The global fine wine market has experienced something of a boom in recent times and is now estimated to be worth a staggering $302 billion. Bottles regularly sell for thousands—if not hundreds of thousands—of dollars, after a huge rise in interest in wine over the last few years.
Although wines from across the world are commanding unprecedented figures, the sheer amount of information now available to investors is also making fine wine more accessible than ever before.
Mathieu Jullien, general manager for Europe at Wine Source, has pointed to “the rise of a new generation of consumers”, with fine wine’s increased accessibility making it more popular with younger demographics. If you have started your own wine collection, or are thinking of doing so, read on to find out what you need to do to make the most of it and put yourself in the best position to make some serious profit.
1. Thoroughly research the wine you buy
In order to get the best return on investment with your wine, you should do extensive research into any wine which you are interested in buying before you commit to a purchase. Facts like who produced it, when it was released, where it was made, and whether you’re dealing with a credible winery can help ensure you sell the bottle on for a good price and do not get ripped off. As international wine merchant Justerini & Brooks caution, “Tradeable wines are wines which have a secondary value. Only a small percentage of wines are actively traded on the secondary market.” Doing your homework ensures that you do buy tradeable wines, rather than bottles with no secondary value. This will also help you discover what other investors are interested in, enabling you to spot trends amongst collectors, and buy wines which are on the rise in popularity.
One way to gain the wine education you need is by attending wine tasting events. You can pay to sample higher-end wines at these events, giving you the chance to discover what you like, and discuss your favourites with other collectors. Similarly, going on vineyard tours can also provide an extensive fine wine insight, helping you make more informed purchasing choices.
It is also vital that you consult with experts before making purchases. A good place to start is a local independent merchant, as they will be well placed to educate you on the types of wine that are likely to rise in value. However, for the most insightful wine tutelage possible, consult with a more prestigious company.
2. Diversify your collection
Just as it is good to diversify a stock portfolio by investing in stocks from different industries and locations, it is also advisable buy different types of wine. Purchasing too much of the same kind of wine can be a huge oversight, as you’ll have no other assets to fall back on if its value depreciates. Instead, diversifying your portfolio gives you more options to rely on, and ensures you can maximise the money you make from your collection.
Indeed, this approach is endorsed by Daniel Paterson of wine investment company, Cult and Boutique. Speaking to European CEO, he said: “Anybody who has a wine portfolio, or is looking to get involved into wine, needs to have a spread of everything.” The importance of diversity is reflected by the success of the Liv-ex Rest of the World 50 index, which tracks wines from less traditional wine producing countries. In recent months it has shot ahead of the Liv-ex 50 index, which is the wine exchange for old world regions such as France, Italy and Spain, demonstrating that a broader portfolio approach is right for anyone seeking to enhance their wine collection.
3. Keep better track of your wine’s provenance
When it comes to buying wine, provenance is all-important. Information like the wine’s country of origin, the conditions it was bought in, and how it was stored can all have a huge impact on its value. Wine enthusiasts like to know that they are buying bottles which have been meticulously taken care of, and aged in optimum conditions.
A bottle of wine is a living, breathing entity. It develops character over time, and needs to be nurtured properly in order to retain its value and ensure it stays as well looked-after as possible. As such, proper storage is essential, and storage temperature, exposure to the right amount of light, and ventilation are all key in making sure wine ages properly. Therefore, being able to prove that you and previous owners have properly taken care of the bottle is critical to fetching its maximum value. Consequently, it is also important that you to enquire about a wine’s history before you buy it.
Furthermore, be sure to retain the original purchase receipts and auction texts of bottles you do end up buying. This creates a paper trail of your wine’s provenance, which helps lend further credibility to your collection, and again helps you sell your bottles on for higher prices.