How to Invest in Fine Wine and Spirits

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Contributor, Benzinga
May 28, 2024

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Owning fine wine and spirits might sound like a luxury rather than an investment. As a luxury, the popularity of alcohol has stood the test of time and graced many fancy dinners. They also form a distinctive — and tasty — asset class.

Such alternative investments offer unique diversification and growth potential. Take a look at investing in wine and whiskey or other spirits and how to go about it.

Why Invest in Fine Wine and Spirits?

Alcohol-related investments have grown more common in recent years. Accompanying this trend: the ability to capture new price movements. 

In the decade leading up to April 2020, rare whiskey prices rose a staggering 586%. Meanwhile, wine saw a 10.6% annual return over the past 15 years. 

Consumer-side growth has also risen, and indicators suggest it will continue to grow. The American whiskey market is predicted to top $18.8 billion by 2027, while the wine market could hit $825.5 billion

This growth may even persist through economic downturns, as the sale of fine spirits is remarkably recession-resilient.   

But it’s not just price growth you should consider. Fine wine and spirits offer unique diversification potential compared to traditional asset classes. These markets may also experience lower volatility or preserve value during economic downturns. 

5 Ways to Invest in Wine, Whiskey and Other Spirits

Whether you’re looking to invest in wine bottles, whiskey casks or alcohol stocks, here’s what to know. 

Invest in Wine or Whiskey Bottles

When you think about alcohol investments, wine and whiskey bottles probably come to mind first. But that $5 convenience store won’t cut it  — you’ll need to buy the good stuff. 

You can buy fine wine and whiskey through auctions, secondary markets or directly from the vineyard or distillery. High-end sales sites like Christie’s and Sotheby’s provide targeted markets for high-flying investors. 

Buying bottles offers perks like tangibility, selectivity and control. But it’s also an expensive hobby that requires a fair bit of knowledge to profit from. Aside from the capital needed to grow a sizeable collection, you’ll need to invest in proper storage and insurance. Plus, you’ll lose some of your profit potential to sales premiums at purchase. 

And after all that, you may have to wait decades to turn a substantial profit. 

Invest in Whiskey or Wine Barrels

Another way to invest in fine alcohol is by purchasing barrels (casks) wholesale. Often, this method costs less per unit of alcohol. You can also buy several at a time to spread your dollars among companies and batches. 

Cask investing is usually considered more stable than buying individual bottles, as you may see greater profits when the barrel is bottled. Depending on the specific batch and year, your returns could hit anywhere from 5% to 50% or more. 

But investing in whiskey or wine casks isn’t riskless — or free. You’ll still need to consider your upfront capital for alcohol and barrel fees as well as storage costs. You may also be on the hook for various taxes involved with purchase and resale. 

Lastly, you’ll want to consider how long you’ll wait until your cask can be bottled. For instance, aging fine whiskey for 15 years or more isn’t unusual. But all the time your alcohol sits in a barrel is time you’re not producing investment turns.  

Invest In Wine and Alcohol Stocks and ETFs

Instead of buying the alcohol itself, you can enjoy these alternative investments from afar with alcohol stocks. These are any stocks issued by companies in the alcohol production or sales industry. 

Alcohol exchange-traded funds (ETFs) provide another avenue. ETFs are basket funds that hold several stocks that fit particular criteria. ETFs come with the added advantage of instant diversification — and not having to pick individual stocks yourself. 

With these investments, you don’t have to worry about a particular bottle’s batch, age or other characteristics. Instead, you can invest in companies that outperform in their niche, whether they sell to the masses or finicky aficionados. Plus, you can branch beyond fine wine and spirits into more general products like beer or seltzers. 

Try Dedicated Platforms

Dedicated platforms offer one of the easiest ways to invest in fine alcohol. With a dedicated platform, you can start building your portfolio without worrying about sourcing, curating, storing or insuring your collection. 

Many offer no or low investment minimums, so you can get started with very little upfront capital. Some dedicated platforms also specialize in specific types of alcohol, so you know you’re only getting the best. 

That said, dedicated platforms aren’t free — you’ll likely to have to pay management fees ranging around 2%. And, depending on the platform and plan, you may not get to select your own investments. 

Sign Up for Alternative Investment Platforms

Lastly are alternative investment platforms — one of the best ways to dive into nontraditional investments. 

Alternative investment platforms differ from dedicated platforms because they allow you to invest in a multitude of alternative asset classes. That means you’re not just limited to wine and whiskey, but can also invest in items like gold, art, collectibles and digital assets like cryptocurrencies or non-fungible tokens (NFTs). 

Because alternative investment platforms don’t limit themselves to alcohol, you have additional diversification potential just waiting at your fingertips. 

Are Fine Wine and Spirits in Your Future?

Investing in alcohol, like other investments, is a personal choice that’s not right for everyone. But if you’re looking to add a taste of the luxurious to your portfolio, high-end wines and whiskeys are a great place to start. Not only will you broaden your horizons, but you also will have a chance to boost your wealth and mitigate risk. 

Frequently Asked Questions

Q

Is it a good idea to invest in alcohol stocks?

A

All investments are inherently personal choices, as what’s right depends on your preferences and circumstances. Investing risks losing money, but if you believe in alcohol stocks’ potential, they might be right for you.

Q

What is the best alcohol to invest in?

A

The best alcohol to buy depends on your goals and financial situation. Alcohol from different regions and distilleries fetches different prices and has different appreciation potential. Historically, red wines tend to sell for higher prices, while Scotch whiskeys have been known to outperform the competition.

Q

How do you start investing in wine?

A

You can invest in wine by buying individual bottles or barrels from distilleries, auctions or dedicated platforms. Wine stocks provide another path to high-end alcohol investing.