Investing in wine

Is investing in wine profitable?

The indices provided by Liv-Ex, a leader in this field, make it possible to know what an investment in wine can bring. The average return on a vin investment over the past five years has been 5.6% per year. However, it remains a risky investment, which is primarily aimed at connoisseurs ready to follow their purchases closely. Profitability is in the medium to long term, 8 to 10 years. Betting on the established values of certain renowned wineries, but also on more speculative wines, will potentially boost the cellar's performance.

Investing in wine can be profitable under certain conditions: being knowledgeable about domains and regions, diversifying your portfolio, focusing on rarity and quality.

Investing in wine can help your savings

Wine savings have a number of advantages.

• Unlike other assets, prices and demand are little affected by financial crises and market turmoil.
• Increasing consumption in the face of a limited supply of quality wines leads to scarcity, a symbol of rising prices.
• Wine is a tangible asset, unlike shares or obligations. It can be sold or consumed but it will always have value.

What are the risks of investing in wine?

Investing in wine is relatively risky and wine savings should be limited to 5%, at most 10% depending on the investor profile. It has a number of disadvantages:

• Predicting the evolution of prices over time is difficult. All it takes is a simple revision of the rating for the market value to collapse.
• Storage costs can be high
• Not all wines improve over time: they must therefore be resold at the right time.
• The lack of liquidity.
• The time frames for making the gains are relatively long.
• The market is unregulated and does not protect against scams and counterfeits.

The prospects for the added value of wine

The Covid-19 pandemic caused a sharp drop in sales with the closure of restaurants and hotels, thus affecting the wine market. This is a real opportunity to invest in wine and to position yourself for a return in strength. The market has already regained its dynamism with an increase in 2021 of + 15% compared to 2020. It meets the law of supply and demand. As the consumption of wines over the years has been constantly increasing, it is tending to make bottles rare. It is therefore possible to realize significant capital gains by selling to an enthusiast the bottles stored in the heat purchased years earlier.

What is the taxation of investing in wine?

The taxation that applies is different depending on the Of ETFs or wine shares or investments in physical wines.

• Case of investment in ETFs and wine shares: the gain from sales is subject to securities taxation. The income tax rate is 12.8% plus 17.2% social security contributions.

• Case of investment in physical wine: it is assimilated to a furnished property in fiscal terms
• The tax threshold is €5000. As soon as the lot includes a bottle whose sale price is greater than or equal to 5000€, the capital gain tax applies.
• If the transfer is less than €5,000, it is completely exempt.
• The tax authorities grant an allowance of 5% per year beyond the second year.

• Case of a professional activity
• The seller must declare his activity in the commercial sector as a microentrepreneur. The fiscal and social declarations are those of the status concerned.

Here are some examples of good wines to invest in

The Bourse des Vins can guide you in your choices. To be preferred:

• Burgundy wines displaying prestigious domains: Saint-Georges, Chambolle-Musigny, Beaune-Grèves.
• Bordeaux Grands Crus, sure values: Pétrus, Château Margaux, Château d'Yquem.
• Southern wines more and more popular: the Tain cellar, Château Mourgues de Grès.
• Organic wines which are the big trend: Château Pontet Canet, Château Palmer.

But also popular foreign wines that are among the most popular and among the most popular, those from Portugal, Spain or Italy.

Conclusion

Investing in wine remains relatively safe, less linked to economic conditions than others. For the classic purchase of wine bottles, you need to be a fine connoisseur to choose the right wine investments.

For wine enthusiasts, wine investment funds will be recommended for wine savings, thus reducing risk and eliminating storage and liquidity disadvantages.

Even if impressive capital gains are a dream, investing in wine must remain above all a pleasure investment.

FAQ

What wine should I buy to make money? As with other assets, it's a question of brand and name recognition. Renowned wines tend to sell at higher prices for one reason: their rarity compared to their high demand.

The most sought-after wines generally come from the regions of Bordeaux, Burgundy and Rhône. Bordeaux wines are generally the most recognized and represent nearly half of the wines sold at auction.
When looking for great bottles, try to always choose the best vintages, as wine collectors tend to appreciate them.

How do you know if wine will increase in value? If you choose wines that are of an average year, easy to find, and have poor vintage years, it will be very difficult for them to be a good investment.

On the contrary, wines from limited production, in a good year, with a good vintage will by nature be wines that will increase in value over time.