Once you learn how to start investing in wine, be sure you have a professional storage option like this one in place to protect your investments.
Are you ready to take your love of fine wines to the next level and start investing in wine? Perhaps you’ve been enjoying wine for years, and while you know that investing takes more forethought than collecting wine, you’re ready to take the first step. By learning to make smart wine investments now, you’ll be able to realize greater profits in the future. The more you know, after all, the smarter your investment choices will be.
How Does Wine Investing Work?
Fundamentally, investing in wine involves buying fine wine, storing it, and reselling it later for a profit.
Experienced investors may spend several hundred dollars per bottle to invest in top-tier wines from well-known châteaus. They do this because they are confident that the vintages they’ve invested in will yield an excellent ROI, as they are likely to increase exponentially in value over time. The very best vintages from the most sought-after collectors can sometimes rise astronomically in value, appreciating even long past their drink dates. Some of the most expensive wines in the world have sold for hundreds of thousands of dollars.
Beginning investors, however, do not need to pursue high-end luxury wines right away in order to make a worthwhile investment. Indeed, perhaps the first and most important rule of wine investing is to determine your own budget and stick to it. An initial $10,000 investment budget should work well for beginning a wine investment collection. And relatively inexpensive well-made wines with a long lifespan can yield impressive results. For instance, an $80 bottle of a particularly nice Burgundy vintage might resell later for as much as $5,000―a profit margin of 98.4 percent.
Which Wines are Investment Worthy?
Once you’ve set your budget, it’s time to determine what wines you’d like to invest in. It might seem tempting to specialize in a certain style of wine―such as reds or whites―or specific regions or producers, such as California Chardonnays or classic Super Tuscans. Keep in mind, however, that a diverse portfolio provides much better protection against unhappy surprises, such as vine diseases or other natural disasters that could threaten crops.
The secret to identifying the best investment wines—especially when you’re just starting out—lies primarily in research. In short, you’ll want to look closely at what wines sell the best on the secondary market, paying special attention to any producers or regions that appear again and again. Recent trends can sometimes indicate potential opportunities. For the safest investment, though, look for regions and producers that have consistently performed well over a long period of time. Burgundy and Bordeaux wines, for example, have a long history of high ratings and equally high returns. Tuscany and Napa Valley vintners also produce many investment-worthy wines.
In short, investment-grade wines possess three virtues you’ll need to look for: quality, rarity, and desirability. A highly-rated wine might still not sell well if it’s so commonplace that anybody can get their hands on it, and an incredibly rare wine might not be worth anything if it’s low-quality or no one has ever heard of it. But a wine that possesses these three virtues will appreciate significantly as it matures and as bottles become increasingly difficult to acquire.
One more thing to keep in mind is that the higher the aging potential of a wine, the more time it will have to mature—in terms of both its flavor and its market value. While younger, shorter-lived wines can also be good investments, when in doubt, longer-lived wines often provide the surer path to higher potential returns.
How to Start Investing in Wine
Once you know how much you’re willing to spend and what wines you want to start your collection with, it’s time to invest.
Global marketplaces like Liv-ex can be a good place to gain historical perspective and research long-term buying and selling data on a wide range of wines. When making your own purchases, you’ll likely be buying not from the marketplace itself, but from retailers who may offer individual bottles or case quantities depending on your needs. Case quantities typically cost less per bottle than individual purchases; however, for rarer wines, individual purchases may be preferable, or indeed may be your only option.
You can also purchase your wine from individual fine wine merchants, or through vetted auctions. Some retailers also offer the opportunity to buy wine directly from producers through special winery-direct programs.
Remember to protect your investment as it matures. While some private cellars may seem fittingly equipped for long-term wine storage, professional storage services are almost always preferable. Not only will your collection likely have more room to grow, it will also be better protected from dangers like theft, fire, earthquakes and other events that could damage your investment.
How to Sell Your Wine for a Profit
Once you are ready to sell your wine (ideally, when it is at or close to peak maturity), the platforms you can use to do so include:
- In-person auctions make it easy to find buyers but often require hefty selling fees.
- Online wine marketplaces allow you to list wines yourself. For instance, a cellar management system like VinCellar enables you to sell your wines—bottle by bottle—through its digital marketplace.
- Speak with an expert to help set prices when you want to manage or liquidate an entire collection. Additionally, services like Vinfolio will send a team member to value your collection and determine if consignment or buyout options are available as well.
While in-person auctions certainly have their place in the world of wine investing, online wine marketplaces tend to be the most convenient (for both you and your buyers) and the most cost-effective methods. They also tend to draw a wider range of potential buyers than auctions. When choosing an online marketplace, look for one where bottles are inspected before sale for quality assurance. This is a marketplace buyers can trust—and therefore, one you can trust to handle your investment with care.
Whether you are starting your high-end wine collection or adding to an established portfolio, Vinfolio is your partner in buying, selling, and professional storage. Contact us today to get access to the world’s finest wine.
