Want to invest in luxury? Choose wine over handbags and scotch

If one is looking to invest in luxury products as an asset class, then wine is the asset that will give the best returns. According to the latest data from Knight Frank’s Luxury Investment Index (Q2 2021), investment-grade wine has seen returns better than previous top investments -- luxury handbags and rare whisky.

“Two assets that have been at the helm of the Knight Frank Luxury Investment Index (KFLII) in recent years -- rare bottles of scotch and Hermés handbags -- have relinquished their places at the top of the index, recording negative 12-month growth. Wine is the front-runner in the 12 months to the end of June 2021 with prices rising 13 percent and 119 percent over a 10-year period,” said Andrew Shirley, editor of Luxury Investment Index at Knight Frank.

“Wine is doing really well, not going crazy but growing nicely. There are no signs of over-exuberance,” explained Wine Owners’ Nick Martin who compiles the data for The Knight Frank Fine Wine Icons Index.

“One market that has been doing well this year is Bordeaux. Burgundy, on the other hand, is taking a bit of a breather.”

Also read: Men, not women, drive luxury goods sales in China

While wine has seen the best returns over a 12-month period, it is far outclassed by other investments over a longer 10-year period. Rare whisky posted returns of 483 percent over 10 years, far higher than the runner-up asset class of collectible cars which had a growth of 122 percent over the same period.

Classic cars and luxury watches were the third and second-best asset classes for 12-month investment periods with price increases of 4 and 5 percent, respectively.

Knight Frank Research compiled the data of the prices from Art Market Research (art, coins, furniture, handbags, jewellery and watches), Fancy Color Research Foundation (coloured diamonds), HAGI (cars), Rare Whisky 101 and Wine Owners.