Wine industry growing as investment option
If you love Niagara ice wine or Okanagan merlot you may be sipping in a good investment idea. A recent BMO report shows Canadian vineyards are poised for five solid years of growth.
Canadians are drinking more domestic wine and willing to pay premium prices for it. As well Canadian wineries are exporting more of their product than ever before. All of this is adding up to a boon in Canada’s wine regions.
Since 1995 wine has become a bigger part of our total alcohol consumption.
In the last 15 years wine has grown in favour as the first choice of drink. Canadians purchased an average of 22 bottles of wine in 2011 up from 13 in 1995. And one-third of all wine consumed in Canada is domestic.
The wine industry’s growth has been remarkable. Between 1995 and 2004 it grew an average of 11 per cent per year and there is still room for more.
Wine grapes need fertile soil, little rain and warm sunny days to produce quality wines. Canada’s vast mountain ranges and many bodies of water help create a number of microclimates.
This provides some of the world's best areas for growing wine grapes. Ontario’s Niagara Peninsula and British Columbia’s Okanagan Valley are the two most popular wine growing regions. But production is also ramping up in Quebec and Nova Scotia.
Another factor is that the Canadian population is aging. Seniors make up the fastest-growing age group and this sector is willing to buy more premium wines. Also, the health benefits of consuming small amounts of wine are encouraging more aging Canadians to pick up a bottle of red rather than a six-pack.
Experts say Canadian wineries are likely to increase their exports of premium-priced products such as ice wine. Ice wine already accounts for one-third of wine exports. Canadian wineries are internationally renowned for this cold-climate product.
So if you’re interested in investing in wine you have a few options.
Wine as investment
One is to buy high quality bottles of wine and store them with the intention to sell later. This takes a lot of money, space and careful timing.
Second, you can buy a wine investment fund. Toronto-based Accilent Capital Management runs one.
Third you can buy stocks in one of Canada’s many wine companies. Such as Peller Estates or Magnotta Winery.
Always consult a professional financial advisor before making any investment decision. Make sure you understand the limits and the risks involved with your investments.