With wine becoming an increasingly popular alternative investment, many investors are looking to add wine to their portfolios in 2023. However, navigating the complex world of wine investment can be daunting for beginners. This article will provide an overview of wine as an asset class, explain key factors to consider when investing in wine, and recommend some of the best wines to invest in for 2023.
Understand wine as an alternative investment asset
Before investing in wine, it’s important to understand it as an asset class. Fine wine has several attractive characteristics that make it a worthwhile investment: low correlation to traditional assets like stocks and bonds, portfolio diversification, capital appreciation potential, inflation hedging abilities, and more. The fine wine market has also demonstrated consistent long-term growth. The Liv-ex Fine Wine 100 Index has gained over 220% in the past 10 years. However, wine investors need reasonable expectations – wine tends to be less liquid than financial assets and returns are realized over longer time horizons.
Focus on investment-grade wines from reputable producers
Not all wines make good investments. When selecting wines to invest in, focus on investment-grade wines from reputable producers in premier regions like Bordeaux, Burgundy, Champagne, and the Northern Rhone. Top estates like Lafite Rothschild, Petrus, and Krug have long track records of demand and appreciation. Younger, up-and-coming producers can also be smart buys. Seek out ratings/reviews from critics like Robert Parker. Also, favor wines with good aging potential – premier grand cru classé Bordeaux and grand cru Burgundy can evolve positively for decades in proper cellaring conditions. Avoid obscure regions or grapes and steer clear of mass-produced “drink now” wines.
Target excellent vintages that are in demand
Pay close attention to vintage when selecting wines to invest in. Certain years will produce markedly better wines due to ideal weather conditions, low yields, and other factors. For Bordeaux, some of the best recent vintages include 2009, 2010, 2015, 2016, and 2018. In Burgundy, aim for 2012 or 2014-2018. Superb vintages in high demand will command significant market interest. Compare ratings across major critics for the top vintages. Also favor current drinking window vintages so that wines can be enjoyed or resold sooner. Very old or very young vintages tend to underperform.
Diversify across varietals, regions, and price points
A properly diversified wine portfolio will mitigate risk and maximize potential gains. When investing in 2023, aim to diversify across grape varietals like Cabernet Sauvignon, Pinot Noir, and Chardonnay. Diversify across premier regions – a mix of Bordeaux, Burgundy, Rhone, Champagne, etc. Diversify across price points – blend ultra-premium wines with some mid-range cases. Blend a core holding of blue chip wines with smaller holdings of up-and-coming labels. Diversification minimizes overexposure to any one wine, producer, or region.
In summary, focus on buying investment-grade wines from top regions and producers, target excellent in-demand vintages, and diversify across varietals, regions, and prices. Words 500 with proper storage and a long-term horizon, fine wine investment represents an attractive opportunity for 2023 and beyond.