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Fine Wine: Beverage or Asset?

Instead of keeping our money in the bank we seek high ROI alternatives. Some of us buy shares, others buy properties, and sometimes we even invest in both. Is it now time to invest in liquid assets, more specifically in the fine wine market.

In a struggling economy, a number of people are interested in diversifying their portfolios and investing in slightly more unusual products. Although most people would look at a fine bottle of wine as a nice way to celebrate a special event, some speculators might see it as a substantial investment.

As the age of the wine rises so does its value. Mature wines cost more. Certain wines are simply not available in large amounts. By keeping the demand high and the supply low, wine producers and growers can maintain high prices, a boom for investors.

However, there are conflicting opinions on whether wine is a strong or weak investment.

How Does Wine Serve as an Investment?
Many people simply don’t understand how wine can be a true investment. However, it is important to keep in mind that only the most expensive and valuable wines are ever going to be considered as an investment.

Storing those supermarket bottle of chardonnay for several years will do nothing but take up space in the wine cellar. Those who buy wine as an investment purchase rare vintages and bottles and hope that the price will increase over the following several years.

There is very little speculation involved, such as guessing which vintages will become popular. Investors only stick with recognized names, years and vintages when investing thousands of dollars in single bottles of wine. These investors can then sell their collection to consumers who want a particular bottle to drink or hotels and upscale restaurants who simply want the bottle in their collection.

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Is There a Risk of Fraud?
Although there is always a risk of fraud in any investment, that possibility increases significantly when it comes to purchasing wine. After all, it is impossible to verify the contents of a sealed bottle until it has been opened, effectively rendering it valueless.

Anyone interested in wine investing should only deal with reputable sellers and auction houses that can be found in most major cities like London, New York City and Hong Kong.

Do Wines Continue to Rise in Value?
As with any investment, whether that is housing, gold or wine, a rise in value is always uncertain. Between 1994 and 1998, the market saw an almost 400 percent increase in value among the top wines.

However, that kind of growth is unsustainable. It is only common in already prosperous markets where the majority of investments are successful.

Current values are climbing after a substantial dip the year prior, but many question whether it is true growth or simply overvaluation. Only time will tell if large wine collections are truly worth as much as they are currently estimated to be.

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Are Certain Wines More Valuable Than Others?
It is vital to realize that not all wines are created equally, and even two wines at the same price will not age and increase in value at the same rate. The most commonly collected wines are those grown in the Bordeaux region, most notably the Château Lafite and the Château Latour.

White wines, typically, are less valuable and less significant in the world of wine investment than reds. Wines produced outside of France are rarely collected at the highest values, making them unworthy for most serious wine investors.

Although wine will likely remain far more popular as a beverage than as an asset, there is no denying the fact that wine investing is an interesting and viable market.

Featured Image Photo Credit: <a href=””>Bottles Of Wine</a> by George Hodan


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