Fine Wine: Exploring Wine Investing
Updated: Oct 10, 2021
Quote of the week: "The funny thing is, wine is turning out to be a great investment" - Suze Orman level 1: acquired taste.
Tyga said it best: "taste, taste, do you love the taste?" Gravy is about living a rich life, and a wise man once said, "wine is life." If you can manage not drinking it all, investing in wine, which involves buying fine wine, storing it, and reselling it later for a profit, can be a good look. Investment benefits of investing in fine wine:
Fun: George Carlin asked, "what wine goes with Cap'n Crunch?". The point: if you're a wine head, why not invest in what you know & love?
Diversification: wine has had a low historic correlation to the market.
Tax Efficient: wine investment is generally considered to be exempt from US capital gains tax (just be sure to holler at a tax pro).
Returns: fine wine has outperformed the S&P 500 for 40 years. Check out the Liv-ex Fine Wine 1000 (index of the 1K most tradable wines) here:
fine wine investment performance vs. stocks & gold
source: s&p global.
Regardless of your starting point, building generational wealth begins with long-term thinking. We don't need to be super-paid to invest in wine. We just need to jump in early with time on our side. Now, let's dig in. level 2: fine wine.
"a little (cheese) to go with your wine" As fine wine gets older and rarer, it is expected to increase in value. That's the bottom line of fine wine investment: buy it young, then sell it when it is older and more valuable, which can take a decade or more to maximize returns. Wine investing isn't a quick money play, but it aligns with Gravy's long-term mindset on wealth creation. So, what makes an investment-worthy wine?
top 3 qualities of investment-worthy wine
Shorter-lived wines can be suitable investments, but those with higher aging potential (flavor & market value) are usually a surer path to higher potential returns. Next section, we'll talk about what to buy, but first some ground rules. Gravy ground rules for aspiring wine collectors:
Set a Budget: Wine Folly recommends investors start with a minimum $8K budget across three bottles to justify storage, insurance & resale costs.
Go Pro: use professional storage to give your collection room to grow and protection from theft, fire, earthquakes & other potential damages.
Pace Yourself: many first-time collectors fall into the trap of buying too much wine upfront. Create a timeline for purchasing plan and stick to it.
You also need to ask yourself how much work you want to do. If hands-off is your thing, then an online platform like Vinovest ($1K investment min + annual fees up to 2.85%) to select, acquire & store your wine may be the move. If you've made it this far, treat yourself to a celebrity wine quiz . And then hop to the next section to learn how to build a wine collection from scratch.
level 3: liquid assets.
keep the"i cant feel my face" portion of your wine collection (read: drinkable young wines) to 20%. What's the secret to identifying the best investment wines? Research. That's what sets casual collectors apart from high-end collectors, who closely follow the secondary market to see which producers & regions are in high demand.
We're here to help, as always, if you're ready to plunge, but need a blueprint to know precisely how to build your starter fine wine collection. Enter the 60-20-20 ratio. Yes, we're getting mathematical with it because that's how we do.
the 60-20-20 ratio
Gravy tips to start investing in a wine collection:
Choosing: the safest investments come from regions & producers with long track records, like Burgundy & Bordeaux or Tuscany & Napa Valley.
Buying: you can buy from merchants (charge a ~10% markup), auctions (charge a 10%-30% buyer premium), or wine funds (charge a mgmt fee).
Valuing: find price info via search tools like Wine Searcher & Google or merchant valuation & cellar management tools. Here's a complete guide.
Also, it never hurts to diversify your wine fund, literally. Here's a list of black-owned wineries to slot into your ratio. Power to the people . join the conversation:
Register here for gravy's next Unpacked series conversation, 'Angel Investing: Scout Programs & Strategies' on Thurs, Oct 21st, from 4 - 5 pm PT. Gravy's own Brandon Jones will be moderating the panel with:
Nmachi Jidenma: Sr Director, Scouts & Partnerships at Sequoia Capital
Mercedes Bent: Partner & Head of Scout Program, at Lightspeed VC
Ashley Flucas: Founder, Flucas Ventures and prolific angel syndicator
Help us serve our community better by completing this 5-minute survey and be entered to win one of three $50 DoorDash gift cards.
Link with hundreds of gravy members talking wealth strategies, investing approaches & investment opportunities in our Slack and LinkedIn groups. gravy reads:
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Yours in wealth, gravy.