Four Things to Know When Investing in Wine for Profit

When it comes to investing in wine for profit, there are four things to know in order to ensure you earn the best rate of return on your investment. Wine can be a great investment if you are willing to play the game right. By that, I mean, you have to understand the rules, you need to know the major players, and, you need to know when to hire a coach.

Rule Number One

You are playing the long game. The primary reason wine appreciates in value over time is due to supply and demand. A finite number of cases of wine are produced in each vintage. Often, wine producers fail to reach their production targets because of losses in the vineyard caused by weather disasters or other mitigating factors that are naturally occurring in agricultural processes, like pests that decimate crops. In such vintages, supply shrinks but demand remains the same or grows because of fantastic critics scores and media attention. This drives the initial price of the wine up. As bottles are consumed over time, the supply further diminishes and prices continue to rise. This benefits the investor that purchases wine upon release or en primeur: while still in the barrel, directly from the producer. If you can refrain from drinking your investment wines, you will see an appreciation in value over the course of five to ten (or more) years. Remember, you are not…