When one considers the market for fine wines as a whole, prices are rising and the role of the investor is becoming even more important, complementing (but thankfully not yet supplementing) the role of the consumer and collector. The investor also places additional demands on the market, namely price transparency and settlement certainty.
To a certain extent, professional investors are able to watch out for their own interests, but for the private buyer some protections are beginning to gain traction. While most agree that the Financial Services Authority (FSA) does not need to be involved, the leading figures in this alternative market are doing more to protect investors and promote the market.
It’s simply a given that any time you can improve transparency and guarantee reliability you will reduce risk. With reduced risk you will encourage new investors and increase activity and liquidity. 2011 could be an exciting year in the wine industry; with the right tools in place the market as a whole should continue to grow.
A quick glance at the newspapers will reveal a host of new brokers selling investment grade wine at high prices. Buyers should always be cautious, of course, since there is currently no absolutely foolproof method of determining prices across the board – but fine wine is often still considered by many experts to be a better long-term investment than the mainstream stock market, where there is supposedly more price transparency and settlement issues are standardized.
With specific regard to fine wine investment, thanks to the increasingly widespread, near-instant dissemination of information the internet provides, more and more people are aware of the risks inherent in the market than ever before, by which we mean both timing risk (i.e. poor investment strategy) and settlement risk (i.e. the risk of fraud) – which of course can only be a good thing.
Tags: Fine wine investment