It might be hard to think about the long term amid a global pandemic, a grape glut in California and tariffs on certain European wines. And yet, people are buying more wine than ever. So, is this a good time to invest?
The Pros
Anthony Zhang, cofounder/CEO of wine investment platform VinoVest, says that the factors that drive the wine market—scarcity, supply and demand—are different than those that drive the stock market.
Wine is inherently a long-term commodity that gets better as it ages, so its value only goes up, says Zhang.
He points out that many restaurants are liquidating inventory, so rare, allocated bottles are hitting the open market. Wineries are also releasing library wines or offering futures at a lower price.
Producers are playing the market right now, too. Take, for example, Bêcheur, a new project by Michael Terrien, winemaker at Obsidian Ridge and Terrien Wines.
Seeing the recent surplus in California, he offered to bottle and sell friends’ wine under the Bêcheur label. This led to the creation of a dynamic pricing model—each bottle on the site has a detailed graphic—to sell Mt. Veeder Syrah and Oakville Cabernet Sauvignon, among others, at a fraction of their normal prices.
These don’t have the labels that make a wine collectible, but Terrien’s model is a great way to get high-end, drink-now wine on the cheap.
The Cons
Rob McMillan, founder/executive vice president of Silicon Valley Bank’s wine division, agrees that it’s a good time to invest, but with a few caveats. Tariffs on some imported wine require a higher buy-in.
Longer term, societal changes could affect investments, too. McMillan points out that baby boomers are beginning to retire, and their discretionary funds may be allocated elsewhere.
There’s also a question about the drinking behaviors of millennials.
According to market research firm Wine Intelligence’s 2020 Landscapes report, the number of regular wine drinkers in the U.S. has decreased by 11 million since 2015. People ages 21–34 account for 77% of that decrease. There’s concern about how many people will buy fine wine in the future.
Danny Brager, of Brager Beverage Alcohol Consulting, urges wine investments to safeguard the industry against the rise of alternative beverages.
“I would suggest that not investing in wine yields to competitive forces,” he says.
Of course, there’s no tidy answer as to whether or not now’s the right time to invest in wine, but as Zhang says, if worse comes to worst, you can always drink it.
Published: December 14, 2020
