Home > Blog > Foresight > Fine wines: a not particularly liquid investment
Fine wines: a not particularly liquid investment
Like other exceptional wines, Grand cru wines are a profitable but demanding investment. In Luxembourg, their average price has risen by between 4% and 8% a year over the last 20 years. Investing in prestigious fine wines is not as “liquid” as other investments. Painstaking management combined with a long-term strategy is essential to maximising returns.
Why invest in fine wines?
Life insurance being the most well-known type of product, fine wines are also an interesting choice for securing your money over the long term. Unlike shares or real estate, their value increases over time. The scarcity of vintages, combined with the worldwide enthusiasm for these prestigious products, helps drive up prices.
Like gold or art, investing in wine adds a secure investment to your portfolio. Grape varieties are proving resilient to economic crises.
Luxembourg offers various investment options:
- Specialised funds: funds based in Luxembourg or London are available for high entry fees.
- Direct investment: purchase of wines “en primeur” or from winegrowers; an expert appraisal or precautions are recommended as regards their storage.
- Wine cellar management companies: iDealwine, Cavissima, U’Wine.
Our tips for managing an investment in wine
Cellar management and protection is key to the success of your wine investment. Store your bottles in their original crates for double protection against shocks and light. You will also increase their value on the market.
By storing them in optimum conditions, you can preserve the quality of the wines. Beware of fluctuations in temperature and humidity! Poor storage affects the properties of the vintages, and they become unsaleable.
For Grands crus, opt for bespoke wine cellars. They maintain an ideal humidity level of 70%, with a constant temperature of between 10 and 14°C.
Unlike investing in funds, keeping your collection at home means you can enjoy it at any time. Treat yourself to a good bottle!
Good to know: manage your collection by phone
Simplify the management of your wine cellar using your smartphone. Several applications allow you to catalogue your bottles, track their age and get recommendations on how to enjoy them.
The risks of investing in wine
Investing in wine carries a number of risks. The market is less “liquid” than that of equities: it takes time to sell a bottle or a collection. Wines are influenced by trends in fashion and their value depends on supply and demand.
Good to know: limit risk by diversifying your purchases
Diversify your wine investments to reduce the risks.
Buy wines from various regions, multiple vintages or producers to maximise your
chances of profitability over the long term.
Criteria for choosing the right investment wines for you
Not all wines offer the same potential for appreciation. Make sure you buy on the basis of the estate’s reputation, the year of production and demand.
Bordeaux wines, like Premier crus, are a sure bet. Burgundy, with estates such as Romanée-Conti, is also highly sought-after. Don’t hesitate to explore other regions such as California, Spain or Italy.
The importance of insurance for wine collections
Storage is not the only factor you need to consider to safeguard your investment. Taking out specialist cover is essential. Although home insurance policies cover the contents of wine cellars, more specialised protection is recommended for exceptional collections.
Foyer has teamed up with Hiscox to offer insurance designed for wine collectors. This insurance for rare and precious wines protects your cellar against accidents, fire, theft, water damage and accidental drops. Is your collection growing? No need to worry. At Foyer, you benefit from expert advice on protecting and valuing your wines. If your collection is growing, your new purchases are automatically covered. Your bottles are also protected during transport, at auctions and when you travel abroad.
Investing in fine wines combines prestige with potential returns. This investment requires good management, a long-term strategy and particular attention to the risks of storage and resale. The Luxembourg market offers a host of investment options. Don’t forget to protect your collection with an appropriate insurance policy to secure your investment over the long term.
Three key points to remember:
- Steadily rising in value: fine wines are increasing in value by between 4% and 8% a year. They offer a secure and profitable investment.
- Rigorous management: storing your bottles in optimum conditions is essential to preserving their value.
Protecting your investment: taking out specialist insurance, such as that provided by Foyer, ensures that your collection is protected against risks.
