Wine – One of the rarest purchases made for pleasure and investment

Wine – One of the rarest purchases made for pleasure and investment

Wine appears to have always been part of human history, although it was not until 500 BC that the Romans brought wine to France. The Bordeaux region was planted around 50 AD and it is the Roman’s who are credited with creating the majority of the great vineyards in France. The Romans were sophisticated and stored their wine in barrels, similar to those in use today.  However, in the 17th century the cork was discovered, which prevented the wine from ‘going off’ and that different size bottles aged the wine differently. 

Investment

Fine wine has always been a pleasure to drink, the Romans have records which show the consumption of one bottle which was said to be one hundred and twenty five years old.  Napoleon III is credited with starting the fine wine index in 1855, something which is vigorously upheld today.

It is this index which creates the basis for wine prices and investment today. Fine wines have been bought and sold as investments for hundreds of years. For a long time this was the preserve of those who knew enough about wine to make informed and valued choices. These would be based upon the age of the wine, how many bottles were produced and the manufacturer of the wine. Now, it is possible to invest in the fine wine market without knowing the difference between Bordeaux and a Burgundy. This can be done by using investment companies which are dedicated to wine. You simply pass them your funds and indicate what type of risk you wish to adopt and they will purchase wine in your behalf.

Providing you have purchased wine which fit into the above criteria it should be easy to sell them on, and, if you keep them for several years you will be able to make a profit simply because the amount of your specific wine available will be less.

Why invest in wine

Wine is very pleasurable to drink and this may leave you wondering why you would wish to purchase it simply to store it. In fact, records show that the returns from fine wine are generally higher than the returns from stocks and bonds. The value of wine is less affected by global economic issues and it is also a physical item which can be held, if required.  Although it should be noted that the wine needs to be kept in the right conditions and this is often done by a bonded warehouse; which reduces the temptation to drink it!

There is also an increase in interest in wine, more countries around the world are starting to purchase it and some of these will be collectors or investors. This means that although the supply is decreasing the demand is increasing; ensuring a steady increase in price.

How to invest in fine wine and what to expect

All wine is classified as a ‘wasting asset’, this is because wine is said to ‘go over the hill’ as the taste rapidly changes when it reaches the end of its life. The average lifespan is fifty years, although a few wines have been kept for significantly longer than this. You can invest in fine wines through a variety of routes, although it is important to note that a smaller quantity of premier wine is a better risk than a larger quantity of lower rated wines.

  • Auction houses regularly sell off wine; you will simply need to turn up and bid and be sure you know what your maximum price is.
  • Investment houses – as already mentioned, you simply pass them your fund and they will buy the best possible wine on your behalf.
  • Privately – you can sell your wine by any method you choose privately and you can buy it this way as well! You should be certain that you are getting what you are paying for, before committing to the deal.

Fine wine is an exclusive purchase and an even more exclusive type of investment. Exquisite varieties like Bordeaux, Lafite, Burgundy and Tuscany have managed to gain a reputation. So if you’re serious about investing in this alternative asset, check these out first and then explore the market for additional varieties.  

 

By Veselin Valchev
Veselin is a data scientist with extensive experience in commodities and natural resources within the FTSE 100. His data analysis skills ensure he reports without missing the fine details.
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