Fine Wine Investing: A Comprehensive Guide

Why Invest in Fine Wine?

The world is full of investment opportunities and arguably, it has never been easier to invest in a wide range of different asset classes. The fact that you’re here means that you’re likely looking into fine wine as a potential asset class. There’s a good chance you have already decided why you should or want to invest in fine wine, but let’s do a little refresher as a starting point.

Fine wine has a proven record of performance compared to many other goods. According to investment firm Knight Frank’s Wealth Report, fine wine has increased 146% over the last decade, outpacing other alternative investment items.

It’s tangible and enjoyable and can be passed down to the next generation. Fine wine also has a finite supply, but with growing demand. It’s a durable good, meaning it can be stored and kept in good condition for a very long time while it only appreciates more in value. Wine is considered a highly liquid asset – pun definitely intended. This means that it can be easily bought and sold, and there is always a ready market. Don’t forget that there are also potential tax benefits as it is exempt from Capital Gains, but read up before you dive in.

To some, wine is just another drink they can enjoy, like their favourite soft drink or even water. However, to a few of us, wine is our passion. Whether we’re buying, collecting, or drinking, we put a lot of time and money into purchasing the best that the wine world has to offer! However, there are  some of us who not only buy fine wines to drink or enjoy, but also for investment purposes, much like investing in stocks, gold, and other commodities.

That said, if you’re one of them, you need to be prepared before you get into the world of wine investments. So, with that in mind, let’s talk about everything you need to know before you start investing in wine to achieve success.

 

How to Invest in Fine Wine

Do Your Research

Do your research on the region, producer and the wine. Wines that are well-regarded by international wine critics, which have received high scores and positive reviews, will influence the market perception of a wine. Wine investment aspects vary from one category to another, which would greatly impact your buying decision.

If you are planning to invest in Bordeaux, for example, your most important concern would be which vintage to invest in and when. Bordeaux is a sucker for vintage-based wines, and you will have to consider which vintage you intend to buy. In this case, generally from 1961 to 1983 and from 2005 to 2009, the wines have been great, with 2018, 2019 and 2020 most recently known as exceptional. However, vintage is just one aspect to research and know – the producer, their reputation, and critic scores also form part of this and should not be overlooked. 

 

Buy What You Enjoy

One of the most important things to remember when investing in fine wine is to buy what you like. It is important to remember that you are buying wine to drink, not to make a profit simply. Buy wines you enjoy and would be happy to drink even if they never increased in value.

 

Invest in Quality

Quality is an essential factor when choosing wine. A quality wine is genuine, rare and aged. Fine wine is a lot more challenging to produce compared to regular wine. You have to choose a vineyard that consistently produces high quality fruit and in turn, wines..

The best way to know if wine is a good investment is by looking at past performances. Of course, this doesn’t mean that you should only buy expensive wine. A high-quality wine will also increase in value over time. It will also grow in value more than a low-quality wine.

 

Storage is Key

Wine should be stored in a cool, dark, and humid environment. If you want to re-sell or simply keep wine for drinking later, proper and trusted storage is crucial. Many companies, like Cru Wine, offer storage services if you do not have a cellar or wine fridge. An ideal storage facility is temperature and humidity controlled, away from sunlight and secure from theft. Furthermore, a bonded warehouse provides protection and off-shore tax treatment, which means that VAT or duty payments will not be triggered unless the wine is withdrawn from a bond.  

 

Portfolio Diversification

When you diversify your portfolio, you are preparing and protecting your tangible assets in the event of an economic disturbance. 

You can purchase En Primeur or wine futures, which are wines that are pre-ordered and usually delivered a year or two after the purchase date. Another option is to buy wine on the secondary market, which is the market for previously-owned wine. The secondary market can be a great place to find deals on fine wine, but you will need to do your research to ensure you are getting a good deal. Always check the provenance of secondary market wine – the wine’s authenticity, the bottle’s origin, proof of ownership, and storage conditions are all important to ensure quality.

 

Expert Guidance

If you plan to invest in fine wine, it is always a good idea to hire a specialist to take care of everything for you. It would be best if you’re able to find someone who has in-depth knowledge about wine and is able to give you excellent advice. But if you cannot find anyone like this, you can look up to an expert specialising in wine investment.

 

 

Factors to Consider Before Investing

Understand the Market

When it comes to investing in fine wine, you need to have a good understanding of the wine market. It is important that you also determine the best time to invest in wine. This is because the wine market can be volatile, and you need to be able to predict how it will move. You should also find out if the market is in a good or bad state to avoid the risk of investing at the wrong time.

 

Define Your Goals

You also need to have a clear idea of your investment goals. Are you looking to invest for the long term, or are you hoping to make a quick profit? How much risk are you willing to take on? These are essential questions to answer before you start buying wine.

Your compatibility with fine wine investment is determined by your position and portfolio objectives. If you already have an excellent portfolio of equities and bonds and have additional cash to invest, investing in wine may make sense. 

 

Budget & Returns

How much money do you want to put into fine wine? You can change your mind later but having a set amount in mind makes it easier to plan your specific investing strategy. The cost of fine wines varies, but an initial investment of up to £10,000 is an excellent start to creating a genuinely valuable fine wine portfolio over time.

When you know your resources, you can be more specific and narrow your options. For example, if you have a large budget, you can invest in rare wines that are expensive and demand a high price.

 

Additional Tips

Be Patient

Fine wine is a medium to long term investment, with most investors waiting a minimum of three to five years. It could take years before you start seeing any returns on your investment. Even then, if you do not care for the wine properly, or the wine has had some manufacturing defect, there’s no guarantee the wine will come out good after many years. You could be waiting for a decade or more without a sure-fire way to know if the wines will turn out great.

Stay Informed

When collecting fine wine for investment, remain up to speed on news and events that might affect the price of your fine wine and create opportunities to acquire at the optimal price point and maximise future profits. 

Important Considerations

• Wine as a Perishable Asset: Improper storage will damage value.
• No Guarantees: Past performance doesn’t ensure future gains. Seek expert advice.

Is Fine Wine Investment Right for You?

Last but not least, you should also find out if you’ll enjoy the process of collecting fine wines. It’s important that you are able to see yourself enjoying the whole process. This is because it would be very hard to see your investment as an obligation, and it would only create stress. You need to be happy with the wine that you buy and the fact that you own it. You should be able to see the joy of having an investment that is always by your side in this process.

For people who can’t tell the difference between a Pinot Noir and a Merlot, investing in fine wine may sound fun, but it can actually be quite a stressful task. However, if you have the right information, you can make a more informed decision about buying wine for investment.

 

Investing Made Easy with Cru Wine

Investing in fine wine is one of the most rewarding investments you can have. But it pays to work with someone who shares the same level of passion for wine as you do. This is where Cru Wine excels. Our team of wine specialists are here to enrich the fine wine investing, collecting, curating, and drinking experience of every wine lover out there. Whether you want our expert advice or someone to manage your cellar, we are the ones you can rely on. Sign up to our mailing list today to receive exclusive access to the world’s greatest fine wines and spirits.

If you are thinking of buying wine as an investment, look nowhere else because Cru Wine brings you everything you need to get started with your new venture. Get Cru Wine’s guide to fine wine investing today!