Billionaire To Auction 25,000 Bottles Of Vintage Wine From His Collection

Taiwanese electronics mogul Peter Chen recently announced plans to auction off nearly 25,000 bottles of wine from his private collection, which has long been known as one of the world's largest. Perhaps the only thing more impressive than the size of the lot the billionaire is auctioning off is that the expected average price per bottle will be $190,000.

The auction is not the first of its kind, and it underscores the wine's potential as an alternative investment. While wine as an alternative investment may seem counterintuitive, a deeper look shows why it matches the profile of a successful alternative investment.

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Why Does Wine Have Potential As An Alternative Investment?

No matter what alternative investment you might make, every sector, including wine, has some variables in common that make it a potentially lucrative investment.

• Independent performance history: The factors that drive the value of alternative investments are not directly dependent or related to the performance of traditional investments. Many alternative investments get stronger or increase in value when the stock or bond market gets jittery. The value of wine isn't going to tank if the Dow Jones drops several hundred points.
• Finite or scarce availability: The kinds of fine wines that wine enthusiasts and investors buy are difficult and time-consuming to make. Both those factors make them highly sought after by consumers around the globe.
• Hedge against inflation: Buying alternative investments like fine wine in today's dollars is a great potential hedge against inflation. As consumer prices rise over time, the value of wine does also.
• Diversification option: The ability of an alternative investment to retain or increase in value independent of the performance of the stock or bond market makes it an excellent option for investors who want to diversify some of their portfolios.
• High liquidity: The caliber of wines sold at auction carries an almost legendary reputation among wine enthusiasts around the globe. If you liquidate your bottles, there will be no shortage of potential buyers willing to pay top dollar.

Value Of Chen's Auction Could Exceed $50 Million

It's well known that people who are passionate enough about art or fine wine to collect it are usually very wealthy. When you combine tremendous wealth with a deep passion, you can amass wine collections worth tens or even hundreds of millions of dollars. Even by that standard, the depth and size of Chen's wine collection is staggering.

He will sell 25,000 bottles at an estimated average price of $190,000 per bottle. If just a few of those bottles go for more than expected, Chen will have netted $50 million. This tranche of fine wines for sale is just a drop in the bucket for Chen, who has been curating his wine collection for nearly four decades. He is rumored to have hundreds of thousands of bottles in his personal cellars.

The auction is being handled by Sotheby's, which has a history of working with Chen. A few years ago, the auction house assisted Chen in selling $15 million worth of bottles. The auction will take place over five sales, with the first in November in Hong Kong. New York, Paris and France's Burgundy region are rumored to be under consideration as auction locations for this collection, known as The Epicurean’s Atlas.

Is Wine Investing Right For You?

The question of whether wine investing is right for you boils down to several factors. First, wine investing can be lucrative, but it is an expensive pursuit. Chen's net worth is roughly $5.5 billion, good enough to rank him as the 10^th-richest man in Thailand and the 515^th-richest man in the world. If you're talking about investing in your private collection with your own cellar, you would probably need a fortune to buy on the elite level. That doesn't mean that you can't start small.

Investment platforms like Vinovest will help you create and curate your wine portfolio. The solid return potential provided by wines is also attracting the attention of fund managers. Wine investment funds are popping up all over the place. This doesn't mean that wine investing is without risk. It's possible to lose money on wine or any other investment offering. You must still exercise caution before investing in any offering.

Other Alternative Investments 

If you're an investor looking to diversify your portfolio or get into some offerings with high upside, startup investing is a potential avenue. Equity crowdfunding platforms like StartEngine and Wefunder allow you to buy early equity in startups for as little as $100. In exchange, you will have a chance to invest in the kind of high-upside opportunities that used to be available only to venture capitalists.

Traditional investments have a solid performance history over the last several decades. But that doesn't mean the sector doesn't have moments of extreme volatility. This volatility is why investors have been diversifying their portfolios into alternatives for almost as long as they've been making traditional investments.

When you consider that people have been buying real estate since before stocks existed, it only makes sense to consider diversifying your portfolio with alternative investments in the here and now. The good news is that you have a greater variety of sectors, platforms and alternative offerings than ever before.