An analysis of investing in French wine by researchers from the Montpellier Business School has found that gold is a more profitable investment than wine in general, unless your portfolios contains top Bordeaux estates.
The 30-page study, published by the American Association of Wine Economists, compared investment performance from January 2007 to December 2013 of various wine investment indexes with stock and bond indexes and gold, inclduing the WineDex100 and Liv-Ex 100.
Using a base of 100 at the beginning of the period, researchers observed that gold prices were highest for almost the entire study period, followed by wines and bonds – with stock values the lowest and always under 100.
Although gold’s average annual rate of return for the entire period amounted to 9.12%, higher than most indexes in the study, WineDex Bordeaux yielded a 9.18% average annual return.
The 40 Bordeaux estates in that index include all top growths from the Left and Right Banks and many ‘super seconds’ and wines from that category.
Portfolios in times of crisis – meaning periods of crisis in financial markets – perform ‘in all cases’ better with wine or gold than those without them, researchers concluded. But gold proved a better investment than all other wine indexes measured in the study, including Burgundy and Rhone based investments.
Researchers also pointed out tax advantages in Australia and in England, where wine investments are tax exempt.
In France, wine investment gains are taxed at a flat rate of 34.5% but only applicable if the sales value is higher than 5,000 euros per invoice.
Written by Panos Kakaviatos