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Investing in Fine Wine: A Case Study

Why Invest in Fine Wines?
For more than a century, investment-grade fine wines have generated strong returns. In this guest post, Vint makes the case for investing in wine.

For more than 8,000 years, people have been producing wine. Over 80 centuries, production has improved, tiers have developed, and the stories associated with wine have evolved.

One of the best-kept secrets of the wine world is that these assets have been high-quality investments for a long time.

We are here to focus on the top tier: the investment-grade fine wines that have consistently beaten other alternative assets over the last 121 years.

Let’s unpack why some producers have 10+ year waitlists, what makes a wine a good investment, and how Vint is democratizing this asset class.

Wine Investing 101: Supply & Demand

Screaming Eagle, considered the original cult wine of Napa Valley, has a more than 10-year waitlist. Shrouded in secrecy, only early adopters and the well-connected can get this wine direct from the producer. Once released, the market value of these wines has historically appreciated considerably over the life of the wine.

Screaming Eagle is not alone in showing strong returns as the wine ages, though. According to Cambridge Business School, over the last 121 years, on average, wine has returned 8.5% annually.

Let’s go back to Economics 101 to understand what drives this return. The fundamentals of microeconomics are based on the supply and demand graph.

At release, all fine wine from a single vintage sells out immediately to winery member allocation lists, merchants, and investors. The release price is typically the lowest price point a highly collectible wine will ever see. Over the next 20–50 years, the wine trades and the powers of supply and demand influence price.

As a consumable good, the supply of wine is ever-decreasing, and once released, no more wine of a particular vintage will be produced. In addition to an ever-decreasing supply, the demand for wines increases as it ages and the quality improves. The combination of scarcity, decreasing supply, and improving quality drives long-term price appreciation.

While supply and demand consistently work in favor of fine wine appreciation, there are other catalysts, variables, and opportunities that drive value growth.

Vint, the platform democratizing fine wine and spirits investing, takes all of these variables into account when selecting assets to be included in collections for investors. And because of Vint’s partnership with Alto, it’s even possible to invest in this non-traditional asset class using tax-advantaged IRA funds (more on that later).

Is Wine a Good Investment? Just Look at High-End Champagne

Champagne has long been revered for its investment potential, the prices it commands, and the quality it achieves with age. Champagne prices have outperformed all other wine regions over the past 12 months (as of October 2021) and continue to see increased demand as US tariffs subside.

Given the favorable macro environment for Champagne, growing demand in Asia, and the significant age-to-value correlation, experts consider this one of the most promising wine investment regions.

With this analysis, Vint curated a Champagne collection featuring the best vintages from 2002–2008. In addition to the best vintages, Vint selected wines from the top producers in the region, like Krug, Pol Roger Winston Churchill, and Dom Perignon—described by experts as some of the “most sought after wines on the secondary market.”

Supply and demand are constantly influencing factors, but these additional catalysts unlock additional return opportunities. Upon public release of this collection, it sold out to 75 investors in under 90 minutes. Demand is not only great for Champagne but also Vint collections!

Democratizing Fine Wine Investing

With over 121 years of strong returns, stability, and limited correlation to other assets, everyone should be able to access this asset class. Vint is an investment platform that allows anyone to purchase SEC-qualified shares in expert-curated wine collections and efficiently diversify into this asset class.(*)

Like Vint, Alto was created to make investing in alternative assets—once largely only available to the wealthy—accessible to everyone. Alto uses technology to streamline the investing using a self-directed IRA, so that everyone can easily invest in alternative assets.

Whether you’re trying to hedge against inflation, improve your downside protection, or invest in something you are passionate about, fine wine investing has something for anyone.

Visit their website to learn more about Vint and their upcoming collections.

(*) This is not an offer or solicitation of securities or collectibles. Interests in securitized wine investments are offered by Vint and VV Markets, LLC pursuant to Regulation A. Investors do not purchase or obtain possession or use of underlying wine assets. See Vint’s website and offering circular for details. Past performance is no guarantee of future results. Investments such as those on the Vint platform are speculative and involve substantial risks to consider before investing.