Whether you’re a wine-lover who enjoys nothing more than sourcing and procuring the most irresistible and rare vintages, enjoying a classy tipple every once in a while or are looking to diversify your investment portfolio, there are numerous different ways to invest your hard-earned dollars in your favorite alcoholic beverage these days – online and in-person.
Each year, extortionate amounts of money exchange hands in the hunt for rare and classic wine vintages, in addition to the vast amount expended by the average consumer on private label wines on an almost weekly basis. And, with the private label wine business rapidly expanding in-line with consumer demand, investment in this sector has become a lucrative business, indeed – one of the few areas of investment to have survived over the last, pandemic-filled year.
The key question here, however, is whether or not wine – a consumable product that’s derived from fermented fruit and has long been in existence – is actually a worthwhile investment.
What is Wine Investment?
Over time, fine (and often rare) vintages of wine accumulate value due to their high quality and relative scarcity in the market. Those in the know, such as online wine retailers Underground Cellar, describe this as the overarching principle of investing in wine, where collectors and connoisseurs procure bottles of wine and place them in storage, waiting for the value to appreciate over time in order to sell them on.
Ordinarily, this draws to mind the notion that these bottles of wine are physically purchased, but this is not necessarily the case: more and more frequently, investors don’t actually physically possess their purchases, instead choosing to buy bottles at an online auction and subsequently store them at professional, specialized facility whilst the value increases.
Why Should You Invest in Wine?
A profitable investment alternative, wine investment is beneficial due to the constantly increasing value that’s attributed to rare vintages – demonstrated across the global market, where the fine wine market has surpassed various other, previously profitable markets.
To make your wine investment journey a success, a certain caliber of knowledge is required, which includes an understanding of investment-grade wines – known as fine-quality wine that has the potential to appreciate value after an initial 5-year period.
Questions to ask yourself prior to investing include:
- Will this wine improve with age? Factors determining this include the acidity, alcohol content, tannins, and overall flavor of the wine.
- How scarce is the vintage?
- How highly is it rated by critics?
- Is it produced in an area designated as a viticultural area, which increases the value over time?
How Can You Invest in Wines?
There are some key ways to go about investing in fine wines and, although they at first may appear to be confusing and require a substantial volume of information beforehand, once you get to grips with and familiarize yourself with the methods, you can choose the one that suit you best.
Online wine investment companies are one way to go. They allow you to invest in sought-after wines, once you’ve completed some simple steps, such as filling out questionnaires to assess your market volatility knowledge, apply funds to your account, and create a customized wine portfolio.
Another method is to purchase wine stocks, a hands-off approach that is driven primarily by your understanding of wine funds and stocks.
A third key method is to physically procure the bottles of wine yourself, via reputable online retailers, trustworthy auction houses, specialty stores, wine investment companies (who can professionally store your purchases in specialized conditions), and wine stock exchanges.
You don’t need to be a wine-lover to invest in wine, which in and of itself helps to make it a worthwhile endeavor. As an area of the global market that continues to appreciate and go from strength to strength – particularly in the face of market volatility – investing in fine wines is definitely worth your time, whether you want to increase your collection, diversify your portfolio, or increase your knowledge.