In order to fully understand the investment opportunities offered by fine wines it is advisable first to understand the concept of EFP.
It is said that “the more wine gets older and the more it becomes good and tasty.” This is only partially true and not true for all the wines. But one thing is sure and it that almost every wine becom more expnsive with time passing by. These physiological evolution of prices or EFP.
The EFP occurs when, dealing with an aging bottle of wine produced years before, the market is confronted with an ever lower supply due to the fact that each vintage produces precise and limited quantities. With the passage of time the availability of a given wine will become increasingly low and its price accordingly intended to increase.
In other words, following the concept of the market where the price is determined according to the economic principle of supply and demand-offer, every time a bottle of that particular manufacturer and year is open and consumed, the remaining bottles become increasingly difficult to find. The physiological consequence of this will be a price in the upward movement.
The effect of this phenomenon is a positive influence in the portfolios of all those who have invested in that particular product which, at the time of sale will be transformable into useful sometimes important and in double digits.
Annex below are some examples of wines “top ranking” (from Liv-Ex):
The concept of EFP is a principle that applies only to large & very large labels, altimenti also called “blue chips”, mainly from the regions of Bordeaux (Cru Classés & Pomerol), Burgundy (Grand Cru), Tuscany (Supertuscans), Piedmont (Barolisti Top) and only for some years.
The following video is taken from BBC News: