|VANQUISH||FINE WINE||ON-TRADE||FINE WINE INVESTMENT||PRODUCTS|
The five billion dollar global fine wine market has experienced exponential growth over the past three years. The catalyst for such an upward trend was the removal of all duties on wine in Hong Kong, in February 2008. As China has experienced an unprecedented new wealth creation, Hong Kong has now become the hub for Asia and has led to a huge growth in fine wine investment activity in the region.
The recent growth in value of fine wine over the past years has been fuelled by the fundamentals of supply and demand. On the supply side, there are less than one hundred investment grade labels with fixed production, because the vineyard land is regulated and finite. The demand side has been propelled by the growing number of high net worth individuals, leading to an increase in global consumption, as well as an increased number of investments in fine wine as a credible alternative asset.
Traditionally, as fine wines mature over time and approach their “drinking window”, they become more desirable, and therefore, more valuable. At the same time, the closer the wine reaches its drinking window, it begins to be consumed, reducing supply and increasing scarcity, which in turn adds more upward pressure on prices. This up-shift in prices has traditionally occurred over the ten years that fine wine takes to reach its first window; however, there has been a cultural shift in Asia that has shown immature fine wine being consumed as it is bought. A rapid increase in the consumption of fine wine in the first five years of its life has shifted the traditional price cycle of fine wine from a decade long investment to one that can show returns in a three to five year span.
In China, for example, wine has become a status symbol and societal driver for the newly rich. Although there has been a strong demand for fine wine from the region, the number of new consumers is relatively tiny in comparison to both the population and size of the emerging middle and upper classes. As this grows, and as palates mature and demand from the other BRICs materialises, we believe that prices will continue to rise over the medium term.
The wine market, however, is global and Vanquish nurtures significant opportunities for routes to markets in the USA, South America, Europe and Asia. Vanquish has a diverse customer base, including private customers, investors, trade re-sellers and stockists, which helps creates diverse routes to markets and maintains liquidity and drive volumes.