What You Need to Know Before Investing in a Wine Business

What You Need to Know Before Investing in a Wine Business

Anas Bouargane 15/07/2020 3
What You Need to Know Before Investing in a Wine Business

If you are an active investor tired of always putting your money into prospering but not secure start-ups or billion-dollar companies with multiple shares, you might want to consider another type of investment.

Chances are you have heard about fine art and antique stock, but have you ever thought of investing in wine? Surprisingly, providing capital for the wine market may turn out to be the best possible investment if you are patient enough.

For a long time, wine cellar investment has been a hobby for the narrow circle of extremely wealthy people - the elite. The stereotype of a rich, older man walking around his hilltop mansion somewhere in Southern Italy, proudly overseeing the vineyard, isn’t far from the truth. However, in recent years the wine market has opened to middle-class investors as well, and ever since vineyards have been expanding based on those investments. 

The first thing you need to know about putting your money into wines is that it is nothing like investing in Wall Street stock. Investing in wines is a future-based, long-term commitment. In a nutshell: people collect wines to sell the bottles for multiples of what they initially paid at a later date.

What’s more, wine investing will most likely not bring you a hundred zeros return. Even if it pays off, wine selling can become an additional, not a primary, source of income.

Nevertheless, many wine investors claim that it is a rewarding hobby for them and their families. So if you were thinking about an alternative and gracious form of buying shares, here is all you need to know before investing in the wine business.

Avoid Making Too Expensive Purchases

This advice, for obvious reasons, should be considered individually. Only you know how much money you earn and how much you are willing to spend on investments. There is no golden limit, nor a minimal price when it comes to wine investing.

However, it would be best if you always bought no more than you can afford. When it comes to wines, purchases beyond your financial abilities will do more harm than good.

The safest option is to put your money in a grade wine. Those are the kinds of beverages with the highest chances of raising their value in a medium to a long-term period. Most often, the revenue starts after at least five years. The vast majority of grade-wines come from places like Bordeaux and Burgundy in France and Tuscany in Italy. If you are a novice to the subject, seeing those places on the label and purchasing these wines is your safest bet.

The final tip regarding money is to choose the wine shop wisely. Some of the liquor stores and auction houses will have exorbitant prices. You might end up paying too much money for too little value. It is best if you stick to the safe and reliable places such as Acker Wines - the oldest wine shop in America, or Sotheby’s - the high-quality wine house that hosts over 20 auctions yearly.

Networking is Vital

Like in any other industry, in wine investing, networking is a crucial factor leading to success. Wouldn’t you want to be well-informed and up to date with all the wine news? And what a better place to get the valuable information than directly from a vineyard owner, or a wine critique?

Getting involved in all the wine associations will come with numerous benefits. You will get a chance to meet all the providers in the industry, taste various wines, and talk to wine experts. 

There is no better, faster, and more effective way of getting to know all about the wines and possible investments, than attending auctions, meetings, or tastings.

Hobby or a Business Plan?

Before putting any money into wines, decide whether you want to make it a sporadic hobby, or make a living out of it.

If the latter one sounds more appealing to you, consider investing in a vineyard rather than purchasing individual bottles. Most vineyards on sale come with a chateau or a winery. Most of the time, the yards come with additional amenities to enjoy, such as a small cottage house or a magnificent villa. Maybe it is time to start thinking about moving somewhere sunny and beautiful?

If owning a vineyard is your long-delayed dream and a potential business plan it is always better to be on site.

The costs of buying a vineyard are high, so be sure about the decision and stay dedicated. Owning a vineyard is a complicated task. It is, however, worth the money and effort. The average earnings of vineyard owners range from $93,000 to $97,000 per year.

Conclusion

Investing in a wine business can be rewarding financially and as a hobby, depending on how you approach the subject.

The safer and less expensive option is to invest in wine bottles - buying  them when the cost is low and after a couple of years, sell at a higher price. The wines you should be considering are the ones coming from Tuscany, Burgundy, and Bordeaux.

If you want to go all-in, it is always possible to buy a whole vineyard, and start your own wine business.

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  • Adam Cockroft

    Investing in wine is not something that people should feel is only for the rich

  • Frank Matthew

    Don’t plough all your money into wine. Invest carefully.

  • Robert S

    Always ensure your investment is correctly stored

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Anas Bouargane

Business Expert

Anas is the founder of CEF Académie, a platform that provides guidance and support for those willing to study in France. He previously interned at AlphaSense. Anas holds a bachelor degree in applied economics from the University Paris Sud.

   

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