Fine Wine Investors Should Spread Their Wings – Research Report

Max Skjönsberg

31 May 2012

Alternative investors should look beyond the classic French wine regions that dominate the market, findings from a new report by a university in the UK show.

The University of East Anglia says that allocation to Italian, Australian and Portuguese wines could be an important diversifier for investors.

Prices of fine wines, which have soared in recent years on the back of higher consumption in the Far East, are volatile and depend on factors such as weather, year, reputation and stock availability,

“The investment market deals mostly with French wines, but we found that diversification across the different varieties of French wine is not that effective," said Dr Apostolos Kourtis from UEA’s Norwich Business School, one of the people behind the report.

“However, our results suggest that diversification across other wine-producing countries is likely to be much more efficient in reducing overall investment portfolio risk,” said Dr Kourtis. ”This is probably due to the fact that fine wine prices are sensitive to climate variations at a geographical level."

The report, entitled Wine Price Risk Management: International Diversification and Derivative Instruments traced nine indices that track the price of the most sought-after fine wines, including the Fine Wine 100 Index, the Rhone 50 Index, the Australia 20 Index and the Port 10 Index, between 2001 and 2011. It also looked at figures from the London International Vintners Exchange .