Alternative Investments: Investing in Wine

Wine has long been a popular investment as it tends to withstand outside influences and market turbulence, plus provides something that can be enjoyed at some point in the future (although you can’t drink that much of it, or you won’t make much of a return on your investment).

With stock markets fluctuating considerably since the onset of Covid, it is no surprise that investors are looking for an investment which provides more certainty. Wine investments can produce returns of 10 to 15 per cent per annum, ensuring you diversify your investment portfolio and make it more Covid-proof at the same time.

Indeed, the pandemic has led to a surge in investing in wine with some investors enjoying remarkable success. With fine wine returns often outperforming the stock market – the global wine market has more or less consistently outperformed the S&P 500 over the past 40 years ¬– it can be a great, fun alternative to investing in equities.

If you keep your wines ‘in bond’ in a property warehouse, rather than at home, you also don’t have to pay duty or VAT, while any profits are free of capital gains tax.

If you are keen to build a wine portfolio, it is similar to other investments in that you need to take a medium to long-term view. The market can be volatile so don’t expect to double your investment overnight. Do your research as to which wines are good for keeping and which new entrants are coming up and seek advice from the experts as to what you should be buying in the first place. Picking the right merchant is crucial to ensure you are aware of the wine’s provenance – its history, authenticity and where it has been stored.

Unfortunately, the wine market attracts less reputable people so check whether the experts you are consulting are legitimate and members of the Wine Investment Association. Don’t forget to budget for storage and insurance costs, which can be considerable.
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