Cult Wines doubles profits thanks to surging demand in Asia

Cult Wines has seen its profits double thanks to wealthy buyers in Asia. The increasing demand from the region has enabled the UK-based multi-service fine wine company to reap profits of £500,000 (€682,140, $731,755) in 2015, marking a 105% increase.

It earned around 30% of its revenues from Asia in 2015, almost double from 2014. In Asia, China constitutes a major market as there has been a growing number of middle-class Chinese who have been increasingly drinking and investing in fine wine. To capitalise on this, Cult Wines has an office in Hong Kong, according to The Telegraph.

Though wine consumption in the world's second largest economy is up 20% year-on-year, there has been a slowdown in overall demand in recent years. This is because of a crackdown by Chinese authorities on the gift-giving culture to curb corporate bribery.

"There was a massive downturn in demand in China between 2009 and 2011 because of the crackdown on corruption," Tom Gearing, MD at Cult, explained.

Gearing, who is also a former finalist of the BBC TV show The Apprentice, opined that there could be a turnaround in demand. "In the last 18 months, the market has been flat, which shows that the bubble is over and we'll see normalised levels of trading there in future."

Founded in 2007, Cult Wines has forecast its annual sales to touch £25m in 2017 and rise to £50m by 2020. It currently has assets worth close to £30m under administration and 1,800 clients across 55 countries.

Referring to fine wine as an investment option, Gearing said: "For many people wine collecting is seen as a hobby for the rich but more recently fine wine is being recognised as a genuine alternative asset class, providing significant diversification benefits from mainstream financial markets.

"Fine wine investment can act as a defensive holding as it has the capacity to remain stable under difficult economic conditions. It has the advantage of not necessarily following the general trend of lagging behind the rest of the market during economic expansion because demand is consistently strong."