Some of the more common alternative investments include real estate investment trusts (REITs), private equity, hedge funds, and venture capital. An alternative investment benchmark, the Liv-ex Fine Wine 1000, represents 1,000 investment-grade wines and has returned 8.6% year-to-date (YTD). Its performance looks even better considering that many traditional investments, including the S&P 500 (YTD return of -16.13%), posted significant losses.
It may seem unexpected, but wine is a growing alternative investment class. It becomes even easier to gain exposure to this asset class via VinoVest, Wine and consumer staples exchange-traded funds (ETFs).
Why invest in wine?
Wine is a finished good. While lower quality wine is relatively common, fine wines are rare. These wines can be classified as investment grade because they have sufficient secondary market demand to support continued price growth.
The winegrowers bottle good wine in limited quantities under strict conditions and must respect many standards. For example, most fine wines come from well-established vineyards like those in Bordeaux and Tuscany. These wines must have the right mix of acidity, alcohol, flavor and tannins to increase their quality as they age.
Each investment-grade wine must be rated Classic or 95/100 by a professional wine critic. Once these wines enter their consumption windows, demand increases and supply decreases, resulting in stable long-term growth.
Regardless of the economy, wine and other alcoholic beverages will continue to be in demand. For example, alcohol sales increased by 20% from March 2020 to September 2020 during the worst months of the COVID-19 pandemic. The one-year return of the Liv-ex Fine Wine 1000 Index is 24.6%, compared to the one-year return of the S&P 500 of -1.18%.
The Liv-ex Fine Wine 1000 index is quite diverse as it includes several sub-indexes of wines like the Bordeaux 500, Bordeaux Legends 40, Burgundy 150, Champagne 50, Rhône 100, Italy 100 and Rest of the World 60. As As the names suggest, each of these sub-indexes tracks investment grade wine from wine hotspots like Bordeaux, Burgundy and Champagne.
Investing in wine can offer higher returns that can beat inflation and is not subject to the many factors that make stock markets so volatile.
How to invest in wine
securely via the Vinovest website
Invest in wine bottles
Vinovest is a platform that breaks down barriers in the once closed world of wine investments. Vinvovest makes wine investing easily accessible by offering fully managed wine portfolios designed with artificial intelligence and industry experts.
The platform manages most of the wine investment process, from selecting, acquiring, insuring, securing and storing authenticated bottles. Investors can monitor their wine portfolio online and even access their wine supply in real life at any time. Vinovest combines the knowledge of experienced sommeliers, wine directors at Michelin-starred restaurants, as well as executives from giants like Apple (NASDAQ: AAPL), Bytedance and more. The ultimate goal is to provide investors with access to fine wine investments with the potential for strong returns and diversification.
Vinovest is a leading wine investment platform — and for good reason. Take a look at all the pros and cons of Vinovest, as well as all the factors that make this platform stand out in the world of wine investments.
- Access to the wine investment market
- Portfolio diversification
- Fully Managed Portfolios
- Alternative assets
- Open to all investors (accredited and non-accredited).
- Investments in wine have a low correlation with the market.
- Learn from wine experts and technology leaders.
- Provides fully managed portfolios.
- Wine is insured, authenticated, stored and more.
- Turns wine investments into cash.
- Minimal information on how wallets are constructed.
- The sale of a portfolio can take several weeks to liquidate.
- Vinovest is a relatively new platform.
VinoVest is one of the easiest and safest ways to directly own investment-grade wine. With this site, you can create a diverse wine portfolio. Some options include wines based on color (red, white, rosé), geographic location, age, and purpose (like dessert wine). These wines also take into account critics’ ratings, producer brand value, risk-reward ratios, and secondary market prices.
One of the biggest benefits of VinoVest is that it secures and insures wine on your behalf. You don’t have to create or rent a wine cellar. This benefit is particularly valuable, but it does not come cheap since the lowest annual fee is 2.25%. Its most affordable plan, Starter, requires a minimum investment of $1,000.
Besides the Starter package, VinoVest offers three other main packages: Plus, Premium and Grand Cru. The Starter program includes 100% authentic wines, access to storage systems and insurance.
One of its other most popular packages is Premium, which steps it up a notch by including personalized reviews with a wine portfolio manager and access to even rarer wines for a minimum investment of $10,000.
securely via the Vint website
Like VinoVest, Wine allows investors to invest directly in wine and other spirits online. Both programs have in-house professionals, including sommeliers, who research and analyze the best wines to ensure they are investment grade.
These platforms also store and insure wine, which can help prevent major losses. After all, improper storage or broken bottles can render wine worth thousands of dollars worthless.
One of its key differences is that every spirits offering is regulated by the United States Securities and Exchange Commission. Investors with fewer funds might prefer Vint because they can buy fractional shares of these wines and spirits for less than $100.
Currently, Vint offers 5,750 shares in The Macallan 50 Year Old Collection Whiskey, with one share costing just $20. The total value of this collection is $115,000, which is a bottle of whiskey. Although this whiskey is expensive, Vint is a more economical way to access investments in fine wines and spirits.
Consumer Staples ETFs
In addition to investing in physical wine bottles, investors can gain exposure to this sector through consumer staple ETFs. No ETFs focus specifically on wine, but consumer staples ETFs own companies that produce alcoholic beverages.
This method won’t be as straightforward as VinoVest or Vint, but these ETFs might be more accessible for the average investor. These ETFs are easier to buy and sell because it sometimes takes two to three weeks to build wine portfolios with VinoVest.
One of the leading consumer staples ETFs is the SPDR Consumer Staples Fund (NYSEARCA: XLP), with one of its top holdings being Constellation Brands Inc. (NYSE: STZ) at 2%. Constellation Brands owns several popular wine brands, including The Prisoner Wine Company and Kim Crawford.
This ETF also has exposure to beverage companies such as Molson Coors Beverage Co. (NYSE:TAP) and Altria Group Inc. (NYSE: MO). Altria is mainly known for the production of tobacco products, but it has a significant stake in the beer company, Anheuser-Busch InBev (NYSE: BUD).
From a financial perspective, this ETF offers a respectable yield of 2.21% and a low P/E ratio of 3.55%. However, it has a relatively high expense ratio of 1%, which is much higher than the asset-weighted average expense ratio of US funds of 0.45%.
Wine is often overlooked as an alternative investment class, compared to private real estate, private equity and venture capital. However, wine tends to remain in demand regardless of the economy. Wine is a physical asset, with the best wines of the highest quality being considered investments.
Investing in good wine is getting easier and easier with sites like VinoVest, Vint, and consumer staples ETFs.