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Why Kenya’s super-wealthy make millions from vintage wines and champagnes

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By Judith Gicobi

According to a recent analysis titled The World’s Billionaires, by Generation, around 9% of the world’s very wealthy invest in the food and beverage business. This is also true in Kenya, where the bulk of people are moving away from real estate and money markets in order to carve out a niche in this profitable industry.

For the average individual, the words “wine” and “champagne” conjure up images of opulence, festivities, and exclusivity. This is not the case, however, for a select group of super-wealthy people. For them, the phrases “money” and “investment” are synonymous.

Despite the fact that vineyards can only produce a certain amount at a time, demand for Burgundy and champagne has skyrocketed. These trends have piqued the interest of Kenyan millionaires, who are significantly investing in high-end beverages, which they see as valuable assets.

Fine Wine and Champagne ranked first in terms of Luxury Investment Index in the Knight Frank Wealth Report 2021, up from second place in 2020. It outperformed market leaders like as homes and fancy cars.

The desire for these high-end beverages has driven the ultra-wealthy to embrace the industry even more.

“More people today are interested in wine as an investment choice, either to make money or for later consumption. Kenyans are more knowledgeable about wine now than ever before. We are importing more wine varieties than any country in Africa,” a wine expert stated.

Wine and champagne manufacturing is regulated, unlike other beverages. Champagne, for example, can only be made in the Champagne area of France.

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Aside from the restricted manufacturing, the beverages must follow a set of conditions in order to protect their trademark, which drives up the price compared to other drinks.

Kenyan investors are applauding the skyrocketing prices, which have generated some of the finest profits in the previous two years due to the limited availability of these premium drinks.

Because of the market conditions, affluent Kenyans are purchasing bottles of wine and champagne and storing them for later sale when demand is stronger. In certain circumstances, they may not directly keep the bottles, instead hiring out approved facilities to store them for years.

Some people invest in blue-chip wine companies and ETFs in addition to keeping champagne and vintage wines.

“The fine wine market has outperformed most global equities and exchange-traded funds (ETFs), and is less volatile than real estate or gold. More importantly, it has delivered 13.6 per cent annualized returns over the past 15 years,” Vivo wines stated in their report.

Antinori Sassicaia from Italy, Robert Mondavi from the United States, Catena Malbec Argentino from Argentina, Domaine Faiveley Clos de Vougeot Grand Cru from Burgundy, and Creation Wines from Rupert and Rothschild from South Africa are just a few of the wines and champagnes that Kenyans have on hand.

Premium champagne brands Mot & Chandon, Maison Perrier-Jout, and Dom Perignon, both from France, are among the champagne brands available in Kenya.

 

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