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Wait, you can invest in wine?
The short answer is yes, but it’s very complex and, similarly to baseball cards (which we wrote about last week), requires an immense amount of knowledge about the industry. It is unlikely you could go to your local liquor store and buy a $20 of wine and hold on to it for a period of time and the value goes up. Rather, it requires knowledge of what makes wine valuable - e.g. the vineyard that produced it, the year it was produced, how many bottles were produced, etc. In addition to knowing key details about the bottle you’re looking to buy, you need to know how to properly store the wine and, of course, you must avoid drinking the wine (which may be difficult for some). There are multiple ways to buy and invest in wine and even some crowdfunding sites where you can purchase “shares” of expensive bottles that will be stored by professionals. All of that and more, below.
Getting Started Investing in Wine
According to Wine Folly, if you are wanting to get serious with wine investing you should plan to purchase at least three bottles valued around $8,000. Wine Folly suggests this amount because of the cost of storing, insuring, and then selling your wine, the upfront costs could make the returns worthwhile.
As is the case with all forms of investing, wine comes with risks. With alternative assets and commodities, the prices may be more volatile than traditional investments due to industry changes and other, less predictable factors (e.g. bad weather). As with any other investment - do your research. If you’re completely new to wine, it will take plenty of research hours to feel comfortable. If you’d like to dip your toe in with wine investing and don’t want to drop the recommended $8k, you can go into crowdfunding.
Investing in Wine with Crowdfunding
There are various options to invest in wine through crowdfunding. As examples, you can invest in wineries, “shares” of specific bottles, farmland for wineries, wine delivery services, etc. While all of these options are possible, the two I will highlight here are wineries and investing in bottle “shares.”
There are several web-based options for crowdfunded investing in wineries. However, from my brief research, one of the top rated sites seems to be: Wine Funding. I have not used this and am not getting any compensation for this, but based on the instructions on the website, you can invest and receive compensation back in wine, wine bond, or equity in the estate. I believe when you invest in a specific winery you have the opportunity to taste the wine no matter which option you pick. A lot of the current projects are in Europe and payout in Euros, but this could be a fun way to get started in investing! Again - I am not an expert and this is not advice. I have never used this site to invest and encourage you to do your own research prior to using their services.
There is another company called Vinovest where you can purchase “shares” of bottles of wine, much like many trading platforms allow you to purchase fractional shares in companies. Vinovest allows you to invest in their curated portfolio without directly purchasing the bottle or storing it yourself. That’s right - you make the investment and Vinovest purchases and stores wine for you. This process allows new investors to get their foot in the door without dropping large amounts of capital on assets they may not fully understand. Similar to the website mentioned above, I have not used Vinovest, but the idea sounds interesting and if I decide to invest in wine this sounds like a great entry point.
Storing Wine
I am by no means a wine expert nor do I have any knowledge on storing it properly. If you’re in that same boat, and you are purchasing wine as an investment, it would be very risky to take a “trial and error” approach to storing wine. Instead, prior to purchasing a bottle, you should do your own research and, if possible, consult a professional. However, here are a few general guidelines. Most wines require cool temperatures and relatively low levels of light. Additionally, try to avoid excessive shaking and humidity. You could attempt to store the wine yourself by purchasing a wine cooler or even building your own cellar, but many wine investors recommend professional storage for higher perceived value.
If you’re new to alternative asset investing, check out our introduction to alternative asset investing series:
Wine
If you’re new to stock investing, check out our introduction to stock investing series:
If you’re new to real estate investing, check out our real estate investing series:
Have a great rest of your week!
Brandon & Dan
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Disclosure: The article was written by Daniel Kuhman and Brandon Keys, and it expresses the author's own opinions. The information presented in this article is for informational purposes only and in no way should be construed as financial advice or recommendation to buy or sell any stock, asset, or cryptocurrency. Brandon and Daniel are not financial advisors. We encourage all readers to do further research and do your own due diligence before making any investments.