Investing In Wine: Is It Worth It?

Using wine as an investment asset has been around for centuries, but the practice only really become popular and accessible in the last few years.

Previously, investing in wine was the hobby of a few mavericks or the extremely wealthy, who were usually more concerned with prestige than with actually making a return on their investment. Today, wine investment is big business, with many investors choosing to use wine as an asset to diversify their portfolio and make long term gains.

As I’m keen to find out more about wine investing and how it can be used to grow a portfolio, I’ve answered the most common questions investors have on how they can incorporate wine into their investment strategy.

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Like most asset classes, there are a number of different ways you can invest in wine. Often investors buy bottles or cases directly, and then sell them on at a later date to achieve strong returns.

As prices on certain vintages rise, so the value in your asset grows. You can sell the wine either through a private broker or by auction to other collectors, or directly to fine wine enthusiasts who are keen to sample this specific wine.
Costs for storing wine are pretty the equivalent of broker fees, meaning that if you’re a savvy investor and can spot a good deal on wine then you could potentially make big money investing in this flourishing asset class.

Can wine be treated in the same way as other assets?

While investing in wine as a physical asset is a unique experience, there are ways that it can be treated the same way as real estate, art and expensive cars. You can either own it yourself and pay for its upkeep as it appreciates, or you can invest through a broker.

With the market growing, trading in wine no longer mean that you have to buy the wine outright, and you don’t have to be a wine expert to make strong returns.

As investing in wine has become more popular wine investment has moved from the fringes to the main financial stage, with investment funds now dedicated to giving investors strong returns on wine without the hassle.

There’s also a wine index now, meaning that you can track the returns made on different vintages and the investment vehicles that have invested in them. t

So, in all, wine is big business today and is more than just individuals buying expensive bottles to save in the hope of appreciation. By tracking the value of wines of various vintages investors can treat wine pretty much in the same way they do most of their assets.

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When you think of wine investment you might think of dusty old cellars filled with bottles of wine you’re not allowed to touch, but today wine investment has gone digital. In November of 2019 Singapore-based Blockchain Wine Pte. Ltd. launched its TATTOO Wine marketplace, supported by the EY OpsChain blockchain platform to allow consumers and investors alike the chance to buy wine with tokens.

These revolutionary digital tokens are able to trace the provenance, quality and authenticity of both new and vintage wines, while at the same time eliminating layers of intermediaries and enabling cost efficiencies. Effectively, the currency investors buy with values the wine for them and make sure that they get the best possible deal.

At the time of the launch of the platform Thomas Uhde, SAP Director, Blockchain Exploration, commented that he felt that this was only the start of a growing trend for consumer sites to use revolutionary tokens such as this.

“This is one of our first commerce integrations of SAP software to a blockchain platform and we see great potential in putting a scalable, consumer-friendly front-end on a blockchain-based digital market.”

This new solution is only the beginning, with wine set to continue to expand into new technologies moving forward. As the wine market continues to grow, investors will seek new, cutting-edge ways to invest and grow their wine portfolios, and as such companies and brokers in the industry will continue to add new solutions to meet their changing needs.

How do you tell a legitimate wine investment from a fraudulent one?

With the growth in wine investment comes an increase in fraud, as merchants try to pass off inferior bottles as great deals or, even worse, as premium vintages.

To ensure that you invest your hard-earned cash in quality wines rather than fakes, try to buy from respected wine merchants.

As an investment market in its infancy, the wine investment industry is still working hard to combat fraud and doesn’t have strong policies in place for supporting investors, but organisations like regulatory body the Wine Investment Association work with wine sellers and investors to try and keep the industry safe and reduce the impact of fake wine.

There’s also informal group the Bunch, which comprises a range of long-standing wine merchants who work together to show investors and drinkers the best wines on the market today and keep them safe from poor quality wines.

When in doubt about the quality or authenticity of a wine, don’t buy it. Try to have it verified by an expert, but if this is impossible or the seller seems usually pushy then do not take the risk. Often, if a price is too good to be true, then it probably is.

© 2020 All Rights Reserved Ella Woodward