New Security in Tangible Assets

Where saving for the future is concerned, many savvy investors have turned to tangible assets that they can touch, feel, see, display and enjoy. That is why investments in such alternative investments as art, gold, diamonds and wine are becoming so popular. When you buy a work of art from a trusted artist that will appreciate in the coming years, you can get double duty by hanging the art on your wall and enjoying it every time you pass by. The same goes for gold and diamonds, as you can derive immense pleasure from wearing your investment and letting everyone enjoy seeing it instead of keeping it hidden away under lock and key until the price is right to sell. Wine isn’t exactly the same because you can’t wear it or display it, but it is a tangible asset that you own and can turn to profit whenever it suits.
Saving for the future

Instant Monetary Gain

Some investors choose to put their money in real estate, which can also be a good hedge against inflation. However, if you need to raise funds quickly, you must sell the entire piece of real estate. Not true with wine. If you need money today and you happen to have a bottle of Mouton-Rothschild 1996 in your wine cellar, you could put it up for auction and make a bundle. A bottle that was purchased from BWC in 2010 for £2,900 can bring you £4,104 in today’s market. That profit of 42% in only three years would be hard to find anywhere else in the market.

Tenfold Increase and Rising

According to an article in the New Statesman, levels of investment in the Fine Wine Market (FWIM) over the past decade have seen a tenfold increase. That increase is in part because of the volatility that has existed in the more traditional banking sectors and equity markets. With new interest coming from the US, China and Russia, those figures will only increase.

Using Terroir to Distinguish Wine for Investment

The mainstay of fine wines worthy of investment hails from the Bordeaux region of France for good reason. The area’s geographical characteristics, geology and perfect climate are conducive to growing the grapes that go into the finest wines in the world. When buying a single bottle or a case, whether to drink or to store, a good understanding of the wine’s terroir will help you make the best choice.

Wine Production Rules

Terroir, which refers to the physical aspects of a certain region, sums up the local environment’s characteristics and how they effect production of a certain product. The terroir concept is based on the French wine’s “Appellation d’origine controlee” system, also known as AOC. The rules regulating wine production and distribution around the world use the French model as guide for appellation laws. Besides wine, terroir can also be important in coffee, chocolate and cheese, which are all influenced by the area where they are grown or produced.

Origin of the Grapes
Fortunately, you can find all of this information on the wine’s label. Some countries put more emphasis on the types of grapes going into the vintage, but in Old World wines, such as that coming from France, it is customary to print the location. Given the specific location, the savvy buyer knows the exact terroir properties imparted to the wine. Along with that knowledge, you can also have a pretty good idea as to what type of grapes were used. For instance, if the label indicates that the wine is from the right bank in Bordeaux, than Merlot grapes are used. If the wine is from the Left Bank, than it will be produced with Cabernet Sauvignon grapes.

It’s fine to take chances with wine you want to put on the table, but when selecting wine as an alternative investment, stick with the tried and true from Bordeaux.