Capgemini and Merrill Lynch Global Wealth Management recently released their 2011 World Wealth Report. According to the report, the number of high net worth individuals (HNWIs) grew 8.3 per cent to 10.9 million in 2010, whilst their financial wealth rose 9.7 per cent to US$42.7 trillion. Although this represents more moderate growth than that seen in 2009, 2010 gains have propelled financial wealth beyond pre-crisis highs.
As we have pointed out in earlier posts, there is a strong correlation between the global population of HNWIs and fine wine prices as demand for blue-chip wines is closely linked to wealth creation. The World Wealth Report reaffirms this point and indicates that demand for "investments of passion" (including fine wine) grew in 2010:
"As wealth levels rebounded in 2010, interest in all forms of investments of passion also revived."
"The amount of money flowing into this category tends to rise and fall with overall levels of wealth. However, many investments of passion are also solid financial investments and will continue to play a role in HNW portfolios, especially for HNWIs seeking investments with a low correlation to global financial markets."
The report also suggests that the rising number of emerging-market HNWIs is "expanding the global market for investments of passion". This is particularly true of Chinese investors (and buyers), who have been the driving force behind the fine wine market's growth in recent years.
Of course, much has changed in 2011, with the stock market, housing market and fine wine market all experiencing a downturn. Nonetheless, in the November Cellar Watch Market Report we suggested that, despite the current fine wine market correction, there are many reasons to remain optimistic. With emerging economies – and Asia-Pacific in particular – still driving the global economy, there would appear to be room for both recovery, and further growth.