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Wine beats scotch and Hermès bags as top luxury investment

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There has been no hangover for wine investors during the pandemic, with bottles of Bordeaux proving a better bet than stashing cash in a Hermès handbag or rare whisky.

Interest from collectors helped wine see off competition from watches and cars to top Knight Frank’s luxury investment index, with prices of investment-grade wine rising 13% in the year to the end of June. That performance beat watches and cars into second and third place with gains of 5% and 4%.

With the pandemic creating turbulent conditions for investors to navigate, the index’s editor, Andrew Shirley, said a fall in the worth of rare bottles of scotch and Hermés handbags meant they had relinquished their places at the top of the leaderboard.

“Wine is the frontrunner in the 12 months to the end of June 2021 with prices rising 13% and 119% over a 10-year period,” said Shirley.

Alternative assets such as paintings, wine and vintage cars appeal to deep-pocketed investors who are able to turn private passions and hobbies into potentially lucrative investments. However, they can also be risky as they are harder to sell than shares in stock market-listed companies.

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Nick Martin, the chief executive of online wine collection platform Wine Owners, said wine prices were “not going crazy” but growing nicely: “There are no signs of over exuberance.” He highlighted the success of the Bordeaux wines market as collectors cottoned on to back vintages, such as 1996 and 2000, as “great value for money”.

In recent years the Hermès handbag Birkin, named after the actor and singer Jane Birkin, has been touted as a shrewd investment. The French luxury house no longer runs a waiting list for the Birkin and only makes them for “friends”, creating a huge resale market. Two years ago a Birkin sold for £162,500 at a London auction.

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The enduring appeal of high-end watches has been illustrated by the recent success of companies such as Watches of Switzerland, which has seen its share price climb more than 200% over the past year. The success of the UK’s biggest seller of Rolex and Omega watches comes despite an average spend of about £6,000.

The classic car market is also in a good health, according to the index, with the value of a selection of the world’s rarest and most collectible vehicles up 4%. However, most of the interest was coming from experienced collectors and dealers.

This article was amended on 24 September 2021 to correct the spelling of Hermès.