Dr Johnny Hon, The Global Group: Investing in luxury food and drink opportunities
I established the Global Group, a venture capital, angel investment and strategic consultancy firm, over two decades ago. In 21 years, it has organically grown and diversified into a whole number of areas, including the luxury sector. I am extremely lucky to have the opportunity to turn my passions into investment opportunities. Investing in luxury allows me to engage with and enjoy my varying interests while simultaneously building my business. With the aim of bridging the gap to new frontiers, there are now unprecedented opportunities to branch out into luxury investments around the world – something I am able to guide and advise others on.
The sector of luxury food and drink is possibly one of the more accessible areas to invest in and can be a good gateway for those who are new to luxury investment. There is the potential to make significant sums of money without having to invest heavily to begin with. Some wines sell for as much as £10,000 a bottle and so, with the right skills and judgement, a bit of luck and some patience, it can be a very lucrative investment.
One main focus of my own luxury investment is in fine wine. I collect wine for personal enjoyment, but my experience has allowed me to provide advice on wine to both friends and high net-worth clients. The global demand for fine foods and wine is on the rise, it is a relatively safe investment even in the face of political and economic turbulence.
The Chinese market has a particularly large appetite for wine. China has now overtaken France as the market leader here, something that is definitely worth taking into account as you begin your investment portfolio. Red wine is particularly popular in China and the middle class is steadily growing, both in size and affluence, thereby increasing demand for the finer things in life.
With the world becoming progressively more health-conscious, and with the increased popularity of veganism and other specialist diets, the global demand for artisan and gourmet food and drink is also on the rise. In China, the taste in food over the last decade has moved away from more unhealthy products in favour of a diet that is more focussed on health and the quality of produce. It was recently noted that China is fast adopting the trend for organic produce, and I recommend any investor in this sector keeps their finger on the pulse of such consumer trends.
Luxury food and drink have the same feeling of exclusivity and glamour surrounding them as other high-end sectors. Many key figures of the fashion industry have therefore also invested in this space, including Patrizio Bertelli, his wife Miuccia Prada, and Gaetano Marzotto, leaders of brands such as Valentino and Hugo Boss. Most recently, Victoria Beckham launched her own line of low-sugar chocolates in collaboration with the luxury Belgium chocolatier, Pierre Marcolini.
It is crucial that you conduct thorough research into the consumer market when considering luxury alternative investments such as wine. The Chinese are now one of the biggest consumers of luxury goods and as a result they have a huge influence on global trends in this sector. By 2021, China is expected to have the greatest number of affluent households in the world, and this growing class is inevitably more discerning than ever.
With the rise of e-commerce, consumers no longer necessarily go in-store to buy food and drink as most things can be ordered online – making the market more globalised than ever. As a result of the increase in online trading, investing in France, for example, does not necessarily preclude any other international market. The proportion of consumers in China who shop online for wine is currently 48%, which shows that there is an appetite for global produce with wine being ordered from around the world and imported into China.
Overall, the most important thing is to enjoy investing in a product or sector that you are interested in. Looking back on my career, I have been remarkably fortunate in my ability to marry business and pleasure and I encourage all investors to consider what interests them and explore potential opportunities in that sector.