As investors shy away from the volatile stock market, a growing number of them are saying 'ganbei' over a pricey bottle of red - instead of baijiu - as they ink deals to invest in China's growing appetite for fancy wines.
Though it is a relatively new trend around the world, and even more so in China, investing in top-notch wines is seen by many wine gurus as a surefire way to guarantee return on investments, particularly in this souring economy.
Last year, Shanghai-based Ruby Red wine importer began offering customers the option of investing in imported wines through its en primeur service, which allows investors to purchase selected wines ahead of production. Co-founder Simon Zhou said more patrons are turning to wine as a source of investment as they recognize its potential for profit.
"If you look at all the other investments you can have right now, performance is quite weak, either in shares or property," he said. "Wine, on the other hand, is quite safe, so to speak, as the value doesn't go up and down as much as the traditional investments, so it's becoming quite a good option."
In the last decade, wine profit from investment has grown at least 50 percent, and as wine consumption in China rises - the country, already the ninth-largest wine consumer in the world, is expected to become the seventh-largest wine consumer by 2012 - investing in wine is bound to become more attractive over time.
"Wine is becoming a drink that is more acceptable and readily available than ever before," Zhou said. "Because there is more availability and more people drinking it, it's good for the market here as well as the global wine market."
Wine writer and educator Denis Lin agreed that the market offers endless possibilities for investors these days.
"Before, only Western people drank wines, but now there is demand from Russia, China and other newly rich countries like Brazil and South Korea," he said. "The demand is so strong, and with fine wines being solely made from just a select number of famous wineries, production cannot expand that much, so for these wines, wines for investment, prices will continue to appreciate."
Investing in fine wines carries less risk, as they are "more stable than stocks", Lin said, and Chinese enjoy several lucrative options when investing in imported bottles, including investing through an agency or broker abroad, particularly in Britain, where wine investments are most popular.
"If you buy the wine through these agencies, it will be deposited in the tax-free warehouses near London, and it guarantees the best environment to keep the wines," he said.
(China Daily April 7, 2009)
