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Wine News

Barrel of oil or a bottle of wine?

Investment in fine wines has boomed in recent years as people try to diversify the risk in their portfolios from commodities such as crude oil or copper. However two economists from the International Monetary Fund who were studying the factors that drive up commodity prices, found that oil and fine wine prices showed a remarkable similarity.

The study disputes that supply factors such as climate conditions, grape quality, age and quality ratings drive prices but say instead that it's demand that really matters in the wine market as with a commodity such as crude oil. Interest in investment-grade wine has increased as an alternative asset but the correlation between the two commodities has strengthened since the financial crisis. After falling in tandem during the downturn, the post-crisis recovery brought about a surge in prices for oil and fine wine, which increased by 86 and 62 per cent, respectively, between January 2009 and June 2010.