Fine wine as an investment has been on the rise for the past 3 years, with the most profitable brand increasing in value by over 160% in 5 years, as this wine market performance report shows. However, the demand in addition to the demand from buyers from overseas taking advantage of the weak British currency has resulted in a rise in the price of initial investments.
Fine wine investment has been one of the most popular alternative passion investments which can ideally be referred to as a lucrative hobby. However, just like any other investment that’s up, there’s a chance the bubble could burst. In this read, we are going to look at the ups and downs of investing in fine wine.
The Upside: Wine is a Reliable Earner
As mentioned earlier, some of the most popular fine wines have increased in value substantially in just a few years. Brands and individual bottles are not just doing well for investors, but the entire sector has been on the rise for the past two decades. Since 1999, fine wine has outperformed almost every investment-grade asset class.
This industry has burst in popularity to a point where it has its own index in the market. The benchmark that was traded throughout 2018 never went beyond 2% and this shows just how little the market has fluctuated. The fine wine index ideally allows potential investors to know which wines are worth investing in, especially when it comes to the region of origin.
The Downside: Wine Investment Scams are Pretty Common
As with any other high-value investment opportunity, you will always come across individuals willing to make a quick buck and fine wine investment is no different. Often operating in the form of high-pressure cold calling, these questionable firms trade over the phone, promising great returns which investors never see.
If you are looking to invest in fine wine, ensure you conduct research on the potential wine broker. Make sure that the whole process is done in a transparent manner and that they will attend to any query you may have. Go through online reviews on trusted websites and shop around in order to get the best quote. An expert and personal service are vital when investing in wine and you shouldn’t be rushed into parting with your money or cellar.
As an Interested Investor, What Should You Do?
When considering investing or selling wine, the most important thing you can do is your own due diligence. You should not just look into the brokers, but the wines themselves. As much as you may enjoy investing in a wine that you actually like, the taste will not compare to how much could make from it as an investment.
You should look at what wines that are currently rising. Experts recommend looking for a great vintage, low yield and generally from a prestigious owner or property. As with any other investment, be ready to be patient when it comes to getting returns. Fine wine investments usually have a lifespan of one to two decades and so, if you’re on the search for quick returns, this isn’t an investment for you.