Most people buy Italian wine because they’re looking forward to opening the bottle and enjoying the delights inside.
But there are also some who see Italian wine as an investment.
As with any product, rare and collectible vintages can sell for massive amounts of money. In fact, some of the most expensive bottles of wine can easily broach six figures when they come up for auction, making investing in Italian wine a viable way to generate large profits, assuming you know what you’re doing.
And therein lies the challenge.
Figuring out which Italian wines have a chance of increasing in value versus those that are likely to either remain as they are or lose value is a tricky task. As such, investors are always taking a risk when they pour their money into Italian wine.
Now that we’re several months into 2022, we’re in a better position to determine whether wine is still a good investment for this year and those coming up. Here, we examine some of the factors that may affect the value of wine in the future.
Ongoing Price Appreciation is Predicted
The general consensus is that the value of fine wines looks set to increase during 2022 and beyond. This comes on the back of a very successful 2021 where the Italian wine investment sector saw some tremendous gains coming off the back of the initial panic that the pandemic generated.
Several factors are likely to influence these price increases.
General economic growth is the largest. Simply put, investors have more money to put towards wine than they did a couple of years ago. This is good news for sellers as it increases their chances of sparking bidding wars that lead to higher prices. Of course, this economic growth is very much a regional issue. Where some countries will enjoy growth coming off the back of the pandemic and the lifting of restrictions, others may experience market retractions. As such, you need to consider the market you’re investing in and its economic state before committing your money to fine wines.
The second factor is a supply and demand imbalance.
With economic growth comes an increase in demand for fine wines. However, the challenges the last few years have presented mean there are fewer new fine wines on the market. Couple that with a continually decreasing stock of older wines and sellers are in advantageous positions. Buyers have fewer options, meaning the wines that do come up for sale are more likely to attract higher prices.
Wine Price Growth Will Exceed UK Property Growth
If we hone in on the UK, Halifax produced some interesting figures. It states that UK property prices rose by 9.7% between January 2021 to January 2022.
If we look at the difference for the same period in fine wine, we see growth of 25.2%.
Wine has grown in value by almost three times as much as property in the United Kingdom. And we’re seeing similar growth disparities in other countries. The point is that Italian fine wine may be a better investment than property in the coming years.
Of course, there are some caveats to this.
The first is that the percentage increase for wine is focused at the top end of the market. A standard wine hasn’t seen anywhere near that sort of increase. And even if it has, the value increase is so insignificant as to make it unviable as an investment.
The second is that property prices are not the only thing that determines the value of property investment. A property owner can rent their property out, thus generating a continuous income on top of their capital gain. That isn’t possible with Italian wine, meaning it can’t generate a passive income.
Still, in pure growth terms, we’ve seen some astronomic increases in the value of fine wine that lines up with the idea that economic improvements will lead to continued growth in the coming years.
Luxury Sparkling Wines Will Be the Best Performers
Sparkling wines have always been a bankable investment. Champagne is one of the most valuable wines in the world for that very reason. And we’re seeing that trend increase in 2022 and beyond.
The key reason for this is that lockdown restrictions are being lifted on many venues.
Sparkling wines are in more demand as people rush out to enjoy more time with their friends. And hospitality venues are cashing in, sucking up much of the supply in the process. That lack of supply means that fine sparkling wines sold to consumers are growing in price faster than they normally would. The average piece of a bottle of Champagne increased by 25% in 2021 alone.
Is this a short-term trend?
But right now, investing in Champagne to make some quick gains may be a viable option. And with the devastation wrought on many French producers by the frosts of mid-2021, Champagne is going to be a little rarer for the next couple of years. It’s likely that some quick gains are going to occur in the future, with price stabilization coming when the French industry is back on its feet.
In 2010, Tuscany accounted for about 95% of Italian wine investments.
In 2022, that figure is getting closer to 50%.
Why is this important?
It tells us that investors are looking beyond the Tuscan classics as they learn more about the many quality wines that Italy has to offer. Piedmont is the main beneficiary of this more varied focus, as it has seen its share of the investment market rise from 4% to 39% between 2010 and 2022. But we’re also seeing many smaller regions, such as Abruzzo, Campania, and Puglia, making their marks.
Italian wines are becoming more respected in the investment community.
This trend is likely to continue in the coming years, meaning more Italian wines will become viable investments capable of generating strong returns. And with that, your next step may be to invest in some fine Italian wines. Xtrawine is here to help as we offer a huge collection of wines, all of which can be delivered to your doorstep if you order today.
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