When it comes to investing, most think of cars, properties or art as the go-to products to build an impressive portfolio. But fine wine is another commodity that’s catching the attention of savvy investors who are looking to make a reliable, stable and enjoyable investment.

But like all investments, there are some things to know so you can uncork the fine wine market and ensure you get your hands on the best products to support your financial goals.

First, what categorizes a ‘fine wine’?

A fine wine offers the collector or drinker a level of quality and rarity unsurpassed for its category. Fine wines compete with their peers from around the globe and demand prices far beyond the average. This is often because of the time, effort and history that goes into each and every bottle of fine wine and, of course, the scarcity in production.

Fine wine can be young or old – and a wine or winery that was known for producing fine wines does not necessarily have reservations about continuity in the space. Things can, and often do, change.

First steps

What are some of the first steps you should take when it comes to fine wine investment?

Research should be your first step so you can understand the market and pinpoint what wines you’re looking for. Our LANGTONS Classification of Australian Wine is a great tool for this research as it outlines a collection of fine wines that set the benchmark for their categories in Australia.

Research should include the history of the producers, regions and styles, plus key auction history. It’s also important to look into past vintages in regions you’re looking to buy from to ensure you’re getting the best example of the wine.

Make sure you think ahead and set up the space where you intend to store your wines. It’s important to make sure the space is suitable for wine storage as when you go to sell any of your wines, potential buyers will want to know that they have been looked after as it helps the longevity of the wine.

Develop a plan and set some goals on what you’d like your wine purchases to be and what you intend to do with them – whether it be to drink or sell. Setting a defined budget early is also vital to ensure you don’t overspend.

Choosing your path

How can you approach fine wine investment?

It’s important to know the different forms of fine wine investment so you can decide which route you’d like to take in your investing journey.

First, there is the speculation side of the investment space, which involves picking or predicting a wine or winery that will increase in price in the medium to long-term. There are multiple ways this can happen, but the most common would be a wine gaining ‘cult-like’ status through scores, scarcity or retrospective assessment that pushes its price up.

Sometimes, wineries close down or shut up shop and their wines become collector’s items and thus more valuable down the line – take Rene Engel in Burgundy, for example. Sometimes, investors see the future and predict a new winery’s success through tasting and choose to invest heavily. This is often a long-term play.

The other approach is to purchase from renowned wine brands (such as Rockford and Wendouree in Australia) and take advantage of the winery’s very humble release pricing and small allocations. Then you can sell down the line and make money. These wines are invested in because they are the absolute pinnacle of fine wine in Australia and always sell out on allocation.

Reputation matters

Once you’re ready, where can you start purchasing your fine wine investments from?

Always buy from reputable auction houses. First, it makes the whole process a lot easier, and second, you know you are getting authentic and well looked after wines.

For example, the LANGTONS website lists an extensive range of wines to browse and bid on. The website also shows you clear estimate values for the wine and cost breakdowns, including the Buyer’s Premium percentage, so you don’t get in over your head.

Fine wine auctions can be purely online or can also be held in person at an event. Durations can vary, and sometimes there can be special event auctions that are dedicated to a single region or wine style.

Assistance at the purchasing stage can also be a great idea when you’re new to the game, too. Here at LANGTONS, we have a dedicated auctions team and many knowledgeable brokers that can help you choose the right wine and place your bid.

Ensuring quality

What are some of the risks and advantages of fine wine investment?

The first and most notable risk is that wine is essentially a perishable good. This is in reference to both the wine itself and the cork, so it’s good to check if the wine you’re buying offers recorking.

Another factor to consider is that wine isn’t like bonds or crypto – it’s a physical and delicate product that can pose risks if the proper care isn’t implemented. You can limit these risks by ensuring you have ideal storage set up in advance and control any handling of your prized bottles.

Like all investments, always check the provenance and buy from reputable houses and retailers so you don’t risk buying an unauthentic product. You want to know the wine has been stored well and looked after, as a bottle’s condition can only tell you so much about the wine’s life thus far.

On the flip side, the fine wine market has seen steady growth over a number of years and doesn’t see the fluctuations of other markets like watches (which have seen a dip in recent years). It’s a safer play, so far as you have the safeguards such as storage and thorough research in play to protect your investment.

Another advantage of savvy fine wine investment is that it doesn’t always need to return cash rewards. Often, investors in this space enjoy what’s in the bottle as much as they do the profits raised from their sale. The best investors buy and sell well enough to keep some of their wines and enjoy them with good company, the way the items were intended.

Lastly, fine wine investment is also a fun topic. I may be biased, but it’s arguably more interesting than stocks and bonds, and it’s something you can talk about around a dinner table without boring your dinner guests.

Enjoying the investment

What are my tips for fine wine investment?

I suggest starting small and going for reputable producers when you first get into the fine wine investment game. The blue-chip wines can be the perfect place to start due to their known standing in the fine wine market.

Also, keep a lookout for birth-year wines, which can be valuable commodities in the secondary market. Last year, we saw big premiums being paid on 1974 Penfolds Grange and will see the same logic applied to the market next year, so plan for events like that.

In terms of regions to keep an eye on, Burgundy is the most talked about region in investment circles right now. The prices on the top wines have gone beyond the reach of most buyers, and even the entry-point wines have risen sharply. There is still some value to be found, but the producer should be the first thing you look at when choosing where to buy.

Closer to home, Australian classics from the LANGTONS Classification increase in value and the best wines to search out are Wendouree, Rockford, Bindi, Giaconda, Penfolds and Henschke. Old Bordeaux from top vintages and the finest wines of the Rhône (think Château Rayas) are once again hot property and demanding huge prices in the secondary market.

But most importantly, remember to buy wines that you also enjoy.

Opinions expressed by The CEO Magazine contributors are their own.