A changing of the political guard is coming and whether you are celebrating or drowning your sorrows, the wine market has been a major beneficiary of the uncertain political climate.
The fine wine market is up 23% this year after over five years of dismal performance, thanks in part to politics and time. Wine represents a hard asset with little volatility and more visceral enjoyment in a low yielding, highly volatile and uncertain world. The deepest secondary market for fine wine is the United Kingdom and when the decision was made to jump from the European Union ship, the pound started it's now 20% decline down from 1.51 to a low of 1.21. Prices for wine in the secondary market have remained steady so dollar buyers have found plenty of reason to look across the Pond for value and sellers are ready to move stock before the next shoe falls.
The fine wine secondary market reflects it's physical nature, where diminishing supply drives vintage movements and tasting reports from critics can move demand. The investment grade wine market is approximately $15 billion dollars with millions rather than billions traded each day, but it is an important part of a wider ecosystem that sheds insight on how rare and hard to find "assets" can be aggressively bid within a few dollars or the bid-offer can be as wide as thousands for the really rare gems. The market has constituents and indices to follow and has provided a source of value and opportunity in 2016. There are six wine exchanges in the United Kingdom and a few in France too and they bring together traders looking for fine wine where they can bid and offer to their heart's content, me included.
The catch, however, because there always is one, is wine has a finite life. Like a bond it has duration and as it moves through time it's value will sadly fall not even back to par, but to zero. Like any asset, being able to actively manage quantities, regions, producers, drinking windows, performance and values means making an investment in the time and the tools to engage with the assets and make informed decisions. It's just not as easy as heading down to the cellar to see what catches your eye, some of those bottles are moving quickly through time and need attention in your glass before you miss the opportunity.
Whatever politics dictate, wine will remain steadfast and true so head to the fine wine section this week, either way you will be glad you did.
No wine to zero is our motto @ www.vinolytics.com. V.2. launched this week with it's cool new add, delete and search features.