How to invest in wine: everything you need to know

Wine may not commonly be considered a profitable investment, but if you’re looking for an alternative asset to invest in, it could be a smart option.

Here’s what you need to know.

Why invest in wine?

Wine is quickly becoming a popular alternative investment.

While it isn’t likely to be as profitable as investing in property or stocks, it could add an extra element of diversification to your investment portfolio. 

While wine is a relatively slow-return investment, there are reasons for its growing popularity.

The Knight Frank Luxury Investment Index, an index tracking the value of luxury assets, has revealed that fine wine prices have soared 146% over the last 10 years, despite inflation and volatility of the stock markets.

Even in the face of a recent price correction, which saw wine prices climb just 1% in 12 months, investors are still interested in wine.

Wealth advisers said wine was a popular ‘investment of passion’ for, on average, 35% of clients across the globe, placing it just behind art and classic cars.

What does an investment wine look like? 

Not every wine is investment quality, so it's important to recognise the signs of a good investment and a bad one. 

Many of the most valuable investment wines in Europe come from southern France and Italy, whereas many of the most valuable non-European wines come from vineyards in California and Australia.

‘New world’ wines and ‘old world’ wines are often produced slightly differently.

While this doesn’t inherently make European or 'new world' wines any more valuable, many of the world’s most prestigious vintages come from Europe. 

According to the fine wine investment platform, Vin-X, many of the most valuable wines in 2023 came from France.

These were:

• Romanée Conti
• La Tache
• Richebourg
• Domaine Armand Rousseau Chambertin
• Château Pétrus
• Romanée St Vivant GC Marey Monge
• Jacques-Frédéric Mugnier Musigny
• Screaming Eagle
• Échezaux
• Jacques Selosse Millesime

How to invest in wine 

There are a few different ways to invest in wine depending on your budget: 

• Buying wine: If you can afford it, all you need to do is buy a wine bottle. Many premium wines are growing in value every year, and once you’ve held this asset for a few years, you will likely be able to sell it again for a profit.
• Buying a vineyard: If you have more money to spend, you might choose to take on wine production as an active source of income. Producing and selling wines can be lucrative if you have the knowledge and skills required.
• Invest in wine stocks and companies: You could also invest in high-performing wine companies or individual wine funds. This means you will need to understand how to invest in a company and what potential warning signs you should look out for. If you feel more comfortable pooling your money and letting other people manage your investments for you, this could still be a lucrative investment. 

How to manage your wine investment

Investing in wine also opens up the tricky world of managing your investment – financially and literally.

Wine isn’t the same as buying stocks or shares. It needs to be preserved, stored and managed optimally, or your investment may start to lose money.  

Before investing, you’ll need to think about how to store your wine.

One option is to store your wine yourself. You will need a cool location, such as a basement, that is well-ventilated and has a consistent temperature and steady humidity level. All your wine should also be stored away from light and vibration.

In addition to the equipment necessary to store it, you may also want to consider taking out insurance to protect yourself in case of unexpected accidents.

Alternatively, you could store your wine in a professional storage facility where experts will keep it in optimal condition on your behalf.   

You should also consider how and when you will eventually sell your wine.

Even fine wines won’t continue to appreciate in value for an indefinite period, so you must be aware of signs your wine may have aged to its peak – this is a good indicator of when you should sell.

You will then need to consider who to sell to and how exactly to do it.

Wine auctions are a popular way of letting people bid for your wine, but you could also use a peer-to-peer platform or sell it directly to another collector. 

Finally, if the proceeds of your wine sale are an essential part of your financial planning, ensure you’re aware of any additional taxes you must pay, as this could affect the final amount of money you receive.

As fine wine is usually defined as a 'wasting asset,' so it has a predictable life of 50 years or less, any profits are typically exempt from capital gains tax (CGT).

If your wine isn't defined as a wasting asset, you may be subject to CGT, which applies to profits over the £3,000 threshold for the 2024/25 tax year. Note that CGT rules may change following the upcoming Autumn Budget.  

Investing in wine may not be for everyone, but as wine becomes an increasingly resilient and profitable asset, it might be time to consider investing.

Need help with investing?

If you are unsure where to start with investing, it's worth speaking to a financial adviser.

Unbiased can quickly match you with a qualified financial adviser who can help you with your investment strategy.

If you found this article helpful, you might also find our articles about the best investing and trading apps and investing in mining companies informative, too.