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Jun 19

Fine Wine Investment: What Makes it Highly Lucrative and Profitable

Posted by at 18:09 | Default | Comments(35) | Reads(1240)

Investing in fine wine has becoming increasingly popular over the last few years. Many investors now recognize the reduced risks associated with this type of investment. They have also come to acknowledge that fine wine investments have been proven to provide better returns than many equity or bond options.

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Some wines, particularly the Rothschild 2008 have been known to increase in value by as much as 150%. There are very few other markets which can offer such impressive returns.  As with any market the best way to ensure you make a healthy profit is to know your market, you must know which wines to buy and when. If you can master this then it can become a highly lucrative and profitable investment:

Supply & Demand
The best fine wines are only produced in a limited supply.  As time progresses many of these wines are consumed and there are far less of them available. The older the wine gets the more it becomes in demand by connoisseurs and collectors. The longer you hold onto the wine the more desirable, rare and sought after it is and this is what pushes the price rapidly upwards. Combined with this is the fact that fine wine investment is becoming increasingly popular.  
This may make it difficult to purchase the right wine but it will also provide even more buyers once you have purchased the right product. It is important to allow at least three years from purchase before you consider selling your fine wines. This will permit you to achieve the largest returns possible. If you don’t know the market really well, it’s best to consult with a wine merchant, just to be on the safe aside and avoid getting scammed.

Balancing a Portfolio
Fine wine has been shown to outperform many bonds and equities and this makes them a solid risk, particularly in comparison to many stock market options. This can enable many investors to chase the more risky investments safe in the knowledge that they have a secure backbone to their portfolio.

Liquidity
The best thing about investing in fine wines is that they can be appreciated yourself. If you want to you can always drink your stock! More importantly it is very easy to turn fine wines back into cash and this makes it one of the most liquid assets around.

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China & Hong Kong
These two economies have been growing at an unprecedented rate and are now one of the biggest consumers of fine wines in the world. The growth in their economies has been fuelled by a massive increase in their manufacturing abilities combined with demand from the rest of the world. This has resulted in a large increase in the number of wealthy Chinese people.  Much of these available funds have been spent on purchasing fine wines and this has had the effect of increasing the number of customers in the market. This additional amount of customers has actually made the price increase as there is now more demand than supply.  Honk Kong has now become a hub for fine wine and is rivaling established places such as London and New York.

European wines – the best in the world for investing
Most of the best wines are produced in France and Italy. Bordeaux, Burgundy, Tuscany and the Rhone Valley wines are known to be some of the best in the world. These wines can be sold across the world and should you wish to sell your collection your marketplace is truly global. The more you can invest the more options which are available to you and the better your returns.  However, you can still make excellent returns by investing as little as $10,000.

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The most important element of fine wine investing is to look for quality over quantity. Fewer bottles for your funds should mean less storage and other costs. The rise in price is usually higher on smaller quantities of wine and the key is to knowing when to sell. Pay close attention to storage - for your product to appreciate it must be stored in the right conditions. Furthermore, unlike additional types of alternative investments, fine wine investment is tax free, providing that you keep your wine in bond.


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