Wine can be a Lucrative Investment – For those with Money to Pour In

Drinking wine has been a respected activity for centuries, and people from various historical periods have all enjoyed the pleasures of drinking this aromatic beverage. Nowadays, wine is still an extremely popular drink, but people have started to look at it from a different point of view – the investment point of view. Increasingly more individuals (wine connoisseurs, avid drinkers, and even amateurs) are willing to invest in wine because of its potential to be appreciated in time, just like art, gold, and additional commodities. As a general rule, fine wine becomes more valuable as it begins to age.

Increasingly more investors have turned their attention to fine wine because it has become a sure way of making money. Although more people like to drink fine wine, not many of them have plucked up courage to invest in the business. Whether you like it or not, fine wine has become more than a pleasure; it has slowly turned into a marketable commodity. According to the latest data, U.S wine sales experienced a 2% increase in 2012, reaching a new record: $34.6 billion.

Advantages and disadvantages of investing in fine wine

As far as wine investments are concerned, both the advantages and disadvantages are quite numerous. If we were to start with the positive aspects of wine investments, we could easily state that there’s no core financial market to mess with the prices. In the wine business, there’s no such thing as a flash crash of bad trade to erase the general value of your asset. Another excellent benefit is that the bottles are yours (physically); it’s up to you to make sure they’re properly stored and care for. Just like art, wine has great chances of being highly appreciated in time. Although that’s not always a guarantee, in most cases fine wine becomes priceless as the years go by, and thus it turns into a sought-after asset amongst avid wine collectors and connoisseurs.

In terms of drawbacks of the wine investment business, we have to point out that most of them are directly linked to its liquidity. You can’t just go online and start an auction or sell a bottle of wine in a couple of minutes. That’s not the way it works. Moving an exquisite wine bottle takes a lot of time and effort, a luxury very few people have. Furthermore, it’s equally important for an investor to know the ins and outs of the business, otherwise he risks getting scammed. If you can’t make sure that your wine is properly stored, you risk losing your entire investment, so that’s definitely an aspect you have to watch out for.

How come fine wine is such a lucrative investment?

Investors are constantly trying to grow their business and make a lot of profit. Yet, stock markets are extremely volatile, and that’s why tangible and alternative assets have started to gain such immense popularity. Wine is certainly one of those assets; prices are gone up in the last years, especially if we’re referring to the top 100 finest wines in the world. Currently, the wine market is stable and increasingly more people are turning their attention to wine investments. There’s one thing everyone should know though – the market is mainly focused on wealthy investors with a lot of money to spare.

Wine entrepreneurs will have to spend additional amounts of money on winemaking equipment and supplies, starting from planted vines to tanks and barrels used for wine storage. Besides, there are plenty of other costs involved, including monthly wages for your employees. Some experts can demand monthly salaries of more than $2,000, and general expenses can reach up to seven figures in a few years. For some investors, that might seem a bit scary, yet as long as you have money to pour in, the returns will exceed your expectations in a couple of years.

According to several wine investors from all over the world, people who want to make a million in this industry need to start with a budget of at least 10 million. This additional million is obtained by increasing the price of each bottle that suits the requirements specific to fine wines. Truth be told, you can’t make a fortune in the wine business if you’re not willing to invest a fortune to begin with.

 

Category: Investing