Saturday, March 3, 2018

Wine as an investment

In this week's class, Carol mentioned that most people drink wine almost too soon now, and fewer people are collecting wine for investment purposes. There are many reasons for this, aside from people's shrinking attention-span. Cellars can be expensive to own and maintain, and for beginners, it is difficult to tell which wines are truly investment worthy.

Nevertheless, for people interested in investing in wine but do not want to physically store the wine themselves, I found that there are wine investment funds that are dedicated to buying wines with growth potential, and there are stock exchanges for wine (such as Liv-ex).

Here is the wine portfolio of the (UK) Wine Investment Fund, all their wines are stored in government bonded warehouses to avoid VAT. 


There are many reasons fine wine can be a good investment. The good investment-grade wine provides good risk-adjusted returns, and serve well as a portfolio diversifier. According to Liv-ex, fine wine investment has seen consistent annual return of about 12.9% since 1988. Wine investments can also be used as an inflation or currency hedge. Wine investment has existed for hundreds of years, and it is not going away. I am wondering if there are potential business opportunities to do crowd-funded wine investment, offering investors the options to "drink or sell" in a couple years. 

2 comments:

  1. This is really interesting. The American Association of Wine Economics did a piece on crowdfunding wine. Unfortunately, you have to pay to read it, but I did read an article about it.
    https://www.forbes.com/sites/thomaspellechia/2016/04/27/who-would-crowdfund-a-wine-project-and-why/2/#2863bd55788c
    It looks like right now people aren't funding an investment portfolio, they are funding new brands and wine research. Crowdfunding in the wine space is relatively new and those willing to fund them are usually younger. It be really interesting to see what kind of funding one could get for wine investment if you give the donors equity in the company.

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  2. Thanks for sharing Stella!!! This is amazing! I've always wondered if there was actually a real opportunity to see investment-grade returns from wine collecting and investing -- I will be checking this out!

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