Why You Should Spend More Time Thinking About Investing in Wine

10-minute read.

Savvy investors seek to protect their investments against inflation and any other economic turmoil. There is a rising demand for alternative assets as these can give you diversification and provide a return that is not tied to stocks or bonds.

Today we focus on a tasty alternative asset: investment wine. Nowadays, wine collectors are making ways for wine investors! Would you invest in wine? Have you ever valued your wine collection or dreamed of having a wine cellar with the best wines?

Whether or not you can tell the difference between a cabernet sauvignon and a pinot noir, read on to find out about popular investment wines in our beginner's guide to getting started with wine investing in 2023.

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Is investing in wine smart?

Fine wine investments are more accessible than ever before; no need for master sommelier knowledge to build a wine portfolio.

Although the investment wine market can fluctuate, the wine trade is expected to keep growing and it may be worth putting some money into alcoholic beverages such as fine wines and whiskies.

Although past performance is no guarantee of future results, the best investment wines, wine funds, wine futures, or even wine stocks can have a place in your investment portfolio, even if only a tiny fraction of your investments.

For new investors, starting a wine portfolio may be too early. If so, open a good wine bottle instead and read Understanding Risk-Free Assets: A Beginner's Guide

Wine investment beats inflation

Concern about increasing inflation has led to a surge in the prices of fine and rare wines as investors flock to this inflation hedge.

The Liv-ex index - for the fine wine market - shows investing in wine has remained remarkably steady in the current world situation, where other assets may be wobbling. The index has been around since 2000 and is an indicator of the fine wine investments market. The Liv-ex index itself consists of several major wine indices, including:

• Fine Wine 50 (Bordeaux first growths)

• Fine Wine 100 (most sought-after investment wines)

• Fine Wine 1000 (made up of world wine indices)

Overall, the market has been growing by an average of one percent. Champagne and Burgundy have been outstanding at 31% and 25% growth, respectively. Champagne from the incredible 2008 vintage was particularly pursued by consumers and investors and prompted by anxieties over the supply chain.

Although the Liv-ex 100 saw its first contraction in eighteen months during 2022, the fine wine market proved its worth and all the major indices rose over the year. The Liv-ex Fine Wine 100 and the Fine Wine 1000 hit new highs, the latter driven by Burgundy 150 and Champagne 50 sub-indices.

How big is the investment wines market?

According to the Fortune Business Insights 2022 report, the global wine market size was $339.53 billion in 2020.

The market is projected to grow from $340.23 billion in 2021 to $456.76 billion in 2028.

Online auctions house Sotheby's has a very interesting tool to compare the market performance of different wine regions with the financial markets. Those looking at wine futures can view the indices here.

Whilst traditional assets often hit the headlines, alternative assets such as investment-grade wines can be included in a diversified investment portfolio.

To learn more about portfolio diversification, see What Is an Investment Portfolio and How To Build a Good One?

Who invests in fine wines?

The people investing in wine are a mixed bag. However, as a generalization, Asia was looking at the best wines, and high-end branded Burgundies last year.

At the same time, it was Champagne for the UK and the USA.

There has also been new money coming into wine investing. Of course, some of this is due to worries about inflation, as mentioned before. However, there have also been other local factors like wine shortages due to frost or wine producer supply chain problems.

The fine wine market: beware of wine fraud

Where there’s money to be made, you can bet there are also scams. And wine investment has its share. For example, auction houses sell fake trophy wines, which seems to happen more in the USA.

There has also been some talk of using Non-Fungible Tokens (NFT) in the wine investment market.

Australian producer Penfold ventured into the NFT marketplace when they partnered with BlockBar to launch a limited edition NFT tied to their rare Magill Cellar 3 barrel of wine, which converted to 300 bottles that the NFT could be redeemed against. It was a spectacular success and sold out in twelve seconds! The producer noted that 80% of the sales were to 18 to 35-year-olds.

Awards have also played a role in increasing the value of certain investment-grade wine over time. Whilst this makes it easier for novices to buy wines, there have been cases of fake awards.

Is wine a good investment now?

Wine has been a dependable investment that also performs well in a shaky stock market. There seems to be no reason to think that it will change in the near future.

Inflation and other issues driving wine investment growth seem likely to continue for some time to come.

Wine is a liquid asset (no pun intended!). This means that you can sell it at any time and convert your investment to cash. Wine investors can get their returns on the secondary market or even through online auctions.

To find out how the World’s leading wine investment company can help you protect your wealth against inflation, check out Oeno Group now.

Wine investing has proven to give stability in the face of increasingly severe headwinds. As a diminishing asset, which encourages long-term storage, even the best wine is an inherently low volatility investment. This gives it advantages over mainstream assets, especially in the current turbulent, economic times.

Wine vs Stock: Which is a better investment?

The London International Wine Exchange – sometimes known as Liv-ex - is the benchmark for the fine wine industry and is headquartered in London.

The Fine Wine 100 index has risen by 270.7% over the two decades spanning July 2001 to July 2021, outperforming the S&P 500 by 8 percentage points over the same period.

The Sotheby's wine market has outperformed the S&P 500 since 2006, but its performance is a relatively short one in 2021.

Transform your financial life for the better with everything you need in one place. Access our favorite resources and toolkits.

The best of both worlds: wine stocks

While wine bottles may not be as popular as beer or distilled spirits, it is still a solid growth sector of the economy. There are few pure-play options for investors hoping to bet solely on wine trading but some compelling options do exist; most of them come with a portfolio of beer or alcohol brands to complement wine labels.

Examples of wine stocks for your portfolio include Constellation Brands (NYSE: STZ) or Vintage Wine Estates (NASDAQ: VWE).

Investing in wine futures

OenoFuture provides a personalized advisory service for both newcomers and experienced fine wine collectors. Clients can choose to rely on the Team's expertise to guide them, or take a more active role in their fine wine journey with exceptional tasting events and winery tours!

A bottle of vintage wine from post second world war or a more recent one at peak maturity, browse their wine library today.

How to buy investment-grade wine?

Introducing the Oeno Wine & Whisky Investment Fund. Awarded Best Global Wine Investment Firm in 2021 and 2022 by the International Investor Magazine, Oeno Group is a dynamic and innovative entity that sets trends and reshapes the way investors enjoy the fine wine market.

Their financial analysts and wine experts work seamlessly together to provide an exceptional level of service and offer exclusive access to the world’s most prestigious wines.

Fine Wine & Whisky Investment Fund

More and more Family Offices and high net-worth individuals are investing in wine & whisky, especially in a down market.

Oeno Group provides investment services focused on generating attractive risk-adjusted returns through the acquisition and development of fine Whiskeys & Wines. This includes comprehensive asset management, market pricing, economies of scale in marketing, and inventory and risk management.

Click here to download your Wine & Whisky Investor Pack

Unique advantages of the fund

• Returns are non-correlated to stock markets.

• Hard assets are independently insured and revalued each year at market value.

• The global demand growth against the diminishing supply lifecycle for these consumable assets removes its correlation to individual economies, i.e. USA, Europe, the UK, China, Australia, etc.

This industry-leading Wine & Whisky Investment Fund is led by a multi-award-winning team with 20+ years of experience in finance, funds management, and wine & whisky investments.

The Oeno Investment Fund is under a Delaware Limited Partnership offering capital preservation, non-correlated returns, low volatility, risk-adjusted returns, inflation-beating yields, and alpha-generating arbitrage. Find out more

Climate change: an opportunity for wine investors?

The wine industry has been acutely aware of climate change for at least the last two decades, and it is one of the leading topics of conversation when engaging in conversation with wine producers on any level. 

There is plenty of research indicating that the world’s most important wine regions face significant challenges in maintaining their recognized styles and quality levels over the next 20-30 years as the impacts of climate change ramp up with higher average temperatures. 

Is the industry taking climate change seriously?

There is a multitude of problems this presents. Warmer winters lead to weaker dormancy of vines, so they can begin growing earlier in the season making them susceptible to frost. Warm winters are less effective at killing off viruses and diseases, so disease pressure can be much higher during the following growing season. Warmer seasons also accelerate the sugar ripeness ahead of phenological maturity, so wines can be less well-balanced. Or worse, the grapes ripen during the hottest parts of summer rather than during the milder temperatures of Autumn. 

Droughts are becoming deeper and more prolonged, often exacerbated by lower snowfall in the Alps, Pyrenees, and California, amongst other regions. Much discussion centers on finding cooler areas within established regions, and this means higher elevations, or closer to the sea, at higher latitudes or one site with cooler aspects (north-facing slopes in the northern hemisphere, and south-facing slopes in the southern hemisphere).

Even leading producers in classic regions like Bordeaux wine (France) are permitting the experimental planting of varieties associated with much warmer climates such as Albariño, Touriga Nacioñal, and Mourvedre. Climate change is the single most important production issue in the wine business this century.

What are industry players doing to prepare?

As described above with Bordeaux and experimental plantings. Champagne houses (France) are buying land and planting vines in England for high-quality sparkling wine. Merlot was abandoned in many areas and is being replanted with later-ripening Cabernet Franc. 

Barolo and Barbaresco producers in southern Piedmont (Italy) are buying land and estates in Alto Piemonte, which is further north, more elevated, and wooded. 

Cava producers in Catalunya (Spain) are planting in much higher areas west of Barcelona.

A global network of producers is planting varieties like Assyrtiko, Fiano, and other grape varieties - associated with the Mediterranean - in regions that are established with classic French varieties like Syrah or Cabernet Sauvignon such as McLaren Vale or the Swartland in South Africa. 

Producers in the Veneto region (Italy) are moving away from Burgundian-style trellises to traditional pergola methods which provide more shade and elevation. 

Domaines in Burgundy (France) buy land in the Haut Côtes where land is cheaper, at higher elevations, and cooler. The list goes on and on...

Which areas are expected to suffer the most from climate change?

This started more than a decade ago, northern hemisphere regions are already warm and dry, and quite continental. Portugal and Spain are good examples. Parts of South Africa and Australia that are far from the coast and without higher elevations will suffer. 

The central valley of California is reliant on snowmelt for irrigation, and the Riverland region of South Australia is also reliant on river water for irrigation. Drinking windows are narrowing...

Which regions are expected to benefit?

Areas that are already cool-climate such as England, Germany, parts of eastern Europe, Washington, Canada, the Finger Lakes in New York state, and new regions in mountainous areas not necessarily associated with wine such as Mexico, Turkey, and regions around the Alps in Europe.

As an investor, what's the best way to get ahead of this?

Keep an eye on classic regions with the potential to mitigate climate changes through some of the elements above where elevation and aspect can be improved. This would include Burgundy, Piedmont, parts of Tuscany, the Mosel in Germany, northern California, the Santa Cruz Mountains, and Tasmania. Keep an eye on top producers moving into other regions completely.

You can invest in wine from all over the world

From Schrader Cellars Napa Valley (US wines) to a pinot noir from the Rhone Valley (France), best wine investing is a global endeavor, with winemakers producing good wine in countries all over the world.

There are hundreds of styles of wine being made and sold each year. The best wines come from the most prestigious regions, which take pride in producing only high-quality wines using traditional methods.

Talk to a wine expert

How to start the best wine collection at the best overall value? OenoTrade connects novice or seasoned wine investors with the private trade sector.

With a simple and accessible approach cutting out the middleman, trade customers can effortlessly source the best investment wines from the world's finest producers. OenoTrade is truly the first of its kind with wine investing.

From American investment wines in Napa Valley to renowned red wines from the Rhone Valley, Oenotrade has built excellent relationships with prestigious wineries across the world, securing access to many of the most exciting wine bottles and covetable investment-grade wine on the planet.

You can select from a vast industry-leading wine collection, benefit from wine expert advice, and enjoy a rapid and seamless purchase and delivery process.

Register for an account today to unlock all of the benefits of purchasing wine through OenoTrade. Time to look at investment wine for your alternative asset portfolio!

Will you add wine bottles to your investment portfolio?

For many people, wine investments are a mystery. They wonder how you can tell if a fine bottle of Bordeaux wine is going to increase in value or simply sit on the shelf and get dusty.

The truth is, the demand for the best investment wines has been steadily increasing over the years as more people discover their love of all things grape-related. Expensive wines are also becoming a feature with auction houses.

Fine wine is a good investment for anyone who wants to diversify their portfolio. Wine investing has proven to be an excellent way to invest your money because it provides both liquidity (the ability to sell wine or trade your investment) and growth potential (returns on investment).

Invest in wine as an alternative asset or open a cabernet sauvignon from Napa Valley, the choice is yours!

Contributor: Maxwell Nee

No Financial Advice. This article does not provide financial advice and has been prepared without taking into account any person’s investment objectives, financial situation, risk tolerance, or particular needs. 

''Why You Should Spend More Time Thinking About Investing in Wine'' is part of our Alternative Assets series.

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