Showing posts with label Aging of wine. Show all posts
Showing posts with label Aging of wine. Show all posts

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. 

Thursday, October 17, 2013

Wine Investment is Risky But Can Produce High Returns

Most people who want to make an investment think twice before turning their attention to the wine market. Such investments should be about getting your money back at some point, so that’s why we’re wondering: is wine worth taking the risk? Wealthy wine enthusiasts know how to appreciate a bottle of wine, and since money is not a problem for them, they usually choose only the best wines on the market. For example, if you love wines and your budget is unlimited, no one can stop you from paying $120,000 for a single bottle. This may sound crazy, but there are many people who do this. 

A 1975 Cabernet Sauvignon is worth a high price but only a real connoisseur can know its exact value. This type of people knows what to expect, and most of them can tell from the start whether they will get their money back. Even if finding these types of bottles is very hard, you will definitely benefit from their amazing characteristics. However, everybody knows that the easiest way of generating profit is through buying low and selling high. That being said, it becomes obvious that very expensive bottles of wine will never be considered a profitable choice. 

Invest in quality wine

If you’re willing to make this type of investment in the future, it would be a good idea to look for a good wine and sit on it for at least 30 years. As long as you know its aging potential, nothing will stop you from achieving your goals (some wines should stay in a cellar for a long period of time so that they can become comestible, while others can be drunk immediately).

Bear in mind that winemaking was totally different two hundreds of years ago, and this difference can also be seen in price. For example, the New World has been invaded with fruity and high-alcoholic wines. These types of wines don’t age too well, and they have nothing in common with expensive wines. Even though there are several vintners and wineries did their best to keep their old strategies, many of them find themselves in a tricky situation: they’re forced to provide people with they want.

The maturation process of wine demands time

Wines don’t mature overnight and most of them require several years of storage before being sold for an impressive price. The problem is that not many people know how long they should wait in order to sell the wine they have invested in. The maturing process is usually influenced by aspects such as acidity, tannin, and phenol.

Besides, you should also take into account that there are plenty of wines who don’t mature as quickly as you have expected. Once the wine is placed in the bottle, specialists re-rate it. If the quality is lower than the expected one, the final price of the bottle will drop. This means that wine investments are risky, and that all the merchants run the risk of going bankrupt. This shouldn’t come as a surprise, since the wine market is crowded with fraudsters which specialize in methods of attracting all the cash invested by investors.

Unfortunately, wine investments will remain risky until specialists come up with an accurate aging forecast tool for wine. You can always hire professionals in order to test your wine, such as sommeliers. However, the best idea would be to purchase up to two cases of the wine you expect to age beautifully (when it comes to aging, the best ones are those with low acid, high tannin, and higher alcohol). If you’re not specialized in wines, a local sommelier can taste the wine and tell you whether it’s worth the investment or not.

As previously mentioned, wine investments are challenging but they can bring high return. That’s one of the main reasons why investors think twice before throwing their money on random cases of wine. The best idea would be that of starting a personal wine collection first, and invest more if you notice that things are going according to plan. Never expect to become a millionaire by investing in cheap wine. Instead of purchasing dozens of cheap wine cases, you should rather purchase two cases with bottles of high-end wine. If you’re a wine enthusiast, chances are you will never experience failure, because you’ll never regret not having sold your wine.

Join 1000's of People Following 50 Plus Finance
Real Time Web Analytics