Wine Investment in South Africa - Cape Wine Academy

after seller’s premium ) giving the owner not only all of his money back with €156 (R1,560)
profit but also eight bottles of Latour to drink for free.
3.2 The 2008-present economic recession
The economic recession of 2008-present resulted in poor performance ratios in all areas,
including previously high returning equity plans, pensions, stocks and shares. Even the
property market entered negative growth in much of Europe. But wine prices remained
steady ( see Table 1 ). Stephen Williams of The Antique Wine Company ( 2011 ) sums it up;
‘For most of 2008, the fine wine market managed to remain immune to the wider
financial crisis. But then after Lehman Brothers, the ‘dash for cash’ changed
everything. Whilst most wine enthusiasts held on to their cellar, nervous investors
started taking profits, restaurants sold wine to raise money and a number of fine wine
funds began deleveraging. With so much stock coming onto the market…. prices
inevitably fell.’
Prices and demand for wine did fall, but blue chip wines weathered the storm. Perhaps the
most compelling argument for wine investment came in the middle of the difficult 2008
trading environment. The 1982 Château Lafleur from Pomerol, not one of the top ranked
wines, was sold on opening at €109 (R1,090) a case in 1983. In 2008 it was selling at
auction for a remarkable €30,800 (R308,000) a case; a growth of some €1,230 (R12,300) or
1,000% every year. Compare that with how gold has suffered through the recession – in
1983 it sold for $450 (R3,150) an ounce, today for $1,419 (R9,933) an ounce in Europe
( March 2011 ) a growth of only 10% per annum. There are many other examples of
astounding price increases for individual wines during this difficult economic period. In 2006
1982 Château Lafite sold for €5,500 (R55,000). With the recession effects still reverberating
around the world, a case sold recently for €43,000 (R430,000); including commission, an
increase of R75,000 a year ( Sothebys, 2011 ). The ’82 Lafite is a remarkable investment,
estimated at being worth eight times its weight in silver ( Schmitt, 2010 ). One does not need
to wait 15 years to see spectacular growth, however. A specialist trading platform – the
London International Vintners Exchange, or Liv-ex, was established in London in 1999 to
track such growth. Recent data showed the 2008 vintage of Lafite went from €3,300
(R33,000) to €11,100 (R111,000) in a single year – and that was before it was even bottled
( Liv-ex, 2010a ).
The massive cash input into wine investment from the Asian market, particularly the
Chinese, over the last few years has helped keep wine as a commodity buoyant and
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