When it comes to investing in wine for profit, there are four things to know in order to ensure you earn the best rate of return on your investment. Wine can be a great investment if you are willing to play the game right. By that, I mean, you have to understand the rules, you need to know the major players, and, you need to know when to hire a coach.

Rule Number One

You are playing the long game. The primary reason wine appreciates in value over time is due to supply and demand. A finite number of cases of wine are produced in each vintage. Often, wine producers fail to reach their production targets because of losses in the vineyard caused by weather disasters or other mitigating factors that are naturally occurring in agricultural processes, like pests that decimate crops. In such vintages, supply shrinks but demand remains the same or grows because of fantastic critics scores and media attention. This drives the initial price of the wine up. As bottles are consumed over time, the supply further diminishes and prices continue to rise. This benefits the investor that purchases wine upon release or en primeur: while still in the barrel, directly from the producer. If you can refrain from drinking your investment wines, you will see an appreciation in value over the course of five to ten (or more) years. Remember, you are not buying these wines to drink, you are buying these wines to earn a profit.  

Rule Number Two

In order to be successful as a wine investor, you must forget about most of the wines you love and focus on the major players. You can dabble in mid-priced wines from California, France, Spain, or Italy. Yet, I suggest keeping those wines for your personal consumption collection. To win the wine investing game you have to go big or go home. You must focus on the top seven blue-chip wine categories: Champagne, First-Growth Bordeaux, Cru Burgundy, Ribera del Duero, Rioja, Tuscans, and select Napa Cabernets. Yes, there are a few investment-grade wines that fall outside of these limited parameters, like Barolo, La Grange, and a few other New World brands, but if you focus on these regions you will position yourself to win big. Purchase cases, store them correctly, and do not open them. 

Rule Number Three

What you do with your blue-chip wine collection is as important as the wines you invest in. Pristine storage conditions are a must. For maximum profit, your wines must be in perfect condition: from the labels to the corks and capsules. The only way to ensure that your wines meet this impeccable standard is to keep them in a professional wine storage facility that has temperature and humidity controls in place. Better yet, don’t take physical possession of your investment wines and store them in a dedicated freeport facility. Not only will your eventual profits be higher; you will be less likely to pop the corks on your wine assets as you play the game. 

Rule Number Four

The professionals are there to help you win, but not all professionals are looking out for your best interest. 

You can work the primary market and search for exclusive deals as a wine club member or by making tasting room purchases. You can dabble in the secondary market by shopping the auctions hoping for rare finds at rock bottom prices. Keep in mind that wine auctions are dealing in wines that often have been stored in less than ideal conditions. You will rarely find full cases of perfectly kept wines at prices that make sense for investment purposes. Additionally, wine auctions are in business to make big profits from their buyers and sellers by way of high fees and hidden charges. You can hire a personal wine concierge or wine consultant to scour the market for deals and allocations. These wine professionals are often highly trained in hospitality with formal wine education. They will use their network to find you rare bottles and insider deals. 

Wine investment firms are another option to consider. There are several investment firms focusing directly on alternative assets like wine. Vet them and understand their specific benefits, offerings, and fee structure before you sign with them. 

Questions to ask: Do they offer coaching and education for their clients? Will they customize your wine collection portfolio with tangible assets or will they simply sell you shares of their general wine fund? Can you take possession of your wine if you decide to consume it? Where will your wine be stored? How can you liquidate your investment collection when you are ready to cash in? 

Wine investment firms that get it right include Vint, Cult Wines, and Vinovest. There are new firms popping up, but these three have the strongest track records. 

Founded in 2019, Vint is the only United States-based wine and spirits investment fund that offers SEC-qualified allocation shares of designated collections curated by wine professionals. Rather than purchasing an entire wine portfolio, investors can buy shares of collections for as little as $25 per share. Vint doesn’t take annual fees, opting to take sourcing fees instead. You can even invest with a self-directed IRA. Right now, you can’t sell your shares under the buy and hold model that extends for three to seven years, but Vint is building a secondary market for share trading and selling. 

Vinovest brings together some of the biggest names in wine with investing and tech experts to create a unique wine investment platform. Vinovest offers a low initial investment at just $1000, a personalized portfolio curated by Vinovest sommeliers, and the best deals through insider pricing. Vinovest offers four tiers of investing packages, each with increasing levels of management and customizable attention. Management fees are under 3% and commission-free. Your wine is your wine, and you can sell your wine whenever you choose. 

After 15 years as a leader in international wine investing, London-based Cult Wines benchmarks the industry and sets an example of excellence.  Cult Wines has investors in more than 83 countries. With a $10,000 minimum investment, the barrier to entry is unattainable for most investors. Cult Wines offers bespoke portfolios with several pricing models that are based on a refined algorithm and data reaching back decades. They partner with CitiBank for detailed industry reports. Cult Wines stores your wine at London City Bond Warehouse and you can visit your wine there. Monthly fees hover around 3%. 

Historically, wine investing outpaces the traditional financial market and often with double-digit returns. Returns are not guaranteed with any investments. Wine investing is non-correlated to the traditional market and experiences low volatility. Now is a great time to get into wine investing. If you remember these rules, you can win the wine investment game. 

#investing #investment #alternativeassets #wine #investinwine #bluechipwine #investmentgradewine #luxury #luxurybrands #chasinggrapes #winerocks 

Vint – Vinovest – Cult Wines

By Simone FM Spinner

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