Monday, February 3, 2014

Three Major Steps Involved in Wine Investments

How well do you know the wine business? Are you thinking of becoming an investor? Whether you’re 20 years old or 40, it’s paramount to know wine prior to spending any money on a purchase. As a liquid asset, wine is the sort of investment that gives people diversity. Together with equities like art, fast cars, and commodity investments (silver, gold, oil), people have finally started to see wine with a different pair of eyes. To begin with, we have to point out that investing in wine is no longer an alternative type of investment. Recently defined as a commodity, fine wine is starting to become a more conventional type of investment than cars and art.

Young entrepreneurs looking to get started in this business should abide by some basic rules: never expect to make a fortune fast, be patient (you’ll reap some benefits in 5 about years, and great benefits in 10), and pay attention (to storage conditions, market prospects, and more). If you’re looking to make huge profits without taking any big risks, the best strategy is to opt for a medium-long investment. Wine gets better with age, yet that’s not a guarantee. Are you wine lover interested to make a sensible investment? Very well then; the following 3 steps are essential if you want to thrive.

Invest in functionality

Although wine is a liquid asset, it’s not liquid enough to provide real-time pricing. Specific types of wine have more profound liquidity than others. Let’s see an example: the famous Bordeaux wine is preferred by most potential investors because of its historical past. Over the years, many people invested in Bordeaux wine and ended up making great money. Everything we know so far about this type of wine can be easily proven, so there are little chances for investors to fail if they buy Bordeaux. You can also view price charts online, assess vintages, regional prices, and compare the wines using multiples sources such as the FTSE index of Liv-ex.

If your goal is to trade fine wine, the key to being successful is transparency. As an asset, fine wine is non-fungible: the buyer is the one to have the last word, always! General prices for traded and collected wines – Bordeaux in particular – increased tremendously in the 1st decade of the 21st century. Hence, the numbers managed to attract plenty of buyers (even buyers who were not that interested in investing).

Technological advances

In the wine business, it’s not always about how much you want to invest, but about the way you’re planning to invest your money. Making use of advanced technology to get started in the business is a step we just can’t ignore. Having a website for your business, making it as responsive as possible, being socially active, and updated with the latest changes, and thinking of new ways to make your investment thrive, are just a few guidelines you have to consider to have a successful business.

Has technology improved the wine production? Definitely, and as a matter of fact, it shouldn’t be seen as something new. Owners of Bordeaux Chateaux have already started to upgrade their viticultural practices. They started to invest in storage rooms and new wineries, and then they began adopting machines to help them with the harvesting process. Drones and satellite images are also at high demand because investors want to stay constantly updated with everything that happens on their properties. You may or may not have the means to make such investments, but it’s wise to be aware that advanced technology can help your future business thrive.

Authenticity and Storage

Authenticity and provenance are crucial aspects in the wine business. With millions of wine bottles circulating the market (particularly high-value wines), scammers and fraudsters are everywhere. As a new investor, it’s paramount to get informed prior to spending a dime. Blue-chip wines can only be bought in excellent conditions, so try not to buy from a stranger because you can’t know for sure if their product is genuine. After you found a trusted seller, your next step would be to store the wine in optimal conditions. Otherwise the quality of the wine will deteriorate and its value will automatically decrease.

Wine investments can be extremely profitable, even for starting entrepreneurs looking to enter the current wine market. The key to succeeding in this business is to have patience. Get to know the market really well, learn as much as you can about wine, and don’t hesitate to ask a professional for assistance. 

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