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Trade rare wines

How to trade rare wines and profit

A guide to investing in the right bottles, knowing when to sell, and finding the investment opportunities in rare wine investing.

By

Date

CultX Team - Wine Investment Specialists
14/09/2022

Contents

  1. Profiting from wine investment
  2. Investing in the right rare wines
  3. What is your wine worth?
  4. When to sell your wine
  5. How to sell your wine
  6. Investing in rare wines with CultX

Profiting from wine investment

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.

Investing in the right rare wines

How to start your wine collection

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:

  • Do your homework - Look into the wines that have performed well in the past, and don’t miss the ones that could be big in the future. Read up on the regions that interest you, and check out the producers who are making waves.
  • Define your goals - Are you looking to invest in wine long-term or short-term? How liquid will you need your investments to be?
  • Understand your risk appetite - Risk means volatility, which can go both ways. If you are nearing retirement or your goals are modest growth over a longer time frame, you might consider the classic wines with track records of steady price appreciation. If you’re looking for quicker wins and willing to risk a loss, the up-and-coming names on the En Primeur market could provide what you’re looking for in the 2-3 years from the initial En Primeur sale to the time the bottles come to market. Ideally, your portfolio will include both higher- and lower-risk bottles, but it’s important to define your personal high and low thresholds for risk.
  • Set your budget - After learning about the space and setting your rare wine investment rules and parameters, you’ll have a good idea of what your initial outlay might be. Come up with a budget that makes sense for you, and stick to it. As you learn from your wins and losses, you can raise the stakes with larger sums when you’re ready.
“Have a good variety of wines from different regions. Unless there is something ultra rare then stick to normal bottle formats as the bigger bottles are difficult to sell. Keep it simple.”
Will Hargrove
194kpr.com

Diversify your wine investments

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:

  • Different regions - your collection leans traditional and European, why not look at Australian, Californian, or Chilean wines? Explore bottles that can offer low relative cost and high potential for returns, especially ones outside of your usual area of interest.
  • Different styles - may be a connoisseur of Chardonnay, but not only are there many other whites to explore - there’s a whole world of reds, rosés, champagnes, and dessert wines.
  • Collectors’ editions - que bottles produced in small quantities to commemorate events or exceptional vintages can make valuable additions to your collection.

How long will it take to see a profit?

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.

What is your wine worth?

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:

  • Producer - Was it made by a highly-regarded producer?
  • Vintage and ageing potential - Is the wine from a standout vintage? Can it be improved with cellaring or has it peaked?
  • Rarity - How many bottles were produced? Is it easy or difficult to find?
  • Terroir and technique - Where was the wine produced? Did the grapes come from a famous vineyard? Was it made in a noteworthy way?
  • Acclaim - What scores has it received from critics?
  • Provenance - Was the bottle previously owned by an important figure?
  • Condition - Has the bottle been stored in ideal conditions?

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.

“Wines are multiples. Assuming they are in the same condition, one bottle of 1982 Lafite is priced the same as another, with lots of caveats. The better the provenance, storage and condition, the more valuable a wine can be.”

When to sell your wine

You might decide you’re ready to sell when:

  • Your wines hit peak maturity - A rare wine's drinking window is the period during which a wine is judged to be at its very best to drink. Wine which has passed its drinking window will decrease in value. So, if you’re holding a few cases of a wine that’s now reaching peak maturity, you may want to keep a bottle or two to enjoy, but it’s time to sell the others.
  • You need to liquidate assets - Sometimes life throws a spanner in even the best investment strategies.
  • Your interests change - If you were really into Bordeaux when you started but now you’re all about Rhone, you might think about selling some of your Bordeaux to finance those new bottles of Rhone.
  • Your collection could use a refresh - If you have your eye on a new way to diversify, you may want to sell the bottles that have already performed well.

How to sell your wine

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.

Fine wine auctions 

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.

At a specialty shop

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.

Online wine investing platforms

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.

Investing in rare wines with CultX

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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