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DRINKS BUSINESS - FINE WINE TIPPED TO BE A SAFE INVESTMENT FOLLOWING BREXIT DECISION

This week has seen the pound sterling drop to a 31-year low and that is set to make wine in cheaper in foreign currencies and stimulate demand from overseas, according to City A.M. And because of that, fine wine is expected to rise as it has definitive characteristics that tend to see it perform well when the pound is down.




As Liv-ex co-founder, Justin Gibbs, mentioned to the drinks business in the wake of the recent referendum, once a ‘Brexit’ vote was confirmed and the pound weakened, US dollar and euro buyers contributed to a surge in activity on the Liv-ex marketplace.


The same phenomena was seen in February of this year when a weak pound led to a boost in the Liv-ex bid to offer ratio.


The market for fine wine ended up running flat in 2015 although this was some improvement following a four-year period that saw the market suffer due to a 36% price correction.


So far this year the fine wine market has performed well seeing consecutive monthly gains since January.


Andrew della Casa, director of the Wine Investment Fund, told City A.M.: “Asset markets are likely to be volatile and challenging to navigate while everyone comes to terms with the implications of the referendum.


“But there are good reasons to think that wine may benefit from the uncertainty: it is physical, and it tends to perform better when sterling is weak. Add in its excellent long-term track record and favourable cyclical position, and it is one asset for which the future looks bright.”




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