Among the most interesting of alts is fine wine and rare spirits. This category comes with a fascinating real-world history, an exciting and differentiated risk/return profile, and material tangibility, all of which are attractive to many investors curious about fine wine and rare spirits.
Investors are increasingly turning their sights on the space as opportunities evolve and emerge. A new wave of digitized platforms like Vinovest, Cult Wines, and Vint have spotted that growing interest, and they’re making it easier than ever for retail investors to access potential opportunities. For those investors curious about participating in wine investing opportunities, Alto supports them by helping to mobilize both retirement and non-retirement capital.
In this overview, Alto covers:
Alternative assets are investments that fall outside the traditional categories of registered securities like stocks and bonds. They include private equity, private credit, venture capital, and commercial real estate, but also lesser-known categories such as farmland, fine art, fine wine and rare spirits, and digital tokens.
In the last decade, alternative assets have seen an increase in popularity among investors for a variety of reasons.
Considering these benefits (and more), it makes sense that investors are increasingly considering the different subcategories of alternative investments, including fine wine and rare spirits.
The fine wine and rare spirits asset class offers investors a tangible, conversation-sparking alternative investment — and a compelling historical performance.
This segment is a part of the luxury and collectible goods market. The naturally improving quality of wine over time as well as the enjoyment of rare spirits on special occasions create an allure that has endured throughout history and spread across the world.
Investing in wine and spirits first began when wealthy families or passionate individuals curated personal wine collections to both enjoy and express themselves. The unique nature of each collection showed the owner’s knowledge and appreciation for the products, and even today, this form of self-expression lives on.
Politicians, pop stars, and athletes often collect fine wines. Now, they’re increasingly creating their own lines of wines and spirits.
“The key is what you do when a particular wine has reached its market peak, do you drink, sell, or hold?”
Mike Veseth,
Editor of The Wine Economist
But, Mike Veseth, editor of The Wine Economist, points out that merely collecting creates a conundrum. “The key is what you do when a particular wine has reached its market peak,” he writes. “Do you drink, sell, or hold?”
To unlock a wine or spirit’s added value, making it an investment-grade asset, it must be sold for profit. The people and processes involved in valuing, buying, and selling these assets are what create and sustain the longstanding and thriving market.
Wine and spirits investments require professionals who ensure that everything from selection to storage meets certain standards.
Analysts, advisors, spirits experts and sommeliers, procurement specialists, logistics and storage managers, lawyers, and compliance officers all work together to be sure the products meet authentication requirements. And all of this is overseen by portfolio managers and fund partners who orchestrate the processes.
Much of the work involved in buying and selling fine wine and rare spirits for profit is ongoing or cumulative work, like growing market knowledge and equipment expertise. But when a fund manager decides to pursue a target investment, a series of events takes place:
In the past, individuals who have wanted to invest in alternative assets have often encountered seemingly insurmountable challenges, and the wine and spirits investment ecosystem is no exception. Some common barriers investors have faced are:
Thankfully, all those barriers are changing, and some are disappearing altogether.
Fine wine and rare spirits have seen a historical sustained value growth that’s been more predictable than some other assets. In the last ten years, investors saw growth good enough for analysts to call “silly”, per Nick Martin of Wine Owners. The values of the wine and whiskey markets have grown 149% and 322%, respectively, in the last decade. The volume of whiskey sold also grew steadily, revealing an attractive upward trend.
Amid these overarching developments, investors hear stories of impressive exits. One investor’s wine collection is expected to fetch $50 million at auction, and an especially rare whiskey was sold for $2.7 million in November 2023.
Perhaps even more interesting to investors than news-making deal sizes is the average internal rate of return for more typical investments. For example, Vinovest’s track record shows a variety of appealing fine wine and rare spirits exit stories, like the Domaine Anne-Francoise Gros, Beaune Premier Cru, Les Boucherottes 2017, which returned 193% in three years.
Many alts only enjoy this kind of growth in certain regions or within niche sectors. For example, a logistics company's growth equity may increase based on its proximity to ports, or a gasket manufacturing startup’s scenario models may shine if new types of commercial fridges gain popularity.
But the growth seen in fine wine and rare spirits transcends geography, surprising investors throughout history. Current hot spots include South Korea, where wine consumption increased 3% year over year, and the UAE, which has recently relaxed alcohol laws, decriminalizing its consumption and sale. The value of vine-suitable land in England nearly doubled between 2015 and 2023, going from an average of £11,000 to £20,000 per acre, and French wine producers are still scooping up UK acreage at a remarkable rate.
Another benefit is the quality of resilience. The fine wine and rare spirits asset class has not only survived inflationary environments before — it’s one of the few investments that thrives in them. That’s because fine wine and rare spirits are accompanied by scarcity. Scarcity creates a sense of exclusivity and desire, which can have the effect of stabilizing values even when general equities experience volatility.
Auctions are a traditional way to begin participating, with renowned auction houses like Sotheby’s and Christie’s hosting regular sales that feature rare and vintage bottles. Buyers can engage in person or online, bidding on single bottles or complete, expert-curated collections.
New, online platforms are another way investors are finding an entry point into the fine wine and rare spirits investing category. Investors can sign up for peer-to-peer online exchanges like Vinovest Exchange, Liv-Ex, Vint, Cult Wines, or Cavex and carefully learn their way around before making any investment decisions.
If the goal is to partner with already-established fund managers in the space, then a more efficient and effective way may be to explore Alto and its Marketplace. Alto brings together all the parties needed for fine wine and rare spirits investment transactions, as well as the standardized forms and processes. Here, those same people can build relationships and explore future investment opportunities together for potential success.
The responsibility remains on the investor to research all viable investment options thoroughly before making decisions. Here are a few important things to know to get started:
“The younger investor is in the same boat as the older investor. If they hadn't had exposure to alternative assets, they're both starting from the same point.”
Scott Harrigan,
President of Alto and CEO of Alto Securities
Alts are experiencing rapid evolution, and within that space, special opportunities like fine wine and rare spirits continue emerging as especially interesting diversification strategies. The subgroup gives investors the benefits of alternative investments with a few unique, compelling benefits of its own.
Best of all, the barriers that once kept individual investors from participating in fine wine and rare spirits deals are crumbling. Strong, clear processes are being built and replacing what used to be walled-off entry points.
Alto is the builder creating those processes by centralizing resources and nurturing industry relationships between issuers and individuals looking to access those assets.
An introduction to angel investing with a self-directed IRA
An introduction to real estate investing
An introduction to investing in fine wine and rare spirits.
Learn how Alto Securities navigates capital markets from its Chief Compliance officer, Brian Fraoli.
Alto's Founder & CEO Eric Satz recounts our origin story and the problem we're solving for the alternative assets space.
Learn from Kali Mon, Alto's VP of Research & Analysis, how we support issuers of alternative assets in building strong relationships with investors.
Invest in venture capital and similar alternative assets using tax-advantaged retirement funds.
