The Wine Market Is Posting Record Gains: Why Retail Investors Should Take Notice

Wine may not be the first thing that comes to mind when you think of investing, but this asset class has been providing solid returns for decades and has had exceptionally strong returns over the past 12 months with the Liv-ex 100 (which tracks the price performance of the 100 most-traded wines in the secondary market) being up 24.61% as of Jan. 31, 2022.

In fact, 2021 broke all previous records for the secondary fine wine market, tracked by Liv-ex. The Liv-ex 100 exceeded its decade-old high, and both the Liv-ex 100 and Liv-ex 1000 indices closed the year with an 18-month consecutive rise.

The most notable price increase, however, was the Champagne 50 sub-index, which finished 2021 with 41% growth.

Image source: Liv-ex indices

What’s Driving the Wine Market?: A number of factors contributed to strong returns from investment wines over the past year.

The 25% U.S. tariffs on wine imports were suspended in March 2021 and abolished a few months later in June. This move effectively lowered the total price of imported wine for U.S. buyers and encouraged increased buying activity, which should continue to have a positive impact on the market.

Additionally, alternative assets, such as wine, are typically seen as being stable, less-volatile investments, providing potential portfolio protection and risk mitigation during a market downturn.

Fine wine is a tangible and consumable asset, so its value is more protected than many traditional, non-tangible investments. This feature has made wine a historically stable investment, only losing 1% during the 2008 market crash while the S&P 500 was down 37%.

Sought-after wines also have an ever-decreasing supply as bottles are consumed, meaning the remaining supply becomes more valuable. This factor can be roughly compared to how a stock buyback increases the value of the company’s remaining outstanding shares or how token burning can increase the value of a cryptocurrency.

These factors all point to continued gains in the fine wine market being likely, with many potential long-term benefits to investors.

How Retail Investors Can Get Involved: With interest rates at historic lows and inflation rising through much of 2021, it’s no surprise that investors have been seeking out alternative investments to add to their portfolios. The issue for the everyday investor becomes gaining access to these types of assets.

Vint has solved this problem with its U.S. Securities and Exchange Commission (SEC)-qualified platform that offers fractional ownership of collections of fine wine and spirits in the form of shares. In the past, investing in fine wine would require upfront costs of tens of thousands, if not hundreds of thousands, of dollars.

Vint is making this market much more accessible by offering SEC-qualified collections through Reg A+ offerings without charging monthly fees or requiring investors to purchase a minimum number of shares. Investors can get started diversifying into wine and spirits by purchasing as little as one share, typically priced around $50.

Eight of the top 10 traded wine labels in 2021 can be found offered in Vint’s various collections, giving investors access to investing in shares of wines that are anywhere from $1,000 to $25,000 a bottle.

Learn more about Vint and the platform’s current offerings.

Photo by Hermes Rivera on Unsplash