 Wine and finance are my two biggest passions and more often than not I think of fine wine as a pleasurable way to diversify my portfolio. That said, I haven't started doing so yet (except for my short to medium-term consumption wine cellar) because I don't want to spoil the intrinsic beauty of an excellent wine.
By digging into this topic, I understood a few things about investing in wine. First of all, just like in any other investment decision, it is important to understand your goal and timeframe. In addition to that, you want to invest just in the most reputable wines in the best vintages. Similarly with stocks, you want to invest in the best of breed at the right time. This first point narrows down the problem of the type of investment.
The second point is about return and time horizon. Probably the easiest way to make a quick buck would be to buy futures of well known wines, such as first and second growth Bordeaux, and sell them as soon as the vintage gets released in the market. Nobody guarantees however that the vintage is going to be excellent. A more risk-averse investment would be to buy lots of wines from established vintages, maybe 3 to 4 years old. The assumption here is that with time, usually 5-6 years, most of the existing supply will be consumed and therefore, as the wine stock diminishes, the value of the remaining bottles increases.
Obviously, investing in wine, creates a "handling problem". Wine requires plenty of storage room which has to be temperature and humidity-controlled. Secondly, when you decide to cash in your investment you will have to physically sell your wine inventory according to your state law. If you are a wine retailer your life is much easier.
I will continue to write about this topic because I believe that is of particular interest now that traditional investments have shown to everybody their Achille's toe. Just let me give you a quick information: Wine has often outperformed traditional indices such as the Dow Jones or the FTSE 100 generally without the usual fluctuations of the stock market. |
