Wine has gained popularity as an alternative investment during the past 20 years. According to expert economists, Philippe Masset, and Jean-Philippe Weisskopf, fine wine investments have performed better than a benchmark U.S. stock index for the past 13 years and successfully withstood the last two recessions.
Their study is based on a careful analysis of more than 400,000 prices traded in two bears and two bull markets. These economists have prepared an index of general wine and a gauge rating top vintages only.
With the slow growth in the stock market and poor economy, it could be a fantastic opportunity to invest in wine and gain excellent returns. If you are new to the wine investment industry, Liv-ex
is the right place to start with.
It is one of the most reliable indexes that reflects global Wine prices and wine merchants do all the trading on this platform. It provides ample resources for doing research in this industry. You can track your purchases, manage wine stocks, and view a real-time picture of your investment.
However, you should be a professional wine merchant or trader to use this platform. Many traders refer to the Liv-ex Fine Wine 100 index, which lists the top-performing wines in the market.
Bordeaux has been the industry leader since 1855, and it has produced some of the finest wines available in the world. It is the right choice for new wine investors. Bordeaux wine can be divided into distinct ranks/types. Among all the available wines of Xanax, the “first-growth” wines are the most sought after ones.
They have a whopping global demand and a limited supply. When investing in wine, your personal taste should not matter, and unless you are Robert Parker, your opinion will not help in bagging returns.
Robert Parker is one of the most respected wine critics and his verdict decides the price of all the leading chateaux. Most of the wine traders and investors wait for the Parker 100 index. Any win receiving a rating of 90 or more becomes the most sought-after wine in the industry.
Successful Wine Trading Tips
One of the main reasons behind the high returns and excellent performance of wine investment is the limited production of top vintage brands and the increasing demand for these wines. The prices tend to sky-rocket with drying up the availability of these wines.
The key to investing in wines is to go for top vintage brands and store them in a bonded warehouse for optimal quality. Most of the professional wine traders and collectors are curious about the storage condition as it ensures them of quality wine. You will not have to pay VAT for wine stored in bonded warehouses.
A major problem in wine investment is to get hold of a sufficient quantity of vintage wine for better returns. Most of the Vintage Wine producers showcase their products in an international market to avoid individual market weakness. All the merchants have their criteria for choosing their customers. The criteria include:
- Annual buyers of a particular brand
- Buyers looking for desirable wines
- A lottery system for vintage wines
- The annual budget of the buyer
A bottle of wine is priced best at two stages of its life: first, after its physical availability, and second after its maturity. You can purchase wine at its first stage with the help of wine brokers and get hold of enough bottles.
Look for a bottle of wine according to its desirability, not taste. Most of the higher-priced wines are popular for their high price, fashion trends, rarity, and perceived quality. Here is a list of some of the most desirable wines in the world.
- Bordeaux Reds: Mouton-Rothschild, Châteaux Latour, Cheval Blanc, Haut-Brion, Lafite-Rothschild, Margaux, and Ausone.
- Red Burgundy: Domaine de laRomanée-Conti and LaRomanée-Conti
- Bordeaux Whites
- White Burgundy
- Vintage Port
- RedRhône: Chave's Hermitages and Guigal's top Côte-Rôties
It will be good to invest in Bordeaux reds and red Burgundy as the preference along with Vintage wines. Make sure to rule out any fraud companies and do a thorough background check of the broker before purchasing wines. Keep in mind that wine is a long-term investment and it is best to give them time to mature.
Five Misconceptions about Fine Wine Investments
In today’s hostile economic conditions, most people tend to wait patiently for things to get back to normal before making any kind of investments. Yet, there are individuals who can always find ways of investing even in the harshest economic conditions.
Surprisingly, they can even make money. There are numerous investment opportunities out there and all you have to do is pick the best ones. Investing in fine wines, for example, is a terrific way of making money. Unfortunately, not everyone agrees that the domain is profitable enough.
Over the past twenty years, fine wine investments have outperformed nearly all major market indexes. As a matter of fact, they even managed to outcast gold and crude oil investments.
However, some people avoid devoting their money in fine wines because they see the investment as unreliable and risky. Surely, there are a few risks, like in any other business sector, but the chances of making a profit are much higher.
Screwcap equals cheap wine
Wise individuals in the wine-making industry know very well that a cap, also called a shelving enclosure, is nothing but insurance for their beloved vintage wine. Indeed, natural corks have a unique flair at the table, but they also feature a chemical compound named TCA, which is extremely damaging to the wine.
Because of this compound, your wine might lose its natural flavor, can get tainted, and even plonk. If you put a screw cap on the bottle none of these things will happen.
Numerous Austrian, German, and even Australian winemakers have started to use screw caps for their wines because this way the content is preserved much better and the wine doesn’t lose flavor.
Investing in fine wines is challenging
False! There are numerous wine companies ready to help you make the right investment. You don’t have to know everything about wine because they will take care of your money and will make sure that you get a significant profit.
Investing in the fine wine industry is as simple as buying a bottle of your favorite wine from the store. As long as you opt for quality, there’s nothing you should be scared of.
Red wine contains sulfur and it gives people headaches
Unless you have a legitimate sulfite allergy, or you drink 3 bottles of wine over dinner, this statement is just a myth. Not to mention that in the absence of sulfites, red wines would lose their taste, they would run the risk of oxidization and they would need to be consumed before their maturation. The sulfur acts as a preservative and it provides the wine with an extended lifespan.
There’s no difference between fruitiness and sweetness
Increasingly more people are confusing sweetness in wine with fruitiness. There are only a few wines on the market that are sweet and numerous that are fruity. Whenever people smell and taste a wine, the human body uses a number of taste receptors to match flavors and aromas with the smell they come across.
Fruity wines can smell like berries, red cherries, mango, and even pineapple. However, this doesn’t mean that the wine is sweet, as it doesn’t contain sugar. If you’re thinking to invest, avoid describing a red wine as sweet, since only white wines can have this characteristic.
Rose wines are out-of-fashion
Spain, Italy, and France are globally renowned for their seductive rose wines. Try these wines in combination with an exquisite dish and you will no longer think they’re out-of-fashion.
The countries mentioned above have been producing rose wines for centuries, while others have just started to discover the dazzling fragrance of a Montepulciano. Bear in mind that these are seasonal wines that must not be drunk after more than two years following their release.
There’s definitely a lot of money to be earned from wine investments, providing that you know what you’re doing. Just like all other forms of assets, prices gains for fine wine vary. If you consider yourself a wine aficionado but not an avid connoisseur, try to mix fine wines with traditional types.
Don’t spend a fortune on exquisite bottles if you don’t know how to assess their value. As a final note, keep in mind that global market conditions are extremely important and can’t be ignored.