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A looming recession and the current free-falling of stock prices have made for a scary investment climate. For those looking to keep their money safe, there are plenty of alternative investment options. Parking money in wine, for example, is one option. It’s one way the world’s super rich bounced back after the last financial crisis. Really. India’s Wine Affair
While wine has not been a traditional part at the Indian table, there has certainly been a growing interest in wine over the last few years. Subsequently, this has helped in the parallel the growth of wine appreciation (and consumption) the middle and upper middle classes in India.
A recent Business Standard study reported that although wine investment promises high returns, this privileged asset is only for ultra high networth individuals. While wine advisory companies evaluate the global market for fine wine to grow at approximately $3 billion annually, it will be some time before India can be part of this global study. Currently, investing in Indian wines, wineries or even wine funds is not an option, investing internationally is an option.
Here’s what you need to know before you plunge into wine investment:
Which Wines: Not every wine is worth investing in. The five best fine wines in the world (commonly called the First Growths) are believed to come from France’s Bordeaux region – Lafite Rothschild, Margaux Medoc, Latour Medoc, Haut-Brion and Mouton-Rothschild. Professionally managed investment portfolios have between 80-90 per cent by value invested in just eight brands.
However, Girish Mhatre, founder of Good Earth Wineries cautions Indian investors, “The consumer has to ‘show some love’ too. At the moment there are not many consumers who understand what wine is or what to look for in a wine.”
Watch Out for the Critics’ Word: If you are unaware about tastes and wine specialties yet, the best way to know whether a particular wine is worth it is to read what prominent wine critics have to say about the year’s harvest. You will be surprised to know some of the most unusual wines double in value within a year.
Finance: The lowest investments in overseas funds are generally around Rs. 3.5 – Rs. 5 lakh. Initially a management fee of five per cent and a performance fee of 20 per cent on profits are charged. Usually the funds have a holding period of five years.
Finally, you should be clear about what your investment intentions are: is about your love for wine or making money. Also keep in mind the budget and investment time frame. If you’re just looking to make a quick buck, speak with wine experts and wine merchants, but like every other investment, don’t give in at the drop of a hat.
Your best gamble would be to “pick a company that is committed to making good wine”, adds Mhatre, and if you still don’t hit the jackpot with the wine business, there’s only one thing left you can do with all that wine!
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