5 Top Risks when Investing in Wine

Investing in wine can be a very lucrative venture. But just like other investments, putting your money in wines can have its drawbacks. Even seasoned wine investors admit that wine investing does not always yield profits. Below are the biggest risks that investors deal with in the wine industry.

1 - Wine Quality can Change over Time

The quality of wines, even unopened ones, constantly changes with time. There are many factors that can alter wine quality. Apart from the ingredients and the production techniques used, wines can be affected by transportation and storage methods. Even the type of cork used can affect the future quality of wine. Therefore, before you invest in wines, first conduct your own study as to the reputation of the winery. Also, investing in wine requires you to spend on the proper storage systems to ensure that the right levels of humidity and temperature are maintained.  

2 - Some Investment Grade Wines can be Faked

When investing in wine, it is important to make sure that your collection is made up of genuine stuff. There have been instances where fake wines made their way into auctions. Fake wines do not have any value. In fact, if you have a counterfeit wine included in your collection, your reputation as an investor could be negatively affected. Future buyers will not be too keen on buying wine from you if they know that you have fake wines. So, always make sure that your wines have their proof of origin. On top of that, you may need to open a bottle for the sole purpose of tasting and proving a wine’s authenticity.

3 - Past Performances Cannot Guarantee Future of Wines

The wine industry is always changing. Besides quality, wine value can also shift. Even the production levels of wine fluctuate every time. What may be an expensive wine today may not be as pricey after ten or twenty years. Many wines that have been celebrated when they were first introduced never joined the ranks of the classics. With this in mind, putting your money on even the most popular wines today does not guarantee that your investment will get good returns in the future.

4 - Production of Great Wines have Increased

Modern winemaking techniques have allowed producers to make more great wines using the same amount of resources. This is one of the biggest reasons why there are more producers now than a few decades ago. The steady rise in the production of great wines can threaten the value of wines. As the availability of good wines becomes more widespread, they can be bought conveniently at auctions and at lower prices. For a wine investor, this translates to lower investment returns.

5 - Investing in Wine Requires Insurance

Collectors and investors need to have their wines insured. Wines are perishable and they can be damaged by almost anything around them, from humidity to the lighting system of the place where they are kept. Also, wines can be easily stolen or their bottles can easily break if disasters like earthquakes or fires happen. Unfortunately, the insurance costs of wines can be very expensive. So, you have to factor in such costs before investing in wine.

 

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