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Investing In Wine

By Sandy Naidu | May 16, 2008

‘Investing in wine’ is not something I have considered in the past nor am really keen to venture into in the near future. Having said that, I am always keen to learn and keep myself informed about various investment opportunities available in the market. What aroused my curiosity about this alternate investment is an article I read recently about how wine investment returns over the past 10 years was more than double the returns from share markets or property. So I started digging more and found out some information about this investment.

Here is what I have found out so far -

* This category of investment can yield really high returns but it is still a very speculative investment.

* You need to really understand the wine market before you take a leap.

This market is really for people who are wine connoisseurs but connoisseurs who are not tempted to consume the wine that they buy for investment. If you are not a connoisseur but still would like to invest in this category then research the market thoroughly and learn as much you possibly can.

* You have to buy the wine only from reputable agents, auction houses or straight from the winery. One auction house name which kept coming up in my research is - Langtons.

* Once you buy the wine, the story does not end there. You need to store it in a proper cellar…The temperature and the humidity of the cellar has to be at the right levels. If you don’t have access to your own cellar then you have hire a professional cellar. And finding a good professional cellar is not easy….And cellars don’t come cheap…

* There is storage and insurance costs for the wine as well.

* The market is not regulated in Australia as yet…There is no ASIC looking over….It is not a well established market as yet…

* And finally, repeating what I wrote earlier in this post - Knowledge about this market is absolutely essential. You need to be able to pick the right wines - wines that will go up in price in the future - Plus you need to buy it at the right cost.

I am still not comfortable with this market…May be my views will change once I learn more about this segment…But for now, I will be more comfortable investing in some ASX listed wineries rather than direct wine…I know its probably not the same but for now I would feel more comfortable with this approach…

Do you have any experience in this market…Feel free to educate us.