With traditional investments like stocks and real estate facing challenges, investors are looking into alternative assets like liquor for higher returns. Liquor, especially high-end baijiu from brands like Maotai, has seen huge price increases recently and is gaining popularity as an investment asset. This article will explore how liquor investment works, its risks and rewards, and provide a guide on how to invest in liquor as part of a diversified portfolio. Both individual liquor products like baijiu and funds investing in liquor will be covered. With proper research and risk management, liquor investment can yield generous returns.
Liquor prices have surged, attracting investor interest
High-end Chinese liquor like Maotai baijiu now sells for over $300 per bottle, double the price from a year ago. Top-grade caterpillar fungus, also known as Himalayan Viagra, fetches over $11,500 per pound. Auction prices for vintage and rare liquor are skyrocketing as well. With traditional investmentssagging, Chinese investors view liquor as a new hot commodity with growth potential. Many new liquor exchanges have emerged to capitalize on this investor enthusiasm. However, experts warn of serious speculation and price manipulation in some liquor markets.
Individual liquor products offer potential upside but require research
Investing in individual liquor products like rare Maotai bottles provides exposure to rising liquor prices. However, authenticity and storage conditions must be vetted, as counterfeits and improperly stored liquor are common. Reputable auction houses can provide authenticity certificates. Condition checks for signs of damage or spoilage are essential. Storage costs must also be considered. While high profits are possible if a bottle appreciates greatly, improper due diligence can lead to large losses.
Liquor funds provide diversification but have complex fee structures
For broader diversification across many liquor products, managed liquor funds are available. Industrial & Commercial Bank of China offers a pu’er tea fund, while China Merchants Bank and Googut Auction house offer liquor investment funds targeting 20%+ annual returns. However, some bank-run liquor funds have previously collapsed with managers embezzling client funds. Carefully scrutinize funds’ fee structures, managers’ credentials, and guarantees on capital preservation. Most suitable for experienced investors willing to accept higher risk for high yield.
With proper due diligence to avoid counterfeit products and high-fee funds, liquor investment can provide strong returns. But risks remain high, so allocate only a small portion of your portfolio. Working with reputable brokers, auctioneers and fund managers is key.