Wine investment can be rewarding in more ways than one. Besides the profits you can expect to pocket when the wine is ready to sell, it has certain benefits that cannot be obtained by putting the same money into the stock market. Wine is a tangible product that you can actually look at, show to friends and even enjoy on special occasions. The only question that remains after the purchase is choosing the prime time to sell. When the bottles or cases are properly stored in a bonded warehouse or home cellar with ideal conditions, the wine will increase in value while reaching maturity.
All in the Reputation
As with all investments
, the goal is to buy low and sell high, but there are a few factors that determine the price a bottle can bring on the market. One is the vintage, because some are much more dear than others. The wines purchased from estates with the best growing and harvesting conditions can be expected to bring higher prices. Another influence is the ratings a vintage receives from important wine critics. It can happen that the reputation of the wine can influence the price more than the contents of the bottle. There is a tendency to think that old wine must be the best and most valuable, which is reflected in the selling price. That being said, the future aging potential of the wine clearly affects the price.
Supply and Demand
There is no doubt that in the wine market, supply and demand plays a huge role. As the wine matures, its rarity also increases. By the time it comes to full maturity, it is more valuable due to its scarcity. While in Bordeaux the supply of wine is limited, there are other wineries that purposely keep production low so the price will remain high.
Fine wine is slow to react to immediate changes in the global economic situation. However, as with all investments, at some point the wine market mirrors that of the rest of the world
. During periods of devastating economy, history shows that even the wine market can be temporarily affected. The good news is that even during these periods, the wine continues to age and improve!