Wine investment funds grow into global business
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...