If you think about it, wine enthusiasts have sought high and low for great wine since it was discovered. In that respect, wine investment has existed for decades.
So if you’ve been thinking about investing in wine, hear it from e-commerce business BoundbyWine.
WealthUp(WU): Before we dive into the nitty gritty, tell us a little bit more about BoundbyWine?
BoundbyWine (BBW): The founders are wine enthusiasts who discovered that most people in Singapore (while they loved wine), often knew only a slim profile of wines, and lacked the knowledge of wine appreciation. So we wanted to make discovering a fun and painless experience! We aim to provide wine enthusiasts with a fun and convenient lifestyle, where they can explore the depths of their wine preferences.
WU: How does it all work?
BBW: BoundbyWine provides curated wine subscriptions, and we pride ourselves in bringing wine enthusiasts unique wines. Not only that, the geeky algorithm we have built helps wine lovers identify their perfect wine for every occasion. This works great for those new to the scene or drinkers who aren’t entirely sure what to go for (we can’t all be sommeliers!).
Just sign up for the weekly or bi-weekly delivery, which will be crafted according to your preferences. Each bottle order will go into your virtual wine diary for you to access anytime. Oh, and the more you review and rate your wines, the closer you’ll get to uncovering the flavour profile you love.
WU: Take it back a notch, tell us – how did the idea all start?
BBW: It all started when one of the founders realised that there was no way for himself to avoid the disappointment of trying a new bottle of wine only to realise it’s not a wine that his friends enjoy. The fear of disappointment causes many to be reserved from trying something interesting, and remain stuck in their comfort zone.
WU: Talk about comfort zones, are there any new trends you’ve seen this year?
BBW: Young wine lovers! A large portion of our new subscribers this year were younger, late 20s to early 30s. It’s fantastic to see younger populations expand their typical palette to include wine.
WU: Interesting, would this spark a new interest in wine investments?
BBW: Here’s a fun fact: did you know that there’s a wine exchange market? It’s called the Liv-Ex, and it’s based in London. Similar to a stock market exchange, wines can be bought and sold by Traders. It’s been great as it sheds light on the opaque market that is luxury wines. It’s even got its own index, the Liv-ex Fine Wine 100 Index! It follows the top 100 sought-after wines, and has now become the standard for tracking luxury wine prices.
Alternatively, you can always grow a private collection, and auction it off as the wines mature. The trouble here is the storage of your luxury private collection. While it’s nice to have it on a display in your home, you’re often better off with a good cellar. In Singapore, there’s actually some warehousing options you can work with, to store your collection!
WU: Would you say now is a good time to invest in wine, considering the uncertain economic landscape?
BBW: It depends on your investment goals. If you’re looking for something with stable potential returns over a longer period of time, it definitely is a good choice. Well selected wine investments have a strong investment return potential. It’s essentially low volatility, and its prices are not correlated to the financial market, making it a good diversification asset for your portfolio.
When people think about wine investment, most people automatically direct their attention to the Premier Grand Cru of wines (the creme de la creme of luxury wines). However, the problem is that the value of these are probably not going to rise/appreciate very much, making it kind of like investing right into blue chip stocks without the dividends. They often don’t have the potential returns as much anymore, and there’s no dividends as you can’t take a sip!
What’s a little more exciting and profitable would be something closer to the French en primeur market. Basically you can invest in wines before bottling. It’s risky, with the biggest risk being wine critics giving the vintage poor marks. But, when the wines mature well, there’s a chance for 20-40% increase in value after only one or two years. Not bad for a little fermented grape juice!
What’s a little more exciting and profitable would be something closer to the French en primeur market.
WU: Oooh, delicious insight! What do you have to say when people warn about “wine not as liquid as the stock market” and hence it’s better to stay away from it? Any myth to bust?
BBW: Longer is not necessarily better for all wines. Similar to bonds, different bonds have a maturity period. There are some that are perpetual, but there are actually a lot of wines that have a maturity period.
WU: Alright, say an investor is interested but has never dealt with wine investment – what are the top 3 factors to look out for?
BBW: Like any investment, you have to know what you’re investing into. Vintage, region, and vinification are the 3 most important aspects. It’s like fundamental analysis of a stock, these are the golden indicators of a good investment. One important thing to note is that the vintages for different regions are different, a good year in one region may not be good for another region. Classification systems are also different from region to region, so best to understand those a little more
Another thing to note is to not underestimate the importance of the microclimate, and that’s where the terroir becomes important. The same region, but different soil, humidity, and soil type greatly affect the quality of the grapes, which affect the quality of wines. It’s just the same – would you invest in a company with poor senior management?
Nonetheless, you gotta invest in yourself to educate yourself about this. Take a wine course such as the WSET, or follow wine critics. Better yet, BoundbyWine’s wine subscriptions can actually help you out with this, discovering not only good vintages for different regions, but also having an understanding about wine and how to sell a trade to potential buyers.
Vintage, region, and vinification are the 3 most important aspects. It’s like fundamental analysis of a stock; these are the golden indicators of a good investment.
WU: Is there a standard go-to rule when it comes to choosing the wine for investment?
BBW: Wine is very much a “passion” investment, like luxury cars, or art. But, you would have to be ready to invest in wines you actually may not like. Similar to investing in companies with stable financial ratios, best to invest in something that has the potential to provide the best returns
Wine is generally a long term investment once bottled, but the en primeur market is a market where you can have a horizon on a couple of years
WU: Of course, we can’t end this interview without a quote. What’s your favourite wine quote?
BBW: “In wine there is wisdom, in beer there is strength, in water there is bacteria” – mostly because until this day they don’t know who said it. It’s attributed to Benjamin Franklin (one of the Founding Fathers of the United States), who did say that “Wine is constant proof that God loves us and loves to see us happy”
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