Tired of investing in stocks and bonds? Want something that has offered higher returns than gold and crude oil in the past and is as modern as crypto? Consider investing in wine. You don’t even have to like wine. Once you purchase bottles of wine, they are stored in a vault—but they can appreciate in value.
Investing in wine has become increasingly popular over the last decade, taking its place among other collectibles. The world’s finest wines are limited in supply—only a certain amount of each vintage is made. Some will be enjoyed by wine lovers. The bottles that remain become rare and, theoretically, increase in value. Many investors consider investing in wine as a way to diversify their portfolios. Here’s what you need to know…
It is not for the faint-hearted. Wine can’t be redeemed quickly. Also, it is not insured and, like coins and fine art, is subject to huge price swings. Prices of some rare wines soared between 2020 and 2022…and then retreated over the next two years.
Wine investors typically use a third party to purchase, store and sell their wine—and that can cut into your returns. Companies such as Vinovest and Vint locate wines for investors to buy and then, when it is time to sell, possible purchasers. This is the best approach for new investors. If you invest in wine on your own, you will need to attend auctions, contact sellers and other private collectors, arrange storage, handle shipping and organize the sales.
Beware of fraud. Collectible wine is bought and sold at auctions and from private individuals, which means that fraud is ever present. Third-party companies are better-equipped to determine provenance (the origin of the wine).
Pricing can be complicated. Liv-ex is a stock exchange for wine, where rare wines are bought and sold. Its charts and graphs mimic stock exchange indices such as the Dow Jones Industrial Average and the FTSE 100. Trading on Liv-ex is open to members only—usually restaurateurs and retailers—not to private collectors. But its pricing can be used as a guideline for all transactions. Keep in mind—there isn’t necessarily a set price for a wine, but a range of prices that are hashed out between buyer and seller.
