Alternative Investment

«Wine is an Alternative Asset Class Today»

Wine is experiencing unprecedented interest not only as a beverage but also as an alternative investment, Cru World Wine co-founder Jeremy Howard told finews.asia, with the region being a major source of demand.

In 2022, global markets registered one of the worst years with major asset classes, like stocks and bonds, generating losses across the board. According to Jeremy Howard, co-founder of Cru World Wine, a British digital platform for fine wine and spirits, this led to more investor interest in alternative and collectible assets.

The company is also present in Singapore. «There’s never been so much interest in fine wine as an alternative asset as there is today,» Howard said in a conversation with finews.asia.

Market Outperformance

In fact, wine has shined not just as a collectible but as a viable allocation within broader investment portfolios.

In addition to positive, uncorrelated gains in 2022, fine wine has risen 2,400 percent since 1998 – a CAGR of 10.2 percent – according to Liv-Ex exchange data. This outperformed the S&P 500, gold, oil and many other mainstream investments during the same period.

Long-Term Outlook

And Howard is positive about the performance of wine even in the longer term due to favorable dynamics in supply and demand. 

On the supply side, fine wine production is not particularly expandable as it is made in very tightly defined vineyards. And on the demand side, there are 610,000 ultra-high net worth individuals today, alongside another 173,000 by 2026, according to Knight Frank’s 2022 wealth report, who invest around 16 percent of their wealth in collectibles. 

Asia as a Key Source of Demand

«Let’s assume that 10 percent of the amount they put into collectibles goes into fine wine,» Howard explained. «You get a dramatically high number of over $80 billion in demand for fine wine just for that group of people.»

Asia is a key source of demand for fine wine not only due to strong wealth creation but also policy developments, specifically in Hong Kong when it removed the import tax in 2008.

Amazing Center – Regional Demand

«Overnight, Hong Kong suddenly became this amazing center for fine wine trading and the Asian consciousness of fine wine went up dramatically,» Howard recalled.

Today, regional demand extends beyond just Hong Kong and mainland China to Southeast Asia, including Vietnam, Singapore, the Philippines and Indonesia. 

Digitalized Wine

Historically, it was relatively difficult to trade wine and buyers tend to just drink their purchases. But over the last 10-15 years, technological advancements have led to improvements in market efficiency and new tools have emerged to support investors in areas like portfolio analysis. «The viability of the proposition is much better now,» Howard said.

Strong Growth

Established in 2013, Cru World Wine is a UK-based digital platform for fine wine and spirits with capabilities in market access, secondary trading as well as portfolio management.

It posted over S$46 million ($35 million) of annual revenue in 2020 which grew to almost S$74 million in 2022.

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