Have you ever heard of «Passion Investment»?
In fact, you literally invest in your passion. The concept usually includes investment in antiques, art, or intellectual property. The topic of wine investment is also related to such kind of investing. Nevertheless, there are three main types of investment:
- Wine investments
- Wineries investment
- Investment in mutual funds
The history of wine dates back to eastern countries, when the first attempts were made to resell wine at a higher price. It is similar to the modern picture. However, historically, the main wine market is located in the UK (more on this in the third paragraph). Today, wealthy people prefer not only to have their own small wine bar, but also to buy the whole batches of their favorite drink. Nearly 30% of large investors invest in this market; and only 10% of them do it for the sake of net income, although this is a pretty good profit. This kind of investment is quite dangerous, because any wine is very vulnerable and even a slight dissatisfaction of leading critics, like Robert Parker, the owner of Wine Advoсate, may provoke a collapse in prices. In this case, you will have to drink the entire contents of your wine cellar yourself. However, it seems like this option does not sound very frightening.
There are two points: indirect and direct investment. Indirect investing takes place if you invest in wine, but you never literally see it again. In this case, you pay for storage in the winery (this option is most suitable for Russian citizens due to the legislative system that does not allow resale of alcohol and requires a license). Acquisition of such license is beneficial only for large enterprises. In addition, difficulties may arise at customs. Direct investing takes place when you make money on winery stocks, vineyards, land, etc. Luckily, vineyards will not be flooded, burned, eaten, frozen, etc. However, the situation is not hopeless even in this case. The price of wine made during the poor harvest will be much higher.
Investment in Mutual Funds
As mentioned above, London was the center of wine investments. It was the first to consider the potential of the French wines. Until now, about half of the vintage wines are sold here. Christie and Sotheby’s were the largest platforms. Over time, many small auction companies appeared. The wine boom in the investment sector started back in 2000. Since then it has not fallen (although there has been a slight decline). This option is considered the most suitable for those who are interested in profit in this sector. You will not deal directly with the investment object, but you do not need any knowledge and skills in this area. Professionals who have special knowledge in winemaking and in the financial and economic sphere are able to analyze the market and make competent investments. Indeed, no amateur will deal with this specific area. The risks in this type of investment are minimal, but the price of the initial capital is not small. Here are some examples:
- Wine Investment Fund – 10 thousand British pounds; funds return approximately in 5 years.
- Fine Wine Fund – 50 thousand pounds. Quarterly withdrawal.
- Vintage Wine Fund – 100 thousand euros. Quarterly withdrawal.
- OWS Asset Management’s “Vintage Wine Fund” is about 100,000 pounds.
If you don’t have the above mentioned sum, you can turn to a wine broker, a specialist who is ready to invest in wine. He will monitor the situation in the wine market for you.
In fact, the investment type is very interesting and it has become not just a business, but a lifestyle. After all, winemaking is an art that stands on the same level with painting, music, architecture, etc.