Fine Wine – the ‘passion asset’ in most demand

WineCap has launched its latest report, Fine Wine: The Journey from Passion Asset to Mainstream Asset Class, which delves into UK wealth managers’ perception of fine wine as an investment option. The study reveals that almost all (96%) of UK wealth managers expect demand for fine wine to increase, putting it comfortably ahead of watches (86%), luxury handbags (80%), and other leading passion assets.

Other key findings:

• Fine wine is already featuring prominently in many wealth managers’ client portfolios: they estimated that two out of five (40%) of their high-net-worth client base invest in fine wine with an average portfolio allocation of around 10%.
• Over half (54%) of our sample in the UK cited fine wine’s low carbon footprint as a key reason for choosing to invest in it.
• An overwhelming majority (96%) of UK wealth managers said that the large reductions in the CGT allowance would stimulate more interest in fine wine.
• 88% of our UK respondents said they treat fine wine to playing a cautious role in an investment portfolio, typically alongside other so-called safe-haven assets such as government bonds and gold.

Fine wine to attract the most demand amongst all passion assets, says UK wealth managers

• Almost all (96%) UK wealth managers expect demand for fine wine to increase
• Fine wine is ahead of watches (86%) and luxury handbags (80%) in second and third place respectively
• Report reveals how fine wine is perceived by wealth managers and financial advisers 

UK wealth managers see demand for fine wine comfortably outstripping other passion assets, such as watches, luxury handbags, and art, new research from fine wine investment platform WineCap¹ shows.

The study – conducted among 50 UK-based wealth managers and financial advisers who only deal with high-net worth clients (£100K+) – revealed that fine wine will attract most demand from investors over the coming year amongst all leading passion assets, with 96% expecting demand to increase, of which three out of five (60%) said that it will increase “significantly”.

This placed fine wine comfortably ahead of watches (86%) and luxury handbags (80%) in second and third place respectively. Other well-established passion assets such as art (68%) and classic cars (62%) placed much lower in sixth and tenth place.

The report, Fine Wine: The Journey from Passion Asset to Mainstream Asset Class, found that fine wine is already featuring prominently in many wealth managers’ client portfolios. UK wealth managers and advisers estimated that over 40% of their high-net-worth (“HNW”) client base invest in fine wine with an average portfolio allocation of around 10%.

Fine wine’s growing prevalence among HNW client portfolios provides compelling evidence, if any is needed, that it has graduated to a genuine alternative asset, a highly effective portfolio diversifier, operating alongside other popular alternatives such as hedge funds, real assets, and private capital as well as mainstream assets such as fixed income and equities.

In common with other alternative assets, fine wine tends to feature more prominently in larger portfolios belonging to more sophisticated investors where there is a greater premium on diversification. Almost all respondents (98%) said that clients investing in fine wine are mainly experienced investors, with 62% saying they were “very experienced”.

Alexander Westgarth, CEO at WineCap said: “Fine wine has long been seen as a ‘passion asset’ – a fun and exciting yet niche investment option for connoisseurs and hobbyists. But over the past few years, characterised by increased market and economic volatility that have destabilised traditional assets such as equities and bonds, perceptions of fine wine have evolved from a passion asset into a mainstream alternative asset.

“The fact that fine wine has received such a positive reception from wealth managers, whose success relies on advising clients on making the right investment decisions, is a testament to its growing appeal.”

As the investment climate becomes even more challenging, squeezing returns from traditional assets, fine wine’s appeal as an effective portfolio diversifier will continue to grow. The sector has also further professionalised and more wealth managers are seeking partnerships with specialist wine investment firms such as WineCap to ensure their clients can gain access to a similarly high-quality service with full price transparency.

Read the full report on WineCap’s website here.

¹ WineCap commissioned independent research firm PureProfile in April 2023 to survey 100 wealth managers, independent financial advisers and financial intermediaries in both the UK and US on views and sentiments towards fine wine (split 50 per market). In the UK, 35 of the respondents classed themselves as wealth managers, eight as independent financial advisers and seven as financial intermediaries/advisers.