Wine As A Stock Market Alternative — But How Do You Know What To Buy?

Alternative investments — such as wine, art and sports cards — have gained steam since the onset of the COVID-19 pandemic. While all of these are viable alternatives to the stock market, remember that not every investment will pay off. 

For that reason, it's important to make cautious investing decisions. 

When it comes to wine, there's a big difference between buying wine to consume and buying wine with the objective of a monetary return. 

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Factors That Impact Wine Prices

Seven primary factors impact wine prices. Some of these are more powerful than others — and their impact will change with time — but each should be carefully considered. 

1. Age-Worthiness

Wine’s potential to improve with age is crucial. Not all wines are designed to age gracefully. Those that do can become more complex and desirable over time, enhancing their investment value.

2. Scarcity

Rarity drives demand. Wines produced in limited quantities often become more valuable over time. Scarcity can be because of small production, unique terroir or a winemaker’s renown.

3. Vintage

The year of harvest significantly influences a wine’s quality and investment potential. Exceptional vintages from reputable regions often command higher prices and appreciate more over time.

4. Ratings

Expert opinions matter. Wines highly rated by critics like Robert Parker or Wine Spectator are more likely to be sought after, increasing their value.

5. Long-term Reputation

A winery’s history and reputation play a pivotal role. Renowned wineries with a track record of quality and consistency are more likely to produce wines that appreciate in value.

6. Longevity

Consider how long the wine can maintain or improve its quality. Wines with a proven ability to age well are more likely to accrue value over time.

7. Potential For Price Appreciation

Historical data on price trends can be indicative. Wines showing steady appreciation over time are often safer bets for future investment.

According to the Knight Frank Luxury Investment Index, which compares the annual returns of alternative investments, including wine, Burgundy has been a top investment. 

"Burgundy has been the big success story of the past decade, with prices having escalated 367% by the early autumn of 2022. However, the top of the Burgundy market peaked around that time and has since fallen by at least 9%. Published prices tend to lag realized sales, indicating that there is further to fall," said Nick Martin of Wine Owners, which compiles the Knight Frank Fine Wine Icons Index (KFFWII).

If you're apprehensive about wine investing — perhaps because of a lack of knowledge or financial backing — there's another option: fractional investing.

Vint is one of the best ways to invest in blue chips and up-and-coming investment-grade wine and spirit collections without holding physical inventory. Fractional ownership of wine is the wave of the future. 

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