Investing in wine

Wine trading comes a very long way. Ranging on various scales, its popularity is increasing daily.

Today even specialist investment houses, insurance companies and retirement funds use wine as an asset to be traded. So let’s take a further look into this phenomenon:

It is estimated that trading in wine generates some R21billion a year. Markets have been quick to realize the substantial amounts that wine has realized. Hong Kong even abolished sales taxes and duties on wine in order to establish itself as a wine trading hub. It worked; in the first three wine sales of 2011 more than R173 million was traded and it now trades more wine than London and New York combined.

Wine trading has a long history, originating in Bordeaux, probably, where wine ‘futures’ saw traders gamble on long term profits by buying early – usually before the wine was even bottled (en primeur) then selling on to buyers at greatly increased prices on the back of increased demand. The system has worked for more than 150 years and profits have enticed many more to buy and sell wine as a commodity much like other collectibles. Now, specialist investment houses, insurance companies and retirement funds use wine as an asset to be traded. And it is very big business.

It is estimated that trading in wine generates some R21billion a year. Markets have been quick to realize the substantial amounts that wine has realized. Hong Kong even abolished sales taxes and duties on wine in order to establish itself as a wine trading hub. It worked; in the first three wine sales of 2011 more than R173 million was traded and it now trades more wine than London and New York combined.

Read more: wine.co.za

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