in times of volatility, was up by only 1 per cent.
More than 600 wines are actively traded on the index’s online arm LiveTrade. A significant proportion are Bordeaux such as Pétrus, Lafite, Latour and Margaux. There are also 100 champagnes such as Krug, Cristal and Bollinger. Pétrus 2018 is priced at £27,000 for a case of six, while Krug 2002 is £2,750.
Most investors leave their prized bottles in Bordeaux Index’s temperature-controlled storage facility in Wiltshire, which keeps the wines in pristine condition as they mature.
Investors who would normally choose the stock market are also putting their money into sought-after single malts such as the Macallan.
Although highly regarded by whisky aficionados, The Macallan’s appearance in the Bond movies Skyfall and Spectre added to its appeal. In Spectre, Daniel Craig as 007 drinks an 18-year-old while in Skyfall he is seen in different scenes sipping a 10-year-old and the Macallan 1962 Fine & Rare, which costs about £25,000.
With collector and investor activity on the rise, Bordeaux Index reported a number of high-profile whisky-cask transactions and “ever-increasing demand for old and rare liquid, whether from Scotland or Japan”.
Matthew O’Connell, chief executive of LiveTrade, dismissed the idea that investing in wines and spirits was only for the super-wealthy, pointing out that prices per case started at less than £1,000.
However, few investors or collectors are likely to be able to stretch to £500,000 to buy a bottle of Yamazaki 55-year-old, a Japanese whisky of which only 200 bottles were produced. O’Connell said he had sold “a couple”.
The rise in prices is reflected in the financial results of Bordeaux Index, with revenue up 37 per cent to £80 million in the half-year to the end of June. The biggest contributor was LiveTrade, where trading was up 55 per cent by value, with champagne trades up 80 per cent. The platform enables investors to buy and sell wines and spirits almost like stocks and shares, although they do not naturally lend themselves to day trading, with most investors retaining their investments for several months.