This article originally appeared on VICE Italy.
A few years ago while I was travelling around Turkey, I met a lovely Croatian man. He told me he spent his life roaming from one luxurious destination to another and eating at Michelin-starred restaurants. When I asked him what he did for a living, he said he was a “wine broker”. The conversation pretty much died after that, because I had no clue what he was on about.
A few weeks ago, I read about an app called Vindome, which is basically a platform for people to invest in fancy wine. It instantly reminded me of that chance meeting in Turkey, and had me daydreaming about one day living that Croatian man’s life.
For me – and a lot of other millennials – the term “investing” is intimidating. If you don’t have a gang of Redditors behind you to rig the system in your favour, it’s not easy to know where to start.
Although a bit old-timey and highfalutin, wine does have a few advantages over other investments. For one, wine is a perishable good and therefore not subject to Capital Gains Tax, which you usually pay on profits made from investments. Plus, “Wine isn’t really linked to the volatility of financial markets,” says Mario Colesanti, marketing and sales director at Vindome. “It’s not speculative in the short term.”
Famously, wine improves with age. Production is limited to certain areas, so it’s inflexible and often can’t meet demand. This makes some bottles rare, and therefore expensive. And because a certain amount of bottles are opened every year, the intact ones become even more prized. These are the main reasons other collectors or restaurants and hotels will be willing to dish out more cash for your bottles in a few years time.
Colesanti estimates the timeframe for making a profit on a wine investment is five years. Bloomberg thinks it’s double that. Granted, that is a long time to wait for a return (and to not drink your investment), but if you already have a portfolio of shares and bonds, wine can a fun way to diversify. That said, like all investments, nothing is a sure bet, and the more you put in, the more you risk losing.
Roland Coiffe, from Roland Coiffe & Associés in Bordeaux, comes from a prestigious family of wine merchants that has been dealing wine in France since the 19th century. Coiffe clearly has an extremely privileged background, but I asked him what it takes to get started as an outsider.
“You need to have general business administration skills,” he said. “And then, of course, you also need to know about wine and appreciate it, otherwise doing this job is pointless.”
Coiffe said there are three main fine wine markets: North America, Europe and Asia. “The biggest consumer is America, which has dominated the market for about 30 years,” he said. “But for about ten years, China and other parts of Asia haven’t been far behind, especially for premium French wine.” He said that, rivalries aside, French fine wine continues to be what you should invest in for a safer bet. “After all, we have Champagne, Bordeaux, Burgundy and the Rhône Valley,” he said.
Not everyone is born into a family with a chateau in Burgundy – and so far, I’m not convinced a peasant like me actually has a shot at making any money in this world. “In the past, you needed around €10,000 to €20,000 just to get started,” said Vindome CEO and co-founder, Ingrid Brodin. “Our first goal was to remove the barriers to investment.” The team is in direct contact with wine cellars and merchants like Coiffe, who sell on behalf of important chateaus, or for smaller growers who can’t take care of their own production and marketing.
Vindome selects the bottles they showcase on their platform based on many criteria, like the wine’s brand equity (how popular it is in Europe, North America and Asia), price, performance (if the wine gets better and more expensive over time) and wine critic scores. You can invest in a minimum of a case of six bottles at a time, with prices ranging from €150 to €8,000. If you’re as clueless as I am, they also offer free online consultations to advise you on your investments. And if you have nowhere to keep the wine for long periods of time in optimal conditions, you can rent a space in their warehouse for €1 a month per wine case.
It sounds good, but if we learned anything from the recent Robinhood scandal, not all apps promising to democratise investment are to be trusted. I had a look around to see if other companies offer similar services, but most had prohibitive first investment quotas. If you are in the US, however, you can check out Vinovest, which asks for a minimum investment of €825.
To play it safe, I asked Colesanti what you could do with a small budget for a low-stake first investment. “A lot of people who are passionate about wine buy two cases of a wine they really like,” he said. “They drink one and resell the other just to cover the costs.”
Sounds good to me.