27 Apr Wine Investment Advice for an Avid Wine Collector
Many wine aficionados have now discovered that their fine wine investments are far more reliable than many other types of investments, including bonds and stocks. Vintage wines are increasingly becoming the world’s most popular alternative investment asset.
However, in order to benefit from this type of investment strategy, you’ll need to identify what is smart advice and which tips to ignore. Here is some investment advice for an avid wine collector.
Investment advice for a wine collector
#1 Wine can prove to be a very lucrative investment
While well-heeled investors have been purchasing and storing fine vintages for centuries, they weren’t always the most popular luxury assets in those circles. Even in the recent past, the trend was to collect luxury cars, as these gave the owners the highest ROI. However, today, legendary and iconic bottles of wines are replacing luxury, high-end classic cars.
On average, there has been a 25% rise in wine values globally. Over the past five years, there has been a 61% increase in wine values overall. In contrast, classic luxury vehicles rose in value only by 2% in the past year, while the value of coloured diamonds did not appreciate at all.
This is a clear indication that wine investments are far more lucrative than they were and the projection is that this trend will continue over the next few years. This increase in the value of fine wine is a direct result of more stability in the wine market overall. Today, wine prices are increasing steadily at a very predictable rate, which makes this rise more sustainable.
#2 Understand there is a difference between a collectible wine and a luxury asset
It’s important to keep in mind that collectible wines aren’t the same as luxury asset wines. The latter tend to have a higher projected asset growth, while the value of collectible wines may not increase at that same rate over the decades. Luxury asset wines have a proven track record of outperforming their returns with each passing year. Understanding the difference between a true luxury asset and a collector’s bottle will help you make a smarter investment choice.
Some things to keep in view
To determine whether a particular wine is actually a luxury asset, look at its past two decades of investment value. As a general rule, once it reaches maturity, a wine should be worth at least 20% more than the original selling price. Although this particular method may not always help you accurately project how much a young bottle of wine will be worth, two or even five decades from now, it does give you a ballpark figure that can come in handy when making your decision.
It’s also important to keep in mind that the demand for any particular wine isn’t static and that it can change over time. This is why it’s crucial that you maintain flexibility while following any wine investment advice, and take price variations into consideration.
Some quick pointers
- Invest in Burgundy, Bordeaux, and classic wines from northern Italy as they generally perform well on the market over the years.
- Keep your overhead costs low by investing in wine futures whenever you can.
- Refrain from purchasing luxury asset wine that’s over five years old, mature wines are always more expensive.
- Store your fine wines in climate-controlled custom designed cellars to maintain their quality and increase their market value.
- It’s always a good idea to buy wines you’ll enjoy drinking. That way, if the price of a certain wine doesn’t increase as expected, you will still be able to relish it yourself.
For any more information on custom wine cellar design and installation, you can call Signature Cellars on 1300 570 636 or use this contact form to get in touch with us. We’ll be pleased to assist you and provide custom solutions that match your requirements.
Thanks for reading,
Neil Smallman
Signature Cellars
1300 570 636
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