Stocks, bonds, cash and...wine? There are plenty of alternative investments out there but perhaps few are as enjoyable as collecting wine. Chris Adams of New York's Sherry-Lehmann wine store joined us to look closer at this asset class. Wine collecting is often seen as the playground of the uber rich but that may not be the case, at least not entirely Adams says, though he warns you do need a fair amount of capital to get started. "It is for people who can start with maybe $10,000, maybe $15,000. Below that I'm not sure the return is worth the investment."
That's a lot of money, true, but compared to other alternative investments -- like say fine art -- wine collecting is at least a little closer to reality. "It costs money to buy the best," Adams says. "You have to be informed about buying the best, it's an agricultural product so you need to know about the vintages but then you have to store the wine properly - and there's a cost associated with that."
Assuming you have the cash, what sets wine apart from other alternative invetsments? "If you have a great vintage and a great wine produced in that vintage then every time a bottle is opened the bottle that you own becomes a little bit rarer," Adams notes, "and that is one of the ways that investing in wine differentiates itself. It's a limited supply and it's a supply that will diminish over time."
That's more true now than it's ever been, especially given the growth in popularity of wine in places like China. "Not only are there fewer bottles as they get opened but there's more demand for those fewer bottles," Adams says, noting that China got up to speed on wine knowledge very fast.
Knowledge, as with any investment, is key. Adams says wine investors need to know things about vintages and the afformentioned supply and demand. They must also keep a close eye on fine wine auctions that are going on all over the world at any given time.
Another tip Adams offers is to buy your wine as close to the source as possible and directly from the winery if at all possible. Fraud is a growing problem across the industry and the closer to the winemaker you make your purchase the less likely you'll end up with a bottle of cold duck instead of Lafitte. When it comes time to cash out it's those auctions, as well as knowledgable retailers like Sherry-Lehmann, that will turn that wine into cash, assuming the collection has been stored correctly.
Perhaps the most important thing to remember Adams says if you're considering getting into wine collecting is "if you make an investment and it's not working out you can always open and enjoy it."
- Consumer Discretionary
- Food & Cooking