CBx Daily

Markets Make A Toast To The OG Wine, African-American investors Take Note

May 15

By Lyric Prince

  • In 2018, the Liv-ex wine market gained over 10% for its broader selection of vintages
  • African-American wine drinkers are 241% more likely to have spent $20 or more on a bottle of wine

Propped up by a lively secondary market, the current valuation for wine stands at $300 billion globally, making it a very investable asset class. Entertainers such as Sean Combs and Jay-Z have experience with fine spirits, the latter dipping his toes into the champagne market alongside Armand de Brignac, known as Ace of Spades. However, for some reason the primary investment market has not yet reached African American consumers, who collectively have $1.4 trillion in spending power. Is investing in fine wine more lucrative now than ever before?

Why This Matters: Due to the unique nature of investment grade wine, it’s tracked by the London International Vintners Exchange, which came online in 1999. The wine market had been a very opaque market before indices like the Liv-ex Fine Wine 100 Index, which follows the top 100 most-sought-after wines came into play. Interestingly enough, the disconnect with investing in wine is not from a lack of interest by Black consumers. “[C]ompared to the average adult,” according to a report by hospitality management researcher Rhonda Hammond. She noted “African-American wine drinkers are 241% more likely to have spent $20 or more on a bottle of store bought wine.” Not to mention there are independent Black-owned vineyards such as Brown Estate in Napa Valley that make it a family affair.  

The current valuation for wine stands at $300 billion globally, making it a very investable asset class

Fine wine is on an upswing worldwide, focusing most of its activity with auction houses such as Christie’s to offload vintage bottles and collections to wealthy Americans and Asian customers. In 2018, the Liv-ex wine market gained over 10% for its broader selection of vintages, outperforming S&P 500 and other comparable stock indexes. Also, they are doing comparatively well in response to COVID-19, which has dampened the prospects of other commodities such as oil.

Situational Awareness: Broadening of the wine market creates unique opportunities for less-known vintages to be bought and sold by Black investors, like bottles of Bordeaux at a good rate. Also, the larger market forces around fine wines can be beneficial to new investors: “In April [2020], the number of different wines traded was 30% higher than at the beginning of the year,” Liv-ex proclaimed in their industry post earlier in May.

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