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You love wine, but is it a worthwhile investment option?

by , 06 November 2014

If you enjoy a glass of fine wine, learning more about it and collecting it, investing in wine may seem a good option.

Not only could you combine your love of wine, but you could potentially make money from it too.

But is it something you should seriously consider?

Let's take a closer look…

How much will investing in wine cost?

If you’re serious about investing in wine, only consider it if you have a decent amount of money available to invest.

Building a diversified portfolio of wine could run into the hundreds of thousands of rand. And the costs don’t stop there.

You need to invest in professional storage too. Otherwise, you risk your expensive tipple suffering due to unsuitable temperatures and exposure to light.

How can you invest in wine?

If this hasn’t put you off, the easiest way to do this is to get in touch with a wine merchant. They can arrange storage of your crates too.

Overseas there are wine funds and different trading platforms related to wine trading, but these can pose risky to investors. And generally speaking, you don’t own the wine. You just gain or lose depending on the performance of the prices of wines in the fund.

One thing to bear in mind is that the industry is unregulated. So make sure you research wine merchants first before parting with a cent.

What makes a good wine investment?

A lot of the value of a wine will come down to wine critics, Marc Shoffman in This is Money explains. If they happen to label a wine you hold as an excellent tipple, you can expect its value to soar.

Its price also reacts to the availability of a certain bottle. For instance, a chateau produces a finite number of bottles a year. As the wine is consumed, less is available and this can reflect in the price.

If you opt for a great vintage, you can expect the price to appreciate nicely over a period of about ten years. So investing in wine is for the medium- to long-term.

The risks of investing in wine

As with any ‘asset,’ values move up and down.

Unfortunately with scams rife in the wine investment arena, if you don’t do your research you could fall prey to one.

Bottom line: Investing in wine is a large financial undertaking. Unless you have the cash to risk and the time to do your research, it might not be a bad idea sticking to enjoying your love of wine at home.

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You love wine, but is it a worthwhile investment option?
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