Investing in wine — but how?

Fine wine as an investment

It is not for nothing that fine wines enjoy the reputation of a prestigious, crisis-resistant and sometimes high-yield investment. In times of severe financial market turmoil, such as the 2008/2009 financial crisis, the coronavirus pandemic or the start of war in Ukraine, wine has proven to be an asset that is largely immune to macroeconomic uncertainty. According to LIV-EX market report for the first quarter of 2023 For example, the impact of events such as the collapse of Silicon Valley Bank and the controversial Credit Suisse takeover by UBS on the wine market was minimal. Even in the long term, Fine Wine has proven to be one of the most stable and profitable forms of investment, with a annual growth rate of 10% established over the past 30 years (Liv-Ex investment index 1988).

Individual segments were able to achieve even significantly higher returns in turbulent financial market years such as 2022. For example, according to the Burgundy 150 Index, Burgundy prices rose by 27.4% last year and the Champagne 50 Index also rose by a remarkable 21.6%.

Individual top wines achieved even higher returns at auction houses such as Sotheby's. In April 2023, for example, a 15-liter bottle of Masseto 2010 went under the hammer. At 56,250 euros, the selling price was far above the estimated price, which was between 18,000 euros and 26,000 euros. According to Sotheby's, this was A new record for a bottle of Massetothat was sold at auction. By the way, the most expensive bottle of wine at a Sotheby's auction in 2022 was a Romanie-Conti 2007, which changed hands for around 360,000 euros.

One thing is clear: The market for fine wines is growing. Mainly due to the increase in collectors, experts and investors worldwide, who - led by financially strong Asian buyers - are willing to pay top prices for top wines.

Selection criteria for investment wine

With five to six-figure sums, a wine investment naturally needs to be well considered. Experts therefore recommend taking five main criteria into account when investing wines: rarity, reputation, vintage, critics' reviews and provenance — both in terms of origin and storage.

Identifying a potential investment wine therefore requires a great deal of expertise.

However, when it comes to French and international wines, for example, wine investors can rely on Reviews by renowned wine journalist and critic Robert Parker orient. Whose numeric “Parker points” rating system is an international benchmark for good taste and a significant pricing factor on the wine market. Wines that he rated well have achieved significant price increases in some cases in the past.

Many wine retailers, collectors and wine investors regard Parker's rating as an outstanding sign of quality, which causes demand and price levels to skyrocket. For example, wines that receive 90 points or more sometimes experience price jumps of over 100%. Although Robert Parker left his post at The Wine Advocate in 2019 and has his legacy continued by experienced sommeliers, Parker points are still a significant reference in wine evaluation worldwide.

The running time is decisive

Once the investment wine has been found, the purchase should always be made through well-known wine auction houses or other reputable providers in order to avoid the risk of counterfeiting wine. Last but not least, Fine Wine investors also need patience. Particularly valuable wines, especially from Bordeaux and Burgundy, usually only reach maturity after 15 to 20 years and then often achieve the “highest percentage” returns. However, the best dessert wines in the world and top champagnes can also be stored for over 50 to 60 years. Therefore, the wine collection should ideally include a certain variety in terms of age. In other words, younger, more speculative wines that could only be sold at a profit in the next few decades, and some that have already aged and will generate a return in a shorter period of time.

In any case, the basic requirement for increasing value is professional wine storage. A private wine cellar is usually not enough, as the temperature and humidity must not fluctuate. A stable temperature of between 10 and 17 degrees Celsius is ideal. The humidity should be 70 to 75 percent. Even modern cellars are unsuitable as wine storage facilities due to these requirements and special wine refrigerators are more intended for individual bottles. However, high-class wines are usually purchased in boxes and only achieve maximum resale prices in original packaging.

Challenges for investors

In principle, investment wines are always associated with high costs and barriers to entry for the reasons mentioned above. From wine selection and purchasing to professional storage and delivery to sales, this alternative asset class is expensive, complex and is basically only available to experts in the subject matter. At least if the wines are actually supposed to increase in value permanently.

Wine lovers who are looking for a “liquid” form of investment with good return prospects should therefore find out about digital fine-wine shares. This means: don't buy boxes yourself, but leave the selection, storage and yield maximization to experienced professionals and then participate in the increase in value just like an owner. For this purpose, FINEXITY has a globally networked partner network of leading wine retailers, sommeliers, winemakers and wine experts as well as insurers and collectors, and thus enables optimal selection and storage of fine wine. In addition, through professional analysis of markets and market trends, the best possible sales time is anticipated and the maximum return is realized. Using digital fine-wine shares, investors can therefore put together a diversified portfolio that offers attractive return prospects and — in contrast to physical wine — a high degree of flexibility and liquidity.

‍