Collectibles

How to Invest in Wine: A Beginners Guide

Looking to invest in fine wines? This guide will help you discover the best tools to do that and start making a good investment.

By

Dan Herashchenko

on

August 8, 2022

Table of Contents:

There are two kinds of wine lovers in the world–those who buy a bottle and drink it, and those who buy two boxes of their favorite wine, drink one, and then sell the other to finance their next purchase.

If you’re looking for how to invest in wine because you want to combine your love for red wine with new ways to invest, this guide will help you find answers to your questions, and make the first steps toward fine wine investing.

Liv-ex data from June 30th, 2022

The first 6 months of 2022 did not provide the best investment returns in traditional markets. Stocks continued their slow but steady tumble, while cryptocurrencies have shown just how unstable they can be.

On the other hand, investment in fine wine has shown investors once again the potential that it can generate as an alternative investment opportunity.

Is wine a good investment?

Wine is known for appreciating in both scarcity and quality as time passes. This makes investing in wine a great long-term addition to your investment portfolio. But of course, there is much more to it than that:

  • Wine outperforms most ETFs and global equities
  • Wine is less volatile than real estate and even gold
  • Over the past 15 years, wine delivered 13.6% in annualized returns

So is wine a good investment? For sure, it is a great addition to your portfolio. Invest in fine wines, and you will be protected against inflation with close to zero correlation with traditional investment options.

How to invest in wines?

Wine investors have long ago defined investment-grade wine and have outlined the key factors that will help even beginners to determine great wines to invest in. Even as far as Australia wine is considered a good way to put money aside for profit. 

Whether you prefer Chinese wine, the Italian series, or the classic Bordeaux wine, these criteria will help you find the best addition to your investment portfolio, and avoid buying wine that does not appreciate over time:

  1. Age worthiness. If the wine does not inverse in quality with age, it cannot be considered an investment-grade wine. To do that, wine has to have the right balance of tannins, acidity, flavor, and alcohol.
  2. Scarcity. Krug Clos d'Ambonnay Blanc de Noirs is the rarest champagne in the world. The winery produces about 4,500 bottles per vintage and ages them for 10-15 years. Their bottles rarely come to the market and, of course, are always accompanied with a hefty price tag.
  3. Ratings from critics. Look for wines that are graded as ‘classic’ - on a scale of 100, it will be graded 95+.
  4. Pedigree. Wine from the so-called ‘viticultural areas’ such as Italian Tuscany, French Bordeaux and Burgundy, or even Rhone Valley are considered to be more valuable. Yet, even in the region, you have to look for wineries with an outstanding reputation.
  5. Longevity. It takes about 10 years for the wine to reach its peak maturity after being bottled. The longer it ages, the better it becomes, and that has a big impact on the wine’s value.
  6. Price appreciation. If you are looking to buy an already aged wine, look at how its price changed over time. A good wine will show stable growth in value over a 10-year period.

Now that you know how to define fine wine as an investment, let’s look at 4 ways how to start investing in wine:

1. Find a wine investment company

One of the best ways to invest in wines is to approach people who know how to invest in wines. Hence, the number 1 option is to find a wine investment company. 

Usually, they have a team of experts in selecting wines and offer great wines to invest in at a certain fee.

All you have to do to start investing in wine with them is to determine your budget, your preferences, and your risk tolerance. The company will source wine bottles for you, and then store them until you decide to sell.

2. Buy wine bottles on your own

A great option for true wine fans. And so far, one of the most complicated ways to build your investment portfolio with fine wine.

First of all, you’ll need to perform the research, and determine which wine to invest in. Then you’ll need to find where to buy it. Most fine wines are hard to come by and can be bought from the wine business that made it, at an auction, or from a retailer who specializes in investment-grade wines.

When investing in wine on your own, make sure to add expenses such as delivery, VAT, and storage fees to your budget.

3. Invest in wine stocks

Now, this investment opportunity provides you with two options:

  1. Invest in stocks of companies that produce wine. These include Constellation brands, LVMH (producer of Moet Chandon), and many others. This way, the growth of your portfolio will be determined by the success of the company, not the wine that it produces.
  2. Invest in wine futures or, as the French call it, ‘en primeur’. When you buy wine en primeur, you invest in a wine barrel before it gets bottled.

Since we are talking about investing in wine itself, let’s focus on option number 2.

Buying wine en primeur is a very popular way to invest in Bordeaux and Burgundy wines. It is less expensive (as the wine is not yet tasted, evaluated, and bottled), and the wine itself is easier to come by, since bottles are not yet owned by anyone.

On the other hand, if you consider en primeur as your investment in fine wine, make sure to research the winemaker, and their success story with previous vintages before putting your money into it.

4. Invest in fractions of wine collections

One of the recent investment opportunities that was made possible thanks to the advancement of technology. Investment in fine wine can be expensive, and retail investors don’t always have the budget to invest in wine that is exclusive.

This is why investing in great wines using fractional investment marketplaces, such as Investables, is the best option for investors on a budget.

The company sources and verifies a collection of fine wine, and then splits its cost into equal fractions using blockchain technology. Then these fractions are auctioned off on the marketplace.

You can buy as many fractions as you wish. When the collection appreciates, your fractions will also grow in value, proportionally to the growth rate of the collection as a whole.

Investing in fractions of fine wine is the best opportunity for starting wine investors to build their portfolios without risking too much of their money.

Risks for investors

Wine cellar in Napa Valley, CA

Whether you want to know how to invest in wine bottles, or buy wine stocks, you should be aware of the risks that come along:

Storage

If you don’t already have a wine cellar or a special room for storing wine, you’ll have to acquire the storage services of a third party. As long as the wine stays within their vicinity, be ready to pay the storage fees.

Holding period

You’ll need to be patient when investing in wine, as with traditional investment tools you may not want to sell it for the next 10 years. It is a long time, and if your wine collection is not insured, we suggest doing it right now to protect your investment.

Liquidity

Investment-grade wine is not the most liquid asset, to be honest. If you’re looking for short-term gains, you will need to search somewhere else, as it may take some time to for you to find the buyer for your wine collection.

Opportunities for investors

Wine Education by Thomas Williams

If you spent your time finding how to invest in fine wine, you probably already know the opportunities it holds for you:

Diversification for your portfolio

Wine has almost zero correlation with traditional markets, and thus will be a great investment to hedge against other markets, and even the inflation.

Low market volatility

Wine prices don’t jump or drop at a whim. So your investment is secure from rapid price changes. Even if your portfolio reaches an all-time high, don’t expect it to drop within a year, as Bitcoin did just recently.

Enhanced potential for returns

You saw the numbers yourself. As long as there are people who love wine, you will keep having the chance of selling your collection in a few years in exchange for great returns. All you have to do is be patient and find the right buyer.

Conclusion

No matter which investment option you choose, fine wine is a great way to put money aside for profit. After all, this is one of a few investment assets that you can drink if you feel so.

If you are a beginner investor, starting with fractional ownership can be your gateway to investing in fine wine with minimum risks. As time passes, you will be able to invest more money until you become a full owner of the wine collection.

Heck, if you feel like it, you’ll even be able to receive your collection at your doorstep!

At Investables, we carefully choose the best alternative assets to invest in, including fine wines, art, watches, and many others.

This way, our investors have the opportunity to not only experience investing in exclusive assets, but also to keep your portfolios as diversified and protected as humanly possible.

Visit our website or explore trending collections to learn more about investment opportunities with Investables!

Frequently Asked Questions

How do I choose the best investment wine?

Before choosing the wine to invest in, make sure that its supply is limited, it has a 95+ rating from critics, and that the wine is age-worthy. This way you will ensure that your investment won’t go to waste.

How do I start investing in fine wine?

First of all, do your research and determine the budget you are willing to invest. Then, depending on your preferences, choose the tool that is right for you, and start your wine investing journey.

Can anyone help me choose the wine to invest in?

There are wine investment companies that help investors choose the best wines, there is also a fractional investment platform such as Investables, where the best wines are already gathered into collections and are available to invest in.

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