Wine, since time immemorial, has been a popular beverage to many, not to mention that it’s almost a must-have in every celebratory occasion. It has been proven that unlike investing in other types of businesses often considered as mainstream and traditional such as securities, real estate or even gold, wine business will always surpass them all and give you a high return on investment regardless of the prevailing economic trend.
Therefore, if you’ve been weighing your choices on whether investing in wine is a good investment? Worry no more, since we’ve put together 6 reasons that will cement your idea and help you make a perfect and fulfilling business initiative.
- Wine Business is a Global, Increasingly Growing market
According to research by International Wines and Spirits Record (IWSR), Sparkling wine, which accounts for 8% of the total consumption, is forecast to rise by 7.4%. The IWSR research predicted a +2.8% volume growth to the end of 2019. The global wine consumption according to the record is expected to rise to 6.17% over the next five years.
The emergence of other economies such as China, Japan, and Hongkong, with its new generation of affluent wine lovers willing to indulge in the best wine in the market at a fairly high price cannot be overlooked.
Wine is considered a Veblen good whose demand increases with increase in price, due to its exclusive nature and appeal as a status symbol.
- Propitious Returns on Investment
Investors have constantly earned double-digit returns from the wine business over the years. High demand from the ever-increasing emerging markets significantly affects the price and maintains it at an all-time high. Due to the current evolvement of market liquidity and price transparency, wine as an asset has performed relatively well as compared to other investment vehicles available.
Considering the ever increasing desire for fine wine, According to Forbes, wine prices are set to increase by 20% in 2019.
- It’s Exempt from tax
Wine is classified as a “wasting asset” — defined as an entity with a limited lifespan and irreversibly declines in value over time, therefore exempt from tax. This categorization also exempts you as a wine investor from paying capital gains tax (CGT) as well as inheritance tax in the event the wine is inherited by your next of kin.
Keeping your wine in a bonded warehouse will save you from paying Value Added Tax (VAT) or duty. This is, therefore, a good investment opportunity that saves you some bucks you’d otherwise have paid to the taxman had you invested in another type of business.
- Unlikely To Be Affected By Inflation
Fine wine is mostly a preserve for the wealthy — in that, they’re not affected by financial instability and will always consume their favorite wine as and when they need to regardless of the prevailing market status. In the event of market instability, wine prices remain consistently unchanged. They’re rarely affected by the economic status, in retrospect, the fine wines increase in value when the market prices are unstable.
- Helps Broaden Your Business Horizons
Being an investor, wine would definitely be a viable investment to consider as a profit booster. Notably, unlike other business ventures, wine business is rarely affected by the looming economic trends. Considered a preserve for the wealthy, seldom will they have less to spend on the precious commodity hence the assurance that profits will eventually be made.
Article by Anthony Chamberlain at BWC Management & Consulting Partners — Wine Investment Advisors.
Official website — https://bwcmanagement.co.uk/