Wine investment funds grow into global business

Tue Jan 12, 2010 8:15am EST
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By Marcel Michelson

PARIS (Reuters Life!) - Collecting wine is no longer a privilege of just the super wealthy now that special investment funds have sprouted amid a search for alternative assets to traditional stocks and bonds.

But they may take away some of the fun of drinking.

Wine-based investments received a shot in the arm with the creation of the London International Vintners Exchange (Liv-ex) in 1999 which runs an internet and phone-based information and trading platform for fine wine merchants.

There are now 270 wholesalers from 22 countries connected to Liv-ex and they trade anonymously.

The mid-price between the members' bid and ask prices is used for calculating the Liv-ex 100 index, which has risen to 237.17 in December 2009 from 93.12 in July 2001. But there was a steep fall in the second half of 2008.

Justin Gibbs of Liv-ex said wine investors were mostly private individuals and investment funds.

"Private collectors in the UK alone hold more than $2 billion worth of fine wine in bonded warehouses," he said, adding the fine wine market was worth $3 billion a year and growing fast.

The index is almost entirely based on Bordeaux wines, partly because the Burgundy growers have greater control over the distribution of their wines.   Continued...

<p>Glasses and bottles of Chateau Belcier red wine (Saint Emilion label) are seen in a testing room in Saint Emilion, southwestern France, November 6, 2007. REUTERS/Regis Duvignau</p>