Investing in wine has become a popular pastime for many people, as well as a serious investment opportunity for those looking to diversify their portfolio.
There are two key ways that you can invest in wine; the first is by buying bottles of if and holding on to it with a view to reselling it at a profit in the future, or you can invest in a wine fund. Although there are several wine funds on the market, the intrigue and interest of actually buying bottles and storing it for re-sale is an interesting prospect for some speculators. As a result, we’ve put together this Beginners Guide to Investing in Wine to help you get started if you’re one of those people.
Here are our Top Tips:
Go in for the long run. Investment in wine, unless you’re looking to trade seriously highly priced wines, is not a fast process. Generally speaking, you’re looking at buying a wine and storing it until such time as its value starts to climb, which is likely to take at least 10 years.
Make sure your funds are in place. Investing in wine is not a short term activity and will tie up cash for some time before decent returns are made. Therefore make sure that you have the necessary funds in place before you start and that you will not need to make a quick sale in a short period of time as that will usually give you a loss. You will also need to keep track of your costs and funds so as well as using some wine tracking software also make sure that you put some sensible bookkeeping arrangements in place.
Practice good financial management. Make sure that those funds you have invested are looked after properly so that you can keep a track of them. You won’t necessarily need to employ an accountant but use some good online accounting software to record your financial transactions. Also if you end up employing anyone in your venture don’t waste time running a payroll yourself just outsource it to a reputable payroll bureau. Your level of transactions are unlikely to be huge but make sure you keep on top of them.
Know what makes an investment wine. Just like antiques and any other commodity, the secret to buying investment wine lies in knowing what will age well and what will be in demand when the time comes to sell it. While the ageing question is normally relatively easy to answer, the demand issue is a bit of a crystal ball point, which involves some chance, but don’t be afraid to seek out trends or source advice.
Look for heritage and pedigree. If you’re not someone who feels confident sniffing out the next big thing on the wine scene, then in most instances, opting for the likes of a Bordeaux or a Burgundy, both of which already have a track record for quality, performance and demand is likely to be a good strategy.
Be prepared to buy in quantity. In normal circumstances, if you’re investing in wine for a return, you should look to buy at least 3 bottles and 6 is better. Many of the prestige wines such as the finest Bordeaux and the Burgundy Grand Crus are sold in minimum case size of 6. If you’re looking at anything top of the range, this will cost you and being ready for this is helpful.
Keep an audit/authenticity trail. With wine, there’s always the fear of fakes, so you should do all you can to make sure you have an audit trail of where your wine came from and what its story is. If you’re plumping for French wines, it’s well worth having any documentation translated and stamped by an official translator.
Looking out for flagship wines as a next step safe investment. If you fancy being a little bit speculative but not going too far off the beaten track, you should look out for wineries that have made their mark outside of the classic wine regions. Often described as flagship wines, they will give you some security.
Get your storage right. Wine favours specific conditions and if you’re planning to store wine for a period of 10 years or so, it’s essential that you get your storage right. If you’re serious about wine investment, it’s probably worth investing in a part share of an insured, temperature controlled facility to make sure your wine is in the best possible conditions.