Do you have a passion for fine wine? Are you looking for a new investment opportunity? If so, you may be considering investing in wine.
While this can be a profitable venture, it is important to do your research first. In this blog post, we will discuss the do's and don'ts of investing in fine wine. We will also provide some tips to help you get started!
What is the difference between an investor and a collector?
Most people who enjoy fine wine tend to build up a collection. This is because they purchase wines that they enjoy drinking and hope to age them until they are at their peak.
An investor, on the other hand, is more focused on buying wine as an investment. They may not even drink the wine; instead, they hold onto it for a period of time and then sell it when the value has increased.
There are pros and cons to both approaches. Collectors can enjoy watching their wine collection grow and mature over time. And, of course, they get to drink the wine! Investors, on the other hand, have the potential to make a profit from their investment.
Of course, there’s no reason you can’t be both a collector and an investor. Many people are. But it’s important to understand the difference between the two approaches before you start buying wine as an investment.
What are the four main approaches to investing in wine?
Every investor makes their own unique path when it comes to getting started with wine investment. However, there are four more popular strategies you might want to consider.
Buying through a wine merchant
Wine merchants are businesses that buy, store, and sell wine. They typically have a wide range of wines available, including some rare and valuable bottles.
If you don’t have your own connections in the wine industry, then buying through a wine merchant is a good option. They can offer advice on what to buy and help you build your collection.
However, you should be aware that most wine merchants charge a premium for their services. This means that you might not get the best value for your money.
Depending on the range of their own connections, they also might not be able to get you the wine you want.
If you’re just getting started in collecting wine, then buying through a merchant is a good option. You can get advice and help with building your collection. Just be aware that it will likely cost more than buying from other sources.
Buying at auction
Another option for investing in wine is to buy at auction. This can be a great way to get rare or vintage wines at a fraction of their retail price.
However, it’s important to do your research before bidding on any wine. You need to know the fair market value of the wine and be aware of the potential risks involved in buying at auction.
Wine auctions are far more common than they were a few years ago, but to properly benefit from one, you will need to know the market well. If you’re not an expert, it’s probably best to steer clear of this option until you’ve built up a bit more knowledge.
Buying ‘En Primeur’
The term En Primeur (or Futures) refers to the purchasing of wine that is still in barrels, not yet bottled, and often years away from release.
En Primeur offers the buyer the chance to purchase wine at a lower price than it will be when released onto the market. It can also be a great way to buy hard-to-find or limited edition wines that may not be available once they are released.
However, there are a few things to bear in mind before buying En Primeur:
- The wine is still in barrels, so you won’t be able to sell it for some time. This can be anywhere from a few months to a few years.
- The wine may not turn out to be as good as you hope. This is why it’s important to do your research and only buy from reputable producers.
- You will need to store the wine until it is ready to drink, so make sure you have enough space.
If you’re thinking of buying En Primeur, make sure you know what you’re doing. It can be a great way to get your hands on some amazing wines, but it’s not without its risks. Do your research and buy from reputable producers, and you should be fine.
Buying through a broker
Expert wine brokers are no different to normal stock brokers, in that they manage your investments using their own expertise and resources.
The benefit of using a wine broker is that they will have pre-existing relationships with producers, which gives you an advantage when it comes to getting your hands on the best wines.
The best brokers are also experts in the field, and can offer valuable advice on which wines to buy, and when to sell. This can offset the cost of their services, as you can avoid making costly mistakes.
However, it’s important to remember that there are fees associated with using a wine broker. So, you need to be sure that the benefits they offer outweigh the costs.
If you’re thinking of using a wine broker, be sure to do your research and choose one that’s reputable and has a good track record. With the right broker, you can enjoy all the benefits they have to offer without breaking the bank.
Which method is best for a beginner wine investor?
Buying at auction or En Primeur requires you to have some knowledge about wine already, as you need to be able to spot a good deal and have the expertise to make sound decisions. For these reasons, I would recommend working with a wine broker.
A good wine broker will have a vast network of contacts, which they can use to source the best wines for you at the best prices. They will also be able to provide you with advice and guidance on which wines to buy, based on your individual preferences.
If you would rather do the work yourself, then starting off by working with a wine merchant. Wine merchants will usually have a smaller selection of wines than a wine broker, but they can still be a good source of information.
Quick do’s And don’ts for wine investors
Now that you’ve got a better understanding of what it means to invest in wine, here are a few quick do’s and don’ts to help you get started:
DO:
- Do your research. Make sure you understand the wine market and the factors that can affect wine prices.
- Do create a budget and stick to it. It’s easy to get caught up in the excitement of wine investing and spend more than you intended.
- Do be patient. It can take time to see a return on your investment, so don’t expect to make a fortune overnight.
- Do take the advice of the experts. There’s a reason they’re called experts. Wine investment is based on both art and science, so it’s important to get advice from those who understand both.
DON’T:
- Don’t invest in wine blindly. If you’re going to invest in wine, make sure you know what you’re doing.
- Don’t overspend. Remember, you’re investing in wine, not buying it for your personal collection. There’s no need to break the bank.
- Don’t forget to diversify. Investing in different types of wines from different regions will help mitigate risk and maximize potential returns.
- Don’t buy wine simply because it’s popular or trendy. Do your research and only buy wines that you believe will appreciate in value.
- Don’t forget to insure your collection. Your wine collection is an asset, so make sure it’s properly protected in case of theft, damage, or other unforeseen events.
Now that you have some tips to get started, there’s nothing stopping you from becoming a wine investor! Just remember to do your due diligence and always invest with caution. Happy hunting!
How Moncharm Wine Traders can help
For the past decade, Moncharm Wine Traders has been one of the most trusted names in wine investing.
We have a team of experts who are passionate about wine and investing, and we’re here to help you grow your collection and maximize potential returns.
If you’re looking to get started in wine investing, or if you’re already an experienced investor, we can help you reach your goals.
So, if you’re looking for guidance on starting or growing your wine investment portfolio, we can help. Contact us today to learn more about our services.
