Does wine investment still have fruit to bear, or is it past its best?

(Spearswms) - A report has noted that although the Liv-Ex Investables wine index had fallen by 27 per cent in a year by mid-2012, it has since reclaimed some of the loss and steadied, says Alex Matchett.

Wine has been toasted as a profitable asset class for years now, and a new report from the Wine Investment Fund suggests that, with patience, investing in grapes can still bear fruit. Not everyone agrees, however.

The report, 'Have the Prospects for Fine Wine Changed?', noted that although the Liv-Ex Investables wine index had fallen by 27 per cent in a year by mid-2012, it has since reclaimed some of the loss and steadied. The authors see the fall as an adjustment and consolidation of a market that had grown at an average rate of 11.9 percent since 1988. They are upbeat (as indeed those running a wine investment fund might well be). 'The long-run returns can be expected to remain around 10-12 per cent.'

Others in the profession are not convinced: 'You'd be doing very well to get half that,' Richard Harvey, senior international director of fine and rare wines at Bonhams, told Spear's: 'They probably have an interest in bulling it up. I would say things will remain pretty static over the next three to five years.'

The report points to significant long term growth potential aided by globalisation of fine wine-buying in North American, Japanese and Chinese markets; by investment, with major fund creation; and by the creation of accepted standards to assist trades. Such shifts in the landscape have contributed to the seventeen-fold increase in the market over the last 25 years.

However, those who sell wine for a living, like Richard Harvey, are not convinced that this growth will come: 'China was the area that gave the growth between 2009-11. It's difficult to see where else is going to do that. India has huge tax issues. Brazil - I don't think that's going to have any significant impact. I don't see anywhere else that can drive it given that the economic outlook for most of the Western world looks fairly slow.'