We've discussed investing in wine using traditional methods, such as investing in a wine business through the stock market. Yet, there are other methods for investing in wine. Rare coins, luxury cars, and fine art - these are just a few examples of items that make up what some investors call the "passion index". These tangible assets act as direct alternative investments that - like any other investment vehicle - after purchase appreciate (or depreciate) in value over time. Interestingly, wine is a non-trivial category in this space. It even has it's own exchange: the London International Vitners Exchange.
You might ask, what drives the valuation of a bottle of wine? Essentially, supply and demand - that is, the rarity of a bottle relative to other wines and the shifting demand for it as a collector's item. If done right, parking one's assets in expensive wine bottles can actually be a smart move (as high as 50% returns in some cases, with commiserate risks). However, wine is not a fast-turn or cheap investment. One can expect to wait between six and ten years for a bottle to significantly appreciate. Further, getting started in the wine investment space is not cheap - a first investment costs at minimum ~$8000.
Interestingly, startups have been shaking up these traditional barriers to the investment wine space. Cult Wines, for example, essentially acts as an index fund for wine - spreading participants assets across a diversified portfolio, managing portfolios towards risk preferences, and insuring bottles. Indeed, if one is knowledgeable about the space, wine investments are certainly not the worse way to spend your investment dollars.
This reminded me of an Economist article last year on investing in collectibles. The short of it: wine is better than any other collectible investment, but you're probably still better off keeping your money in stocks! https://www.economist.com/finance-and-economics/2018/02/22/the-long-term-returns-from-collectibles
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