🍷How wine investments work

The core idea of investing in wine is the same as investing in any other asset – buy low, sell high.

1. Buy in the futures market and sell the physical wine to a buyer

You can buy a futures contract from a wine producer. You need to pay the full price of the wine upfront even though delivery can take several months or years.

Once you take the delivery of the wine from the wine producer, you can find a buyer in the open market, say, a premium wine retail store, and sell the wine to it for a higher price.

2. Buy in a relatively new market and sell when the market becomes popular

Imagine buying vintage Chilean wine. The wine is brilliant but not recognized as widely as, say, Bordeaux wine. Hence, the price it commands in the market is not as high.

If the Chilean wine market becomes massively popular a few years later, you would be in possession of aged vintage Chilean wine that can be sold at a very high price.

This is similar to value investing in stocks.

3. Buy young wine and sell when it is aged

This is the slowest but one of the surest ways of making money from wine.

Simply buying a young fine wine and selling it a few years later can generate respectable returns.

This is because a significant value of a wine is associated with its age. The more aged the wine, the better!