Starting a wine investment portfolio with Wine Circle is very straight forward and all you need to determine is the following:
Wine Circle recommend allocating 2-5% of your investment capital into wine and imposes a minimum starting play of 100,000€ in order to access wines with the greatest potential returns and to obtain the required portfolio diversification.
Wine Circle advises its investors to set an 8-10 year investment horizon and a very minimum of 5 years for their portfolios to experience a full market cycle and to best mitigate short-term irregularities and trends. The general rule of thumb being, the longer the investment, the greater the returns.
Building balanced portfolios.
Portfolio diversification in any investment class is crucial and wine investment is no different. Getting ahead of trends and having access to the best stock and prices within traditional fine wine regions such as Bordeaux ensures strong potential growth, whilst investing across alternative regions and vintages minimises risk.
Over the years, our trading experience and networking has allowed us to gain access to primed allocations of the finest, investment-grade wines and the below portfolio composition is typical of a portfolio proposition offered and managed at Wine Circle:
The following services are included in owning a wine investment portfolio managed by Wine Circle.
Wine Portfolio Life-cycle, 5 stage process that occurs when in investing with Wine Circle:
The investor defines the amount of capital to be invested and the duration of the investment.
Wine Circle source and purchase the wines with the investor becoming the legal owner of the investment portfolio.
The portfolio is managed over the defined duration with Wine Circle’s portfolio managers capitalising on market opportunities and trends to sell and purchase wines, following the investors consent.
Upon instruction, the investor’s portfolio is liquidated by trading the wines into the global wine market (merchants), via Liv-Ex, or to existing and new clients of Wine Circle. The required time to liquidate a wine portfolio at market value averages between 8-10 weeks.
The returns from the sale of the portfolio are transferred to the investor.
Broken down and put simply, wine investment is driven by two economic principles: supply and demand.
Due to investment-grade wines having finite production and possessing the capacity to improve with age, demand increases and leads to a more scarce supply, which in turn applies upward pressure on secondary market prices.
Furthermore, barriers to entry are rife in fine wine production with strict classifications being imbedded within wine producing regions, therefore increased supply over the long-term is extremely unlikely.
Global demand has increased significantly in recent years due to higher consumption in both emerging markets in Asia, but also in more traditional markets such as Europe and the USA. Increased consumption has equally resulted in new trends – consumption of wine at earlier stages of its life cycle converts to improved liquidity and shorter-term gains on an investment scope.
Over the course of time, wines develop strong footholds in certain markets due to a combination of elements from market presence to ownership. Wines with such following make them prime candidates for investment portfolios, with demand being strong from vintage to vintage.
The scores and tasting notes of leading wine critics and journalists have a strong influence in regards to investment performance. Critics scores, generally marked out of 100, can create strong demand, price appreciation and vice-versa both across the short, medium and long-term.
The qualitative output of a particular vintage plays an important role on wine investment. Strong quality vintages provide excellent longevity and create strong demand at premium prices over the long-term. On the other hand, more ‘classical’ vintages are generally priced more competitively and enable earlier consumption, leading to improved liquidity and generating solid medium-term returns.
Selecting wines for investment portfolios is strongly linked to the combined results that production, consumption and distribution have on output. Having access to leading industry data, reports and being a member of Liv-Ex (See below) allow Wine Circle to anticipate trends across wines and vintages.
There are thousands of fine wines on the market, but only a small percentage of those produced can be considered as investment-grade wines. A number of key factors combined help determine Wine Circle which wines enjoy the most qualitative investment potential in an ever-evolving industry.
Impressive returns, low volatility and correlation.
Returns on fine wine over the long-term are stable and consistent due to the aforementioned imbalance of supply and demand. Investment wines as an asset class have low volatility, whilst also benefiting from an attractive low correlation to traditional equities, notably during periods of global economic unrest – adding value and lowering risk to a diversified investment portfolio.
Being a physical, tangible asset with intrinsic value, fine wine has proven resilient during financial recessions, unlike the collapse of stocks and shares – preserving wealth for investors during uncertain times.
Very few assets, traditional or alternative, can compete with fine wine on investment performance. Since 1988, fine wine has outperformed all mainstream assets, bonds and commodities increasing over 2000% in value, reflecting in a Compound Annual Growth rate of over 10%.
Although the core fundamentals of wine investment are driven by supply and demand, price and market transparency are of utmost importance, two key elements that Liv-Ex (The London International Vintners Exchange) has brought to the table since its creation in 2000.
Liv-Ex offers an unmatched trading, settlement and data service via its online digital platform, with the data and transactions deriving from the activity of their 400+ members – fine wine merchants based in over 35 countries worldwide.
Wine Circle uses Liv-Ex services and benchmark indices to support its market expertise and experience to identify potential wines for investment portfolios and is an active member of the exchange. The performance indicators and services on offer provide Wine Circle with key, up-to-date valuation tools, whilst the trading platform offers rapid and regulated liquidity solutions on hundreds of investment-grade wines.
Liv-Ex Fine Wine 100
Our relationships across wine growing regions and nations with growers and respected trade suppliers allows Wine Circle to give you its guarantee.
In a fast-paced and growing fine wine market, it is absolutely crucial to ensure that the wines entering your portfolio are of seamless provenance. Thanks to the experience and connections of the Wine Circle team, only pristine condition stock, in their original cases will be purchased and sold on your behalf. Our relationships across wine growing regions and nations with growers and respected trade suppliers allows Wine Circle to give you its guarantee.
Only wines stored professionally, under- bond and in perfect conditions are able to command the full market price at a given time. Our guarantee ensures that duty paid stock, foreign strip labels and bottles with poor conditioned labels and levels stay out of portfolios – elements that can result in decreased valued wines.
Storing your wines in bond with Wine Circle is paramount. Wines stored within a bonded warehouse are not liable for VAT and Duty and are one of the first requirements for buyers that seek faultless provenance – therefore being essential for liquidation.
Wine Circle has partnered with a secure, temperature-controlled bonded warehouse in Bordeaux for the storage of its clients’ portfolios. In storing professionally, investment-grade wines are insured to full market value.
Unlocking membership to Circle 1855 provides investors with unparalleled vinous experiences, and the opportunity to meet likeminded individuals interested in fine wine and alternative investments.
In addition to lower management fees of 1.6% per annum the club offers exclusive access to: