KNIGHT FRANK: RARE WHISKY IS WORST PERFORMING LUXURY ASSET IN PAST YEAR
By Susan Lewis
Rare bottles of whisky is the only asset class to see a drop in value in the latest Knight Frank Luxury Investment Index (KFLII) which tracks the performances of ten luxury assets in the twelve months ended June 2023.
The asset class, which is the strongest 10-year performer in KFLII, has seen its value dropped by 4 percent, according to the index compiled for KFLII by Rare Whisky 101.
Market leader The Macallan has even seen losses of almost 12 percent over the past twelve months.
“Higher value (over USD6350) bottles have re-traced recently due to a myriad of geo-political, social and economic reasons. Certain brands have still performed well, while the market leader (from a sheer volume of market perspective), Macallan, has seen particularly punishing losses with its index re-tracing almost 12 percent over the past twelve months,” said Andy Simpson of industry consultant Simpson Reserved.
The performance of fine wine has also been affected. Against the backdrop of high interest rates, the Knight Frank Fine Wine Icons Index (KFFWII) has risen 5 percent in the past year and is flat year to date.
Take for Burgundy, after having escalated 367 percent over the past 10 years, Burgundy market peaked at early autumn of 2022 and has since fallen by at least 9 percent.
“Published prices tend to lag realised sales, indicating that there is further to fall,” said Nick Martin of Wine Owners, which compiles the KFFWII.
“When interest rates have risen sharply to around 6 percent, new releases in particular, according to market economics, should be offered at a bigger discount to future value in order to convince consumers to spend on wine instead of holding cash. If wine markets are looking toppy with limited obvious upside for new releases, there’ll continue to be downward pressure exerted on secondary market prices more widely,” he added.
Some markets like South Africa (+11 percent) and Australia (+8 percent) have, however, seen strong growth this year.
Overall, the ten luxury assets tracked by KLFII posted a 7 percent rise in the 12 months to the end of June 2023.
Art, watches, jewellery and coins have emerged as the best performing luxury investments during the period.
“This was a credible performance compared with the FTSE 100 index of equities, which rose by 5 percent; and gold which was up in value by just 1 percent over the same period,” said Knight Frank.
In the Asia-Pacific region, ultra-rich individuals are most interested in buying art (52 percent), watches (48 percent), and wine (45 percent). Globally, art (30 percent) tops the index, followed by watches (10 percent), and jewellery (10 percent).
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