Fine wine investment

by Chris Siegle April 22, 2018

Fine wine investment

Investing in wine can be an exciting opportunity, but it can also be very challenging if you are unfamiliar with the market and what to look for. It has increased in popularity since the 90’s and it is important to remember that there are certain factors to consider. Therefore, here are a few tips to help assist you in investing.

There are two main methods for investing in wine. One is to purchase and re-sell individual bottles or cases of certain wines at a later date, hopefully at a higher price than when you bought them. The other is to purchase shares in an investment wine fund that pools investors’ capital. The first option often requires the assistance of a wine merchant or broker with an in-depth knowledge of the wine market to help guide you through the process. This can help to minimise the investment risk, although this is not guaranteed. Wine funds are a little less risky but require a larger financial investment and a lot more patience when it comes to exiting your investment.

There are wines out there that will attract a huge following and most wine merchants or brokers would recommend that you should stick with the main chateaus of Bordeaux. This should hopefully create a steady profit margin. Bordeaux Grand Cru Classés account for the largest part of the investment market for fine wine at around seventy-five percent. This is the case if both the vintage and provenance are of a high quality. The key is to invest in wines with a record, such as a first growth Bordeaux like Mouton Rothschild. These have provided sound returns for centuries. The top Burgundies and Rhônes have performed well over the past five years, as have top wines from Champagne.

For anyone looking to invest in the fine wine markets, I would recommend buying with a medium to long term view of between seven to ten years.  As fine wine matures it will improve with age and therefore should become more desirable and valuable over time. The demand will increase when the consumption of wine increases the rarity of certain vintages, pushing the price up as more investors will look to seek out fewer bottles. This will drive prices higher over the long term.

Wine storage is also key when buying a precious asset such as fine wine. Therefore it is of high importance that the unmixed sealed cases should be stored professionally and in the right conditions. In doing so, this will help guarantee the future value of the wine when it is time to sell. The best way to store the wine would be in bond which will require a bonded warehouse such as London City Bond. These bonded warehouses provide the optimum environment for storage, with the temperature, humidity and other microclimatic factors carefully regulated.

As with any investment, it is important that you do your research, but in this case some specialist knowledge would most likely be of benefit as well. It is also important to use a reputable broker and company that have proven to be successful in their field. So whether you are looking to invest in a top Burgundy, Super Tuscan or Californian Cabernet, I hope that I have provided some useful points to consider.

Chris Siegle
Chris Siegle

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