The ultimate guide to planning your wine investment

In investments, a relative newcomer has recently gained prominence: wine. What was once merely a passion for oenophiles is now unveiling itself as a promising and rewarding investment opportunity. Wine investment has occurred since our ancestors decided to pass down their wine bottles from generation to generation; today, we observe an increase in wine investment as a recognition of the value of quality labels. In an uncertain financial world, investors are eyeing new assets, and this is where wine stands out.

The transformation of wine into a financial asset

There is a shift of wine from something we merely appreciate to a respected asset class. The appreciation of certain bottles over time demonstrates not only the quality of the wine but also the strength of this unique market. Investing in wine goes beyond seeking financial returns; it is a blend of pleasure and growth potential of the asset that ages and appreciates.

What factors determine value in wine, trends, and predictions for the 2024 landscape? Our guide will provide practical insights for those looking into investing in wines in the upcoming months. Here are a few crucial elements that play a significant role in appreciating your wine:

Factors determining the value of a wine

Vintage Year

The vintage year, or the year the grapes were harvested, is a pivotal factor in assessing the value of a wine. Different weather conditions each year significantly impact the grape quality and, consequently, the resulting wine. For instance, a warmer year might produce riper and more flavorful grapes, contributing to a bolder wine. Conversely, a cooler year may produce a more elegant and nuanced flavor profile.

Collectors and investors often consider certain vintage years exceptional, and wines from these years may command higher prices in the market due to their perceived superior quality. Therefore, when evaluating wine for investment purposes, it is crucial to factor in the vintage year and its impact on its overall characteristics and market value.

Brand Equity

Brand equity encompasses the reputation, heritage, and overall perception that consumers and the market have of the winery. A strong brand is built over time through consistent quality, distinctive winemaking practices, and a commitment to excellence.

Investors should consider the following aspects related to brand equity when evaluating the potential of wine for investment:

Heritage and Tradition

A winery with a rich history and a commitment to traditional winemaking practices often commands higher value. The legacy and story behind the brand contribute to its uniqueness and appeal.

Consistent Quality: Brands that consistently produce high-quality wines build trust among consumers and investors. Consistency in flavor profiles, winemaking techniques, and overall quality enhances the brand's reputation and market value.

For example, we mention the Rothschild family with Château Lafite Rothschild and Château Mouton Rothschild, which are internationally recognized for their excellence and tradition in producing high-quality wines.

Awards and Recognition: Awards from reputable wine competitions contribute to a brand's prestige. Wines that have received recognition from industry experts and competitors are often perceived as more valuable. A perfect example is the wine from Castello Luigi, vintage 2019, which received the "Tre Bicchieri" rating from the Gambero Rosso Guide, demonstrating the excellence of this label that you will find in our portfolio.

Scarcity

It stems from a given vintage's limited availability, influenced by the quantity extracted from a vineyard and climatic aspects affecting the overall supply. The scarcity of wine contributes to its exclusivity, making it an attractive option for collectors and investors.

Remaining supply

Even though it's not always a requirement, some older vintages of wine may have a price increase due to the decrease in available supplies. As wine ages, the number of bottles available on the market naturally decreases for various reasons:

Wine collectors may consume or age the bottles they buy, reducing the number of bottles of a particular vintage over time and limiting their availability for purchase.

The reduction in available supply contributes to the rarity of older vintages, making them more sought after by collectors and investors. Although it's not a rule, decreasing supply generally increases market demand, resulting in price appreciation.

Production region

Some wine regions are renowned for producing exceptional wines due to their unique climatic and geological conditions and their history. When planning your investments, focusing on established regions like Bordeaux, Burgundy, and Piedmont, which have a solid reputation for wine excellence, is vital.

Critics' ratings

The scores specialized critics give are valuable indicators of a wine's quality. Investors often rely on expert reviews from Robert Parker, James Suckling, Jeb Dunnuck, Jancis Robinson, and Wine Spectator to make informed decisions. However, considering diverse opinions is essential, as different critics may have distinct preferences. A wine well-rated by multiple critics is generally a more reliable indicator of its quality.

Aging

The appreciation of wine is directly related to its aging process, which is only possible with the greatest wines, a complex journey after fermentation and bottling. During this period, the wine undergoes various chemical and physical transformations, resulting in taste, aroma, and texture changes. Here are the stages of wine aging:

Fermentation: After harvest, grapes are crushed to release the juice. Natural or added yeasts convert sugar into alcohol, initiating fermentation. This stage produces young wine with fresh and fruity characteristics.

Barrel aging: Some wines are transferred to oak barrels. Over months or years, the wine interacts with the oak to allow micro-oxidation thanks to the wood fibers in the barrel.

Bottle maturation: After barrel aging, ONLY the fine wines from great terroirs can continue maturing in the bottle. Interactions with air through the cork and chemical evolution occur, further refining the wine.

Storage

Some wines evolve, reaching their peak after five years, while others require decades to develop their full potential. Here are some key points to make your wine storage suitable and enhance your label's value:

Appropriate and constant temperature: High temperatures accelerate aging and can spoil the wine, while low temperatures slow the process. Hence, the optimal temperature for storing wine to maintain quality is between 12-15 degrees Celsius.

Controlled humidity: A humid environment prevents cork drying, keeping it swollen and preventing excessive oxygen entry, which could oxidize the wine. Therefore, the ideal humidity level for wine storage is between 60-80% to ensure stability.

Absence of light: UV light can deteriorate wine, causing undesirable changes. Therefore, it is crucial to store bottles in dark places, such as a wine cellar, basement, understairs storage, or even a particular wine room, assuming they offer no light and stable temperature and humidity levels.

Bottle position: Storing bottles horizontally keeps the cork moist, promoting a tight seal and preventing oxidation.

Stability: Avoiding excessive vibrations and movements is essential to ensure sediments settle at the bottom of the bottle rather than mixing into the wine.

Trends and market predictions for 2024

Sustainability and organic wines

Environmental awareness significantly shapes consumer choices; the wine industry is no exception. In 2024, a substantial increase in demand for sustainably and organically produced wines is expected. Wineries adopting eco-friendly practices not only contribute to environmental preservation but can also win over conscious consumers.

When investing in wines, consider the reputation of wineries regarding sustainability. Those implementing eco-friendly production methods and promoting environmental responsibility may stand out in the ever-evolving market.

Exploration of new wine regions

Climate changes have directly impacted grape-growing conditions in traditional regions. In response to these changes, wineries are exploring new regions previously not considered for wine production. This exploration of new growing areas can lead to discoveries of unique terroirs and contribute to the geographical diversification of the wine supply.

When planning investments, pay attention to emerging regions attracting the attention of winemakers and experts. These areas may become valuable sources of distinctive wines and attract market interest.

Integration of technology in the consumer experience

The growing technology integration in the wine industry is transforming the consumer experience. In 2024, augmented reality (AR), virtual reality (VR), and blockchain are expected to play significant roles in wine tastings and wine investment. Innovative wineries can use these technologies to offer interactive virtual experiences, allowing consumers to explore vineyards and better understand the production process.

Macroeconomic forces

To understand the investment market perspectives, it is crucial to pay attention to various factors, and one of them is to analyze the five macroeconomic forces identified by Ray Dalio. Our CEO briefly comments on the topic in the video below on our YouTube channel and explains why wine is considered an investment trend for the coming years.

In an increasingly uncertain and ever-changing world, global events such as debt cycles, geopolitical tensions, natural disasters, technological advancements, and the rise of social inequality are considered five macroeconomic forces that can create turbulence in the financial market. This prompts investors to seek new investment alternatives that provide security in such a volatile market.

Amidst this scenario of constant change, fine wine emerges as an excellent investment option in 2024 due to its consistent appreciation, and market experts project significant growth for the coming years. It is estimated that the value of this market could double by 2027, presenting exceptional opportunities for you as an investor.

How we can assist in your wine investments

Relying on a specialized team is crucial for making informed and strategic decisions in the wine market. Our team consists of highly qualified professionals with deep knowledge of the wine market. We stay consistently updated on trends and developments in wine production, ensuring our clients receive accurate and relevant guidance.

Furthermore, having direct access to producers is a significant advantage for our clients. We maintain close relationships with wineries in major production regions, providing exclusive access to the finest vintages and more attractive pricing conditions. You automatically benefit from our network, ensuring your portfolio includes high-quality wines, often before they become widely available in the market.

We simplify the wine investment process through our integrated buying and selling marketplace. We have developed an intuitive and easily accessible interface, allowing our clients to browse our catalog, conduct transactions with ease, and monitor the performance of their portfolios. Our platform offers transparency and convenience, ensuring you have complete control over your investments. Why not start now?