wine-investment-appraisal

Wine as an investment

wine-collection-appraisal

Is wine a good investment?

 

I work with investment firms that want to offer diversification to their clients’ portfolios. In partnership with specialists, I can recommend certain purchases to be made, for investment purposes,

Why investing in a wine collection?

To diversify a portfolio. Luxury goods in general have performed well in 2021 and offer some safety compared to the stock market. The Wall Street Journal reports that the investment market for luxury goods, such as wines, works of art, classic cars and colored diamonds outperformed stocks and bonds. People are constantly looking for investments, and owning something tangible is reassuring as having something rare is a source of pride.

For rare vintage and collector’s wines, there has also been an annual price increase of 10%.  The interest in traditional Bordeaux has declined in favor of Burgundy wines.

What are the risks?

There is always a risk in holding “alternative” investments. The market can rapidly change according to trends and fashions. Another risk: if you buy at auctions, you have to do your homework beforehand: establish a budget and don’t forget about buyers’ fees and taxes to avoid paying too much for a bottle because you get carried away by the frenzy of the sale. Ensure proper storage. Because a badly stored bottle loses all its value.

If you have a collection of 5,000 bottles, it’ s sometimes difficult to keep track of all the bottles. There are several software programs that can help. Some bottles may be sold now while others will still increase in value.

Speculation: therefore risk. It’ s not because you buy bottles at 10 000$ that they will increase in value. Same thing for all valuable goods.

The advantages

*Portfolio diversification.

*Less risk of fluctuation and loss than the stock market

*Interesting return for great wines. (some researchers speak of an average return of between 5% and 10% annually for certain bottles) Some bottles like Petrus can gain up to 30% per year.

The Liv-ex Fine Wine 50 Index, which tracks changes in the price of the world’s 50 most sought-after wines, rose 28.1% in 2010 and 191% over five years. During the same periods, the Toronto Stock Exchange rose by 13% and 47% respectively.

 

Tips:

One must study the market, trends, learn about wine, appellations, etc.

You have to read, read and read. There are many websites that can help wine lovers, blogs too. You have to consult them and participate in them. Robert Parker.

I also advise not to buy only at the SAQ but also in auctions. In Quebec, the auction house Iegor makes regular sales.

Always buy a bottle that has been well stored. I once went to a house without a wine cellar and several great wines had been kept in a bedroom closet for several years. Even if the collectors don’t want to drink the bottle, they still want to make sure that it has been well preserved. When buying at an auction, the experts go on site to ensure proper storage and condition.

You have to reach out, stay in touch and deepen your connections in the field. It takes time. You have to know and be known to be in contact with potential buyers, to be informed of the new arrivals, sales, etc.

In real estate they say location, location and location. In the field of luxury goods we say rarity, rarity and rarity.

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