Sunday Times has just discovered India
Wine Investment news India.
You could be forgiven for thinking that The Sunday Times has just discovered India. At the end of last month Ian Cowie’s headline trumpeted: “China is hyped. India’s the real ray of light.”
Then on 8th November in the “Money” section we had Rachel Winter advising investors of a £10,000 nest egg to put it ALL into India.
As APM clients well know, we have had a joint venture taking wine investment to India for over a year now, and we are just as excited as The Sunday Times about the prospects. Narendra Modi has created a feelgood factor locally and there is undoubtedly a certain magic in the air. Obviously there is a lot of work to be done, and there are plenty of reactionaries whose interests are best served by there being no progress at all, but confidence is high, and the most important man in the land has the bit between his teeth.
The election “reversal” last week in Bihar is a stark reminder that there are always contrarian forces in the world of politics, but there are plenty of erudite commentators who believe this will just accelerate the reform programme.
One thing that catches our eye in the newspaper articles though are the guarded warnings: “single country funds remain high risk because they lack geographic diversification”, says the “Financial Commentator of the Year”, stating the obvious. Ms Winter opines that “investing in India should be considered for growth investors with a time horizon of ideally 20 years or more”. Blimey! We know that Rome wasn’t built in a day, but then, as Brian Clough memorably said: “I wasn’t on that job”.
We call fine wine a long-term investment but sincerely hope to see returns well in advance of that.
What is interesting about all this is that both articles cite a young and expanding population as a key growth driver. Rachel Winter says that “the younger generation in India has demonstrated a higher appetite for risk”, and we know from direct experience all about the entrepreneurial spirit currently being evidenced all over the country.
What we also know for an absolute certainty is that the younger generation drinks wine by choice over the whisky preferred by its parents and grandparents, so there are several seismic shifts taking place here:
- For a variety of reasons the huge and expanding population of India is being mobilised.
- As it grows it creates wealth for current and future generations.
- The current administration has a stake in the success of this and is being led by a determined and popular leader.
It is now an accepted premise that China cannot (nor does it wish to) roll back the economic progress of the last 20 years. It too has a stake in the maintenance of an increasingly prosperous society, and will take all steps necessary to mitigate the current economic slowdown.
At APM we continue to argue that this all bodes extremely well for the future of the fine wine market, because as developing economy millionaires become enriched they aspire to the ownership and enjoyment of Western luxury goods, of which fine wine is a potent example.
Last week the Head of Investments at The Wellcome Trust went out on CNBC reiterating the points about the young entrepreneurial population in India, and the rising levels of disposable income: “It is really (the consumer) side of the economy we find exciting”, he said.
All commentators, though, highlight the difficulties of gaining exposure to the more exciting aspects of emerging market growth. For many years investors (Warren Buffett among them) bought Coca Cola shares as a proxy for Chinese economic expansion. Is it very fanciful at present, we wonder, to buy fine wine as a proxy for the emergence of these two economic powerhouses?