Fine wine among most popular ‘hobby’ investments

According to a new study by Lloyds, one in six investors are sinking their fortunes into “hobby” investments such as fine wine and whisky.

The report by Lloyds Private Banking laid out some of the most popular of these investments, which range from classic cars to racehorses. It reportedly showed that investors will, on average, spend £13,500 on a single item, with one in 10 apparently willing to spend up to £50,000 on a collectible.

The most popular category is jewellery but the most consistently high spending is classic cars where investors spend an average of £34,500 per vehicle.

Below cars are antiques and third on the list of most expensive collectibles is whisky, where consumers seem prepared to spend an average of £27,700 – which is presumably per bottle rather than per case as it would be with fine wine.

Fine wine came in at seventh place, behind coins, art and stamps, apparently with an average spend of £20,300. There is, however, some confusion here potentially. Reports in the media and indeed from the study itself appear to suggest that the average prices are ‘per investment’, usually ‘per item’.

Yet the fact of the matter is that there aren’t that many cases of wine that cost £20,000 on the market. While it’s easy to imagine a single watch costing £17,400 or a piece of art £21,100, even a case of 2000 Richebourg from Domaine de la Romanée-Conti has a market price of under £20,000 on Liv-ex and the currently much sought-after 2000 Mouton Rothschild hits around £14,000 per dozen on a high trade. An average of £20,300 for fine wine is therefore hard to imagine unless the report was also taking into account auction prices, which, of course, can often be higher than the going market rate.

The report also flagged up the personal interest that drives many investors in their hobbies, with 68% of classic car enthusiasts for example citing personal sentiment as the chief reason for buying and just 5% doing so for purely financial reasons.

Other areas driven chiefly by personal interest were art (53%), antiques (50%) and whisky (44%).

Markus Stadlmann, chief information officer at Lloyds Private Banking, said: “In investment terms, work and play do not need to be mutually exclusive, and with the right investment approach it is possible to make your interests pay.”

“Often tangible assets, such as a painting or a timepiece, retain their value and are not eroded by inflation. Over the long-term, these types of assets do not closely correlate with more traditional equity and bond markets, and therefore offer diversification opportunities. Investing in something you enjoy is a great way to make your portfolio unique to you.”

It is not the first time of course that fine wine has been linked to hobby investments. At the turn of the decade it was part of the much talked about ‘SWAG’ group of investments (Silver Wine Art & Gold).