How do you make a profit from investing in rare and fine wines? Whether you’re already buying and selling bottles and cases, or just getting started on building your rare wine portfolio, in this article, we take you through everything you need to know to improve your potential returns from your wine investment.
We’ve put together our best rare wine investment tips to help you at every step of the process, from how to pick the right bottles to getting the best price when you decide to sell. We also discuss what contributes to a bottle’s value over time, and when you could expect to start seeing returns on your investment.
Before you can make a profit trading wine, you’ll have to buy the bottles that’ll appreciate in value. To maximise your return potential, it’s important to:
Once you’ve started, you’ll want to diversify. If you’re passionate about wines from Burgundy, it can make sense to have a collection of the best of the region, but think about your investment holistically - focusing too heavily on one area can be risky. Instead, consider spreading that risk with:
As with all investing, profit is not guaranteed. Markets are affected by myriad factors such as taster’s scores, the size of harvests and trade regulations. However, with strong historical returns on wine, many investors have done very well.
It’s important to remember the tax benefits that come with wine investment. Storing your wine cases 'in bond' in a temperature-controlled warehouse, not only means you can rest assured that your wine will remain as saleable as possible, but also that you won't have to pay duty or VAT. Profits on fine wine investing can also be free of capital gains tax in some jurisdictions, as it is sometimes considered a wasting asset.
Generally, for smart buys you’ll start seeing larger returns after a few years, but there are plenty of bottles that see peaks sooner – you just have to keep your eye on the market, do your research and decide to sell at the right time for you. If you’d like to discuss a managed portfolio service with one of our Cult Wine Investment Relationship Managers, then you can get started here.
Understanding the value of your bottles is key to knowing when to sell. Some of the factors that will contribute to a wine’s value include:
As an example, a bottle made by a well-regarded producer will tend to be worth more than one made by a relatively unknown producer. But, if a valuable wine has been stored incorrectly, it may lose some of that value. Conversely, a wine made in an unremarkable vintage may become more desirable later if it has been part of a famous collection, has ties to a historical event, or experiences a growth in demand as supplies deplete over time.
You might decide you’re ready to sell when:
You’ve got your portfolio, you know the value of your assets, you know it’s the right time to sell, and now you’re ready to make those profits. When it’s time to sell, you have a few options.
Auctions used to be the main way to buy or sell rare wine. When you work with an auction house, they take care of the sales and any legal red tape around having the right licences to buy or sell - but they also take significant commissions.
Wine and spirits auctions aren’t ongoing - they take place on a few specific dates each year. If you’re looking to sell quickly or on a different day, you’re out of luck.
If you do put your bottle up for auction, there’s always the risk that it won’t reach the price you’re looking for, or that it won’t sell. If it doesn’t sell and you choose to put it up for auction again, you’ll likely need to pay another listing fee - and there’s no guarantee it’ll sell this time.
If you live near a shop that specialises in old, rare, or collectible wine and spirits, they may be interested in purchasing some of your bottles. While this can be a way to build a relationship with the merchants and perhaps get better access to stock of theirs you’d like to purchase, it is less than ideal for selling.
Specialty merchants probably won’t purchase more than one or two bottles at a time, and they’re really unlikely to pay the bottle’s full value - they’re more concerned with making a profit when they resell the bottle than giving you the best price.
A new generation of digitally empowered wine investors is demanding the convenience they are used to when trading stocks or cryptocurrency. With CultX, investors can trade rare wines with just a few clicks. Get the most current data on your portfolio’s performance and check up on the market at large, all from the same easy-to-use wine investment app.
Great wine is complex, trading it shouldn’t be. Enjoy full control of your wine portfolio and get insights from industry experts, all in the CultX rare wine trading platform, available at the end of 2022.
CultX provides everything you need to buy, sell, and trade with collectors around the globe - whenever you choose. Secured by Blockchain technology, CultX offers a modern alternative to alternative investment. Join the waitlist now for early access.
* Past performance is not indicative of future success; the performance was calculated in GBP and will vary in other currencies. Any investment involves risk of partial or full loss of capital.
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