The wine market has been growing for some time and will continue to grow in the meat decade according to various sources. This growth in the demand for win presents an investment opportunity. Wine is such a great investment because there is little risk associated with holding a bottle or two of wine and selling at a higher price. Below are some other reasons why wine is such a great investment.
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High Return on Investment
Wine usually has a higher return of investment than most other investment vehicles. For example, Forbes says that wine investments grew by more than 200% compared to stocks over the last decade. These high returns are coupled with low levels of risk, which makes wine a unique type of asset class.
Wince Can Be Used to Hedge Against Other Securities
Wine is an outstanding hedge against other investment vehicles such as bonds, equities, and even other commodities. A portfolio that includes wine usually offers investors risk-adjusted returns that are better than the other investment classes.
Healthy Supply and Demand
Most Burgundy and Bordeaux estates produce very small quantities of wine. This means that there is a small supply of these wines every season, many considered to be investment wines, with this supply diminishing as the wine is consumed around the world.
Demand for wine from attractive Bordeaux and Burgundy estates is always higher than the supply. As the demand for fine wine remains stable and the supply diminishes, there is price pressure on fine wine, which leads to an increase in the price of these wines. This is also true for other rare wines you would get from Underground Cellar, a platform where every bottle of wine you buy is upgraded to a more expensive, exclusive, and sometimes rarer bottle for free.
Tax-free Investment
Wine is considered a wasting asset in many jurisdictions. Because of this, it does not attract any tax in these jurisdictions, specifically Capital Gains Tax. Even though you do not have to pay Duty or VAT on your wine investment, do talk to your tax lawyer to ensure everything is on to not find yourself on the wrong side of the law.
Wine Improves With Age
Another reason why wine is a unique investment asset is that its quality improves with age. As the wine matures and nears its drinking age, its value increases tremendously. Also, there is the possibility of enjoying the wine if you would not like to sell it. This is because while its price today might be very high, the price might have been quite low when you purchased the bottle.
Growing Market For Wine
Many of the companies you would invest in have reached maturity, giving you little incentive to invest in them. Wine, on the other hand, is growing and reaching new markets. As wine is taken up in these markets, there will be a higher demand leading to higher prices.
If you love wine, you should know that it can be a great investment in addition to being a great way to spend quality time with friends, a partner, or even family. Make your love for wine work for you by investing in wine today.
