Speaking to the UK Investor Magazine, Vindome Consultant and Master of Wine, Roderick Smith, MW, offered his insight into investing into an asset he thinks has the ability to ride out economic instability.
He says that fine wine emerged as one of the most robust investments following the 2008 financial crash, and though it’s hard to predict the outcome of the current economic uncertainty, fine wine‘s status as ‘a finite, luxury product with increasing demand’ gives it the ability to maintain something of a consistent performance versus other asset classes.
“Wine consumption continues to rise, and even in markets where future tax implications may have an effect on the wealthy, there remains a healthy appetite for fine wine. It may be time for introspection when it comes to investing in real estate, fine art, classic cars, or even the stock market, but wine seems to remain a safe bet”, said Mr Smith.
Three top tips for budding fine wine investors
Number 1: Mr Smith’s first suggestion is getting the foundations right. Having an easy way of trading, a trustworthy broker and supplier, and secure storage are all crucial components for a successful fine wine investor. Looking for a medium, such as an app, which provides all of these tools in one umbrella service, can be the most viable way for regular investors to enter the fine wine space. This is why services such as Vindome play such an important role in democratising reliable asset classes such as fine wine.
Number 2: Whatever the investment, your point of entry is crucial. Smith says that whether it’s wine, oil, tech or marmalade, it is intuitive to think that you want to buy into something while it’s at a price that can be considered relatively good value. This is currently the case with fine wine. While having overall resilience against instability, COVID has downgraded many prices and wine has yet to catch up to its pre-pandemic levels. With a wide array of fine wine classes, categories and price ranges, the COVID discount offers rare cut-price entry at several different price points.
Number 3: Personally my favourite piece of advice – while offering great prospects, fine wine is only rarely a ‘day trading’ venture. If considering a move into fine wine, an investor should see the asset as something which will yield profits in the medium-to-long term, as the items increase in rarity and maturity. Hence the saying – ageing like a fine wine.
Bonus: As an added piece of advice, I’d say that fine wine should be to a portfolio what it is to a healthy life, an alternative to the mundane but ultimately not the bulk of its substance. As Warren Buffet advised, some small part of every portfolio should contain fine wine, but without the expertise or time to constantly track the market, and risk factors such as an influx or departure of new demand (as seen with Chinese buyers in the last decade or so), fine wine should not be the mainstay of an average investor’s portfolio. As my favourite adage for this asset class goes: it is a fun, alternative asset. If it all goes to pot, you can always drink your assets and forget your problems for a while.
What does Vindome offer?
Speaking on his own company, Mr Smith told us that Vindome was an exciting entrant to the online fine wine trading space.
“Vindome connects producers, investors and consumers to buy and sell collectible wine in real time, via a smartphone app. It offers rapid, direct and secure investments and allows users to trade directly with one another.”
“All wines on the Vindome app are sourced direct from renowned wineries and négociants, guaranteeing their provenance. One of the key advantages of using the Vindome platform is that it offers immediate access to thousands of wines, including special vintages and en-primeur, unlike other trading platforms where the wines are often unavailable for immediate purchase” he added.
Other services providing by Vindome include NFC tags on all purchased crates of wine, which state a crate’s contents, trade history and contents of ownership.
Further, the app also gives prospective investors access to experts who can be contacted via email or telephone, to provide consultation based on an individual’s taste, budget and returns expectations.
Finally, the company offers full security and storage as part of its service. All wines are tagged and stored in bonded warehouses with humidity and temperature control and security, with an insurance policy that compensates clients for compromised goods at market value, rather than purchase price.