When considering investments, wine may not immediately spring to mind as a profitable channel, but with a little know-how, wine could be a smart choice as an alternative investment.
While wine may not yield the same profits as investing in financial products or property, it does prove a steady, low-risk investment, which is why it’s a growing investment opportunity in an increasingly uncertain world.
According to the Knight Frank Luxury Investment Index, which is an index dedicated to tracking the investment value of luxury assets, fine wine is listed as the best performing asset in the year to June 2021, and the fourth best in the past decade.
How to get started with wine investments
If you are just starting your wine investment journey, or have a smaller budget, then simply buying wine is the easiest way to make an investment. Many luxury wines are increasing in value each year – and the longer you are able to hold onto the bottle, the more lucrative the returns are likely to be.
If you have a larger budget, look toward profitable investments in high-performing wine companies. This does require some knowledge of the company to ensure you invest safely, or alternatively, you can hand over control of your budget to allow experts in their field to make decisions and manage your wine portfolio for you.
Which wines should I invest in?
According to Vin-X, a wine investment platform, wine is currently delivering stronger returns than cryptocurrencies and gold, with an average growth of 50.7% over the last five years.
Most of the best-performing fine wine investments are all from Europe, and some of the ones to watch out for include:
- Domaine de la Romanée-Conti
- Lafite Rothschild
- Mouton Rothschild
- Petrus
- Margaux
Burgundy wines have well-earned reputations as investable wines. Look for Cabernet Sauvignon labels that include Haut Brion or Latour, and Merlot wines from Lafleur and Le Pin.
Wines originating from the Rhone Valley can also boost your wine portfolio. Take a look at Jean-Louis Chave Hermitage Vin de Paille, or Guigal Ermitage Ex Voto for excellent examples of highly-investable wine.
Some Italian wines from Tuscany are also incredibly investable – research traditional wines such as Casanova di Neri, Poliziano Le Caggiole or Avignonesi Riserva Grandi Annate.
If you are looking to invest in New World Wines, California is at the top of the list for profitable investments. Dominating the list are the Napa Valley wines such as Screaming Eagle, Schrader Cellars, and Roberto Mondavi.
Managing your wine investment
Not only will your investment need to be managed financially – you’ll also need to literally manage the storage of the wine.
It could be as simple as having a cellar at home – but you’ll have to ensure that the humidity levels and temperature is consistent, and that the wine is stored in darkness and is well-ventilated. If you decide to store your wine at home, we recommend alerting your insurance company to protect your investment from theft or accidental loss.
Of course, not everyone is fortunate enough to have the ideal conditions at home in which to store fine wine, but there are other options available.
Do your research into wine storage companies such as Arc Reserves and Corney and Barrow, who provide professional wine cellaring in optimal conditions from just £7.00 per month.
Selling your wine
Before investing in fine wine, it’s important to understand how and when you will eventually sell the bottles in order to maximise profits.
Keep a close eye on the market as not all wines will continue to appreciate in value, so look for signs that the market is peaking and be ready to sell.
One way to sell your wine is via a wine auction. There are several platforms that you can use, which gives you a greater reach of wine collectors and buyers who may just be searching for the bottle you are trying to sell.
You can also sell directly to another collector. This does require a little more knowledge to ensure you maximise your profits, but if you are prepared to put in the groundwork and do your research, you could achieve a more profitable return than selling via a wine auction.
Do I need to pay tax on the wine I sell?
If you sell your fine wines in the UK and have made a profit of over £12,500, you will likely be subject to Capital Gains Tax. Make sure you are aware of any taxes that you may need to pay, as this will reflect the final amount of profit you make from selling your wine.
Do your research before investing in wine
Remember, not all wines make good investments. Over 90% of the wines you see on the supermarket shelves – and even the majority of wines sold by vineyards – are designed to be consumed ‘young’, or within five years.
Start by following ‘influencers’ such as Jancis Robinson, James Suckling and Robert Parker, who are some of the most knowledgeable wine critics who have an eye for spotting highly investable wines.
We also recommend signing up to a fine wine market platform such as Liv-Ex, the wine trade’s global marketplace, where almost six hundred members benefit from over £100m investment opportunities across markets.
Remember, as with all investments, prices can fluctuate but by working with a platform such as Liv-Ex, you will have the data at your fingertips to find out what is happening at the market level and buy and sell confidently with other wine traders across the globe.
While investing in wine may not be for everyone, if you conduct your research and seek advice from the experts, you may be able to make a profit on a bottle of Cabernet Sauvignon or Merlot with very little effort.
