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A great wine collection can be worth millions and can be a lot of fun to acquire if you’re passionate about wine. This makes it a popular alternative investment option for wine lovers around the world. However, there are a lot of different strategies and methods for investing in wine and the one that works best for you depends on your goals. Here is an overview of the best wine investments and how to decide if this alternative investment makes sense for you.
Is Wine a Solid Investment?
It absolutely can be. A great bottle of wine can increase exponentially in value over the years. When done right and with enough capital, you can buy a good vintage by the caseload, store it for a few years while the price appreciates and then sell it off at a substantial profit when the wine reaches peak maturity and becomes scarce enough that the remaining bottles can be sold at a premium.
With that said, it does require a strong sense for spotting investment-grade wines and the right storage facilities to ensure that bottles don’t spoil or break before you can sell them. You’ll also need to take out insurance on your wine to protect against the risk of loss due to natural disasters or other threats. That insurance policy is an ongoing cost that might not pay off if you’re not generating a healthy return from your collection.
It also requires a relatively high amount of capital to see any kind of real return. If you’re doing it as a hobby, buying and selling a couple of cases per year is fine. But if you’re trying to generate real growth and offset the risk of a particular wine not appreciating in value as much as you expected, you’ll need to be able to buy and sell in much larger quantities.
The Benefits of Investing in Wine
The major benefits of investing in wine are the potential to turn your passion for the elixir into a source of profit. For those who love wine, the process of attending auctions or visiting wineries in search of a wine that has the potential to sell for hundreds or thousands of dollars per bottle in the next 5 to10 years can be exciting and enjoyable.
If you’ve got a talent for it, the potential profit is substantial. A $40 bottle of wine could be worth over $400 in 10 years under the right circumstances. With a large, diversified portfolio of wines, an investor can reach a point where they’re selling cases of wine every year at a substantial profit above what they paid.
Do You Enjoy Wine?
This is the real key to whether investing in wine makes sense for you. While it certainly can be profitable, there are a lot of reasons investing in wine doesn’t really make sense if you don’t enjoy it.
Firstly, choosing the right vintage — or even the right vineyard — to invest in really comes down to your ability to tell through taste whether that wine has potential to increase in value in the future. If you don’t even like wine, distinguishing between a good wine with a strong potential to age well and a lower quality wine won’t come easily to you.
Second, it’s a steep initial investment. To build a sizable collection, experts recommend investing around $10,000 to start. Then, there’s the cost of storage. Investor-grade wine needs to be stored in proper, climate-controlled conditions in order to age properly and avoid spoilage.
When done well, you will get your investment back with interest. However, if you aren’t passionate about wine, there are other alternatives with similar returns that don’t bear the same high cost of entry.
Wine Investment Funds
For those who don’t have the storage capacity or conditions to maintain a large collection, investing in funds that include wine stocks as part of its underlying assets can be an easier and lower risk way to invest in the market.
While there aren’t any funds made up exclusively of wine stocks, there are some that are heavily exposed to the industry. Most often, these are alcohol exchange-traded funds (ETFs) or beverage ETFs.
These ETFs can be a great way to gain exposure to the wine industry without needing to bet on any specific bottle or specific company. So, if you’re not passionate about wine or not willing to risk your finances on your expertise, you can check out the wine-related funds we recommend later on in this guide.
What are Investment Wines?
To become a wine investor, you can’t build your collection out of just any wine. You need to look for investment-grade wines. These are wines that have a reasonable potential of increasing in value over the years. Not every wine has the potential to age well or is of a high enough quality to become more expensive as the number of bottles available gets scarcer. Here are the basic characteristics of an investment-grade wine:
- Longevity: All wines produced have a peak maturity date. This is when the wine’s flavor profile is considered to be the most developed and at its best. For some wines, this happens in just a few months to 1 year. For others, it can take a decade or longer. As an investor, you want a wine with longevity so that you have time to let the price appreciate before it reaches peak maturity and needs to be sold. Ideally, an investment wine won’t peak for at least 10 years from bottling.
- Price appreciation: To be a good investment, you need some assurance that you can sell this wine for more than you paid. A key metric for evaluating that is price appreciation (the increase in price over time). You can track the price history of specific vintages or previous vintages from the same producer to look for wines that have a strong record of continuously increasing prices. Ideally, look for vintages or producers that can show at least 10 years of continuous price appreciation.
- Production quantity: Production quantity is one of the trickier criteria to assess. On the one hand, the rarer a particular wine is, the higher the price it can command. On the other hand, with extremely small batch productions, you might not be able to buy enough to see a substantial return. That is, you’ll make a higher profit selling 1,000 bottles of reasonably high-demand wine than you will selling 10 bottles of an incredibly scarce one. There are no set criteria here, unfortunately, but wine is generally produced in batches ranging from just 50 cases to 20,000 cases or more. Where your comfort zone is on that spectrum depends on your particular investment goals and will likely take a little trial and error to find.
- Producer pedigree: Wine prices are heavily influenced by reputation. You can charge more for champagne produced in the Champagne region than you can for the exact same sparkling wine made from the same grape in another region. The same goes for any other wine varietal. The reputation of the winery that produced it — and the region it was grown and produced in — will play a major role in what kind of prices that bottle can command. Familiarize yourself with the market and investigate the reputation of any producer before you make an investment.
- Critical consensus: The taste of wine is largely subjective, but the industry is led by reputable critics like “Wine Advocate” and “Wine Spectator,” publications that establish rankings and divvy out points for different wines. For investing purposes, look for wines with a rating of “classic” or higher or an average of 95 points or more on a 100-point scale.
Can You Invest in Wineries?
Yes, you can. There are a lot of ways to invest in wineries, too. For the least amount of hands-on work, you can simply buy shares in the stock of a successful winery. If you want to be a little more involved, you can look into crowdfunding or private equity opportunities where you invest directly into the winery. You can also take the leap and buy a winery outright to produce wines yourself.
Benzinga’s Best Wine Funds
As mentioned earlier, there aren’t any ETFs that exclusively contain wine stocks. Even so, there are investment platforms available that allow you to invest in wine funds managed by some of the most experienced and knowledgeable experts in the industry.
Vint makes wine investments accessible to virtually anyone by selling shares of curated wine collections made up of some of the most sought-after vintages from the top wineries and regions in the world.
Investors can simply purchase any number of shares in Vint's collections and receive a return when the wines reach their peak value and are sold.
Vinovest is an alternative investment platform that allows you to invest in expertly curated wine portfolios that are securely stored in world-class wine storage facilities.
The company has three investment offerings that each have its own account minimums ranging from $1,000 to $250,000 depending on the types of wine investments you want access to.
Turn your Love of Wine into a Profitable Investment Today
If the idea of attending wine auctions and going to tastings at reputable vineyards sounds like the most luxurious way to earn an income and you’ve got the capital to get started, becoming a professional wine investor could be a great decision. The next step is to decide how much capital you’re willing to invest and what goals you hope to achieve. In the meantime, feel free to stop by Benzinga again as you explore all of your investment options.
Frequently Asked Questions
Is there a wine ETF?
While there aren’t any exchange-traded funds dedicated exclusively to wine, there are ETFs for alcohol and other broader categories that wine stocks are included in. Choosing among these that include a robust selection of wine stocks is a great way to invest in wine without the capital or sommelier skills needed to invest in actual bottles.
Is collecting wine a good investment?
It can be. When investing in actual bottles, success depends a lot on your ability to anticipate which vintages will become highly prized (and highly priced) in the future and your ability to properly store the wine in the meantime.
Generally, if you aren’t a connoisseur, making those decisions will be tough and more work than it's worth. If you are a connoisseur, though, turning your love of wine into a potentially profitable investment avenue can be a lot of fun and a way to turn your passion into a wealth-growing opportunity.
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