| Investing in wine is by no means a new phenomenon, | | | | US's relationship with alcohol has been severely |
| although most US consumers are unaware of modern | | | | tainted, thus stalling the adoption of wine investment |
| wine investing opportunities. This brief history should | | | | practices. Prohibition, and its historical legacy, still |
| provide context and confidence to potential US | | | | permeates US laws. Intrastate and interstate |
| investors to look to wine investing as a viable, | | | | shipping, the three-tier selling model, holding and selling |
| lucrative and mainstream investment option. | | | | of alcohol is all regulated, which adds hurdles (and |
| Individuals and companies in Europe have been | | | | cost) to buying and selling wine that European |
| investing in wine on a grand scale for decades. And | | | | investors do not have. But thanks to internet retailers |
| more ancient forms of wine investing go back | | | | and online auctions buying and selling fine wines is |
| thousands of years, long before Romans brought | | | | now easy, convenient and affordable. |
| grape vines to France. Investing, or speculating about | | | | Increasing global demand has made wine investing |
| a wine's future value, has allowed growers to finance | | | | more lucrative than ever. In the 1990s demand for |
| their crops, merchants to identify price points, and | | | | the best wines from Bordeaux boomed as Asia |
| collectors to make a profit. | | | | joined Europe and North America in pursuit of |
| No doubt, however, it is the fine wine from Bordeaux | | | | consuming this liquid luxury. Greater price |
| that has captured investor attention for centuries. | | | | transparency via the internet and the influence of |
| Superior terroir, advancements in bottling and the rise | | | | wine critics has demystified and democratized fine |
| in global trade made the Bordeaux wines prime for | | | | wine, bringing it to the attention of a much larger |
| fine wine demand. In fact ships were once measured | | | | audience. With only a few clicks of the internet |
| by the tons of wine they could carry. Given the | | | | investors can now view the market price range and |
| capital and space required to bring wines to maturity, | | | | a series of expert opinions on taste, quality and |
| however, wine investment was limited to European | | | | longevity. As a result, wine prices have risen by |
| aristocracy. | | | | approximately 13-15% per year over the past 25 |
| In 1855 Napoleon III aided the wine investment | | | | years with quiet periods (e.g. 1998-2002) being more |
| market tremendously when he classified Bordeaux | | | | than balanced out by the busy ones (e.g. 2005-2007). |
| wines based on historical quality and prices and | | | | Offsetting the demand growth is a long-term limit on |
| instituted a series of laws to ensure long-term value. | | | | supply. Napoleon effectively fixed supply when he |
| Aside from Chateau Mouton-Rothschild's upgrade in | | | | tied the wine classifications to the corresponding |
| classification, the original classifications and laws | | | | parcels of land. New World wines, like those of the |
| remain unchanged today. Novices and bourgeoisie, | | | | US and Australia, have had difficulty with acceptance |
| who typically could not afford to sample fine wine | | | | in the global wine investment arena. They are |
| personally, suddenly had the tools to feel comfortable | | | | competing with several centuries, if not millennia, of |
| selecting wines for investment. Prices also became | | | | practice and reputation in Bordeaux. With such a |
| steadier as wines were now identified in tiers. | | | | young track record, about 100 years, it is difficult for |
| The largest exporter, and consequently the largest | | | | investors to have as much confidence in their return |
| speculator, of Bordeaux wine for the past 900 years | | | | as they would have with a Bordeaux wine. |
| has been the UK. So it is not surprising that the UK | | | | Fine wine has long been a part of a European, rich |
| has the most advanced systems for wine investing. | | | | man's portfolio. With the advancements in |
| A "Fine Wine Index" was started in 1982 by Liv-Ex, | | | | transparency and availability of online merchants, US |
| which can be traded on Bloomberg systems, by | | | | investors are primed for investing in wine. And with |
| banks and is commonly used for hedge funds and | | | | the fixed supply and the growing demand from |
| private investment data and trading. In fact, wine | | | | emerging economies like China and Russia, wine |
| investing is so popular that private collectors in the | | | | values can only go up, up, up. If US investors can |
| UK hold more than $2B worth of fine wine in bonded | | | | learn the lessons from more established European |
| warehouses. | | | | markets they will find a lucrative way to diversify |
| For several reasons the US never followed the UK's | | | | their investment portfolio. |
| lead in wine investing. Unlike European history, the | | | | |