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Diversify into Fine Wine?


Veblen goods are a group of luxury commodities whose demand is proportional to the price. Usually the higher the price of a particular good the less people want it. For Veblen goods, such as  very expensive wines, watches or cars, however, the item becomes more desirable as it grows more expensive.


The term is named after the American economist Thorstein Veblen, who is best known for introducing the term “conspicuous consumption.”  A ‘Veblen Good’ has an upward-sloping demand curve and can be seen as a status symbol with high quality and exclusive characteristics.


The Veblen effect is where people’s preference to buying said goods increases as a directly correlation to its increase in price.


Wine is a physical asset with intrinsic value. All "Title and Risk” is assigned to the investor upon clearance of funds into the escrow account, the asset does not form any part of our company balance sheet. At all times a full audit trail is provided for your records and proof of ownership.​


As an alternative investment, wine has a very low correlation to equities and bonds. The asset class is considered an important tool for any diverse investment portfolio.

"Since 1988 Fine Wine has outperformed Global Equities 98% of the time"
FWI – Fine Wine Investable Index (Liv-Ex)

Bordeaux wines are restricted in supply with an increasing demand globally. Iconic wine brands have become firmly established as luxury goods, on average the top chateaux in Bordeaux make less than 20,000 cases per annum, with some producing only a few thousand, even hundreds (Chateau Le Pin) of cases per annum.


The combination of finite production and increasing demand is extremely rare with investments. Inevitably this leads to price increases, much the same with house prices in London, UK. This asset class has a ‘perfect inverse supply curve’ relationship.


“Once bottled, the quantity of wine can only reduce thereafter due to consumption.”


Wine, art and gold as an alternative investment should be added to an investor’s portfolio to protect against the corrosive effects of inflation. Historically wine increases with inflation.

"The story with other physical assets is similar: since 1993, when the first monthly wine index began, wine prices have risen 12-fold, while gold has increased just 3.6-fold and the FTSE 100 has only slightly more than doubled."


Source: Financial Times July 10th 2015

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