Investment in wine became one of the most profitable ways to multiply your money long ago.
Regardless of some risks, such kind of business is becoming more and more popular among many people, which is quite logical.
It also concerns the purchase of the wine collections.
This is not only a nice alcohol drink, but the promising branch of investment and diversification of the portfolio management.
It’s connected to the peculiarities of the drink, which becomes only tastier with time.
Wine differs from the antiquities and other works of art by the fact that it is drunk.
Every year the amount of the old drink of high quality is impetuously decreased, which causes its substantial growth in price.
The profit from such kind of investment may reach 30-35% per year, and some bottles become 10 times more expensive within few years.
So, how to invest in wine?
Let’s discuss it and find all the answers.
How to invest in wine?
There are several true methods how to become an investor.
Buy it from kavists (the professional owners of the cellars) in Europe and order them the service of keeping it as well.
The procedure of selling happens in Europe, accordingly.
The trade on the exchange liv-ex.com.
This exchange allows investing in the drink without expanses on the transportation and saving.
The main guideline to the condition of the wine sector on the exchange is the index Liv-ex 100, which includes 100 most demanded wines (mostly includes the manufacturers of Bordeaux).
Another nice opportunity is to invest in Wine Funds.
They appeared not long ago, but possess great connections and professional audience.
However, the expanses on maintenance of such funds varies from 2,5% to 20% per year.
Such method permits making money without receiving license and moving it to your country.
The average entrance fee starts from 10 thousand dollars.
It’s also worth mentioning that almost all funds are registered as offshore companies.
Besides, the place of product’s saving is also in doubt.
The thing is that the cellars are located in few countries and it means that it’s not that easy to check them.
Moreover, due to the fact that the products are the wasting assets and the income is free, the fund is considered to be the organization, which is tax imposed.
These funds are the young institutions, and it’s unclear how they are going to show themselves in long-termed perspective. Such investment is clearly very risky.
It should be noted that in order to invest in wine, you must have some specific knowledge of how it is made.
You are to grok and know all technological details how to make wine, learn the opinions of the experts in this field and compare the influence of the weather conditions to the harvest and quality, and as a result to its price.
In order to analyze the wine market you must regularly study the different topical editions.
For example, it may be Wine Advocate magazine, which belongs to the specialist in winemaking Robert Parker.
Besides, there are numerous ratings, tracing which you will be able to come to the conclusions which kind will grow in price in a few years.
It is believed that it’s better to buy the drink in batches.
Young wine is usually bought in tuns, because its original price is low and it becomes more expensive with the lapse of time.
Moreover, it should be noted that in order to buy the drink physically for the further resale in the future, you are to provide the necessary conditions for its storage.
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What should you pay attention to when you invest in wine?
How can one define that the products are good?
There are several parameters for this:
the expiration date:
not less than 25 years with the acceptable period of ripening after 10 years of aging;
the growth of the price:
the history of the stable growth of price for the 10 years or more, which is proved by documents;
the winery, the name of which is accepted as a synonym of prestige and quality;
the critics’ reviews:
pay attention to the trademarks, which have not less than 95 points from several world wine critics;
the drink must be manufactured in the amounts, enough for the purchase/sale on the secondary market.
Every year the rate of the best wines is created, but the weighty utterance of a respected man in this field may ruin the good wine or, on the contrary, create a roaring demand.
One of such people is Robert Parker with his Wine Advocate magazine.
Everyone, who intends to invest in this drink, must subscribe to the magazine in order to be aware of the mainstream trends.
In order to maintain the interest to their product, the leading enterprises often hold the sales.
That is why all tables of millesimes are reviewed every year.
Nevertheless, every investor must have his own rating, which is based on the personal experience and intuition.
There are plenty of ratings and tables.
The most demanded of them are the following ones:
- the millesime table Berry Bros & Rudd wine fund;
- the vintage guide by the Decanter magazine;
- the table of the vintages by the Wine Spectator magazine;
- the table of Robert Parker.
Studying their methods of selection, you will be able to understand which sorts are soon going to bring the profit of 20% or 30% yearly.
The great attention is paid to the young wine (up to 5 years) by the successful millesimes.
It is often bought cheaply and in tuns. Such purchase is considered to be the most profitable futures.
If the drink isn’t spoiled for the time of storage, 5 years later it will be sold one and a half or even two times more expensive.
The famous tables rate the drink on the scale from 1 to 5, 10, 20 or 100, and give the recommendations, how many years must pass before the wine reaches the highest pick of the most profitable sale.
In order to make the way on the market, the Robert Parker’s table of millesimes must become a reference book to an investor.
For example, according to the Parker’s table 0 to 90 points are given to a wine, which is better than average.
90 to 95 points are given to the good one.
The outstanding ones get the highest points – from 96 to 100.
The drawbacks and risks you face, when you invest in wine
To invest in the drink is not to have a source of momentary income; it’s more like the long-term investment.
The horizon of suchlike investing starts from 1 year.
Besides, the investor subjects his money to the following risks:
- it can get spoiled in case the storage conditions are not kept or by other reasons;
- it may stop being fashionable, and it means it won’t be demanded and expensive;
- the image of the wine may be spoiled by the critical remark of an expert, which will reflect on its price at once.
Here, just like in any other kind of investment, there is a sense in diversified portfolio, by the purchase of the wine of different harvests, trademarks and manufacturers.
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Online grounds, where you can invest in wine
Nowadays, there are such selling online grounds, which arrange the sale, purchase and the appropriate storage.
They also arrange the wines’ transportation from the manufacturer to the warehouses’ cellars, where it is kept right until the sale.
These companies also secure the forehand buying of the drink from the new harvest, which hasn’t been bottled yet.
The guideline for it is the prognosis of the best world experts.
On this online ground you can easily trace the market fluctuations and study the lots offered for sale, and put up your lots.
The leading wine trading grounds:
- Berry Bros. & Rudd
- Farr Vintners
- Fine & Rare Wines Ltd
- Geerlings & Wade
- Antique Wine Company
There are websites, which held wine assessment by the photos of the bottles. Moreover, the site wineauthentication.com publishes and regularly renews the photos of all genuine bottles of the famous Chateau.
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Investing wine funds
If the investor doubts his capabilities, he can enter the Unite Investment Wine Fund with the greatest professionals, who almost never have losses.
Their profit is up to 30% per year.
However, the price to enter such organizations is also rather high.
The minimum fee to the Unite Investment Wine Fund:
- Wine Investment Fund — 10 thousand pounds (around 20 000 dollars)
- Fine Wine Fund — 50 thousand pounds (97 910 dollars)
- Vintage Wine Fund — 100 thousand Euros.
For most investors investing in wine is not only the way how to make money passively, but is a kind of hobby.
The collection of the good wine demonstrates how good the taste and reliability of the investor is and with the proper approach allows making good money as well.
We hope that in this article we managed to cover the topic of how to invest in wine.