Wine Portfolio Management: Why You Need it & Best Practices

by Hunter Robillard

With a stellar track record of long-term returns on investment, fine wine is an excellent alternative investment asset class.

But to build a successful wine investment portfolio, you need to have extensive wine knowledge and be up-to-date with all current trends.

Alternatively, you can skip all the time-consuming research and get help from a professional wine portfolio management service instead.

Let’s cover the best wine portfolio management practices, why it pays off to use an expert service to build your wine portfolio, and how Vinovest can help you build a winning one!

What Is Wine Portfolio Management? (Best Practices)

Wine portfolio management is a service that helps you build and manage a wine portfolio.

You’ll be able to buy, sell, and store investment grade wine bottles easily, without you having to spend extra time on research, logistics, and following wine market trends on a daily basis.

To give you a better idea of how this works, let’s break down seven best practices that a wine portfolio manager would follow. (These tips are also useful for wine investors who want to manage their fine wine collection on their own.)

Track Price History and Production Quantities
Research the Producer’s Reputation
Check the Wine Critic Scores
Understand Which Vintages Perform Well
Find out the Wine’s Aging Potential
Diversify Your Portfolio
Do Extra Research

1. Track Price History and Production Quantities

A wine portfolio manager would have a wide network including wine merchants and wineries in different regions to ensure easy access to even the rarest wines.

Here’s why:

Some of the most expensive wines are produced in limited quantities, which is one of the factors that determine their skyrocketing prices. For example, only 700-850 cases of the Screaming Eagle Cabernet Sauvignon cult wines are produced annually, and they sell almost immediately upon release.

But since this rare wine label is sold exclusively to the winery’s mailing list, only a few lucky investors have immediate access to the new vintages. In turn, most collectors try to obtain Screaming Eagle on the secondary market, but prices there are much higher (easily sold for double or triple the initial price.)

Wine portfolio managers would also be up-to-date on the price trends so that they know when to buy and sell your bottles.

For example, rare and prestigious investment wines, especially in their most exceptional vintages, show stellar price appreciation trends. The 2016 Domaine de la Romanee-Conti Romanee-Conti Grand Cru Classe grew from $19,968 in 2020 to $27,430 in 2022 - a spike of 37%.

2. Research the Producer’s Reputation

Wine portfolio managers also have extensive knowledge about producers, their reputation, and past vintages’ performance.

A producer’s reputation is one of the most important factors to consider when choosing investment grade wine labels. Great wine vintages from renowned winemakers are usually always in high demand, which means you can easily sell them later on to other investors and monetize your investment.

Some of the most famous names that are highly sought-after by wine investors are:

Your wine investment manager should ideally be on top of all this information.

3. Check the Wine Critic Scores

When selecting wine bottles for your fine wine collection, wine portfolio managers always check wine critic recommendations and reviews.

Wine critic scores from influential world-renowned critics like Robert Parker, Jancis Robinson, Neal Martin, and James Suckling can heavily influence the reputation of a wine label or a specific vintage.

4. Understand Which Vintages Perform Well

The quality of the year’s harvest is usually influenced by the growing season and conditions, which can vary significantly in the different years and regions.

So before buying a wine asset, wine portfolio managers do their research on the vintage characteristics.

To diversify your portfolio, they can include both excellent and average vintages. The superior vintage labels will leverage your portfolio. Meanwhile, a few great wine labels from lesser vintages would provide a great price-quality ratio with the potential for a higher ROI in the future.

5. Find out the Wine’s Aging Potential

A good fine wine portfolio should contain wines with substantial aging potential.

A fine wine suitable for aging can typically last for at least 10 years in your wine cellar, but some of the most exceptional vintages might preserve beyond a few decades and appreciate in value.

A wine portfolio manager would know the longevity of the wines. He can advise you on when is the best time to sell (or drink) such special bottles, so you don’t miss getting the most out of them while they’re at their prime.

6. Diversify Your Portfolio

A wine portfolio manager also ensures you have a diverse fine wine collection that consists of wines from different regions, vintages, and producers.

According to Financial Times, part of your portfolio should definitely consist of “liquid” wines (traditional blue-chip wines) that have proven to be safe investments over the years. These include wines like First and Second Growth Bordeaux and Grand and Premier Cru Classe Burgundy labels.

The rest can include fine wine labels that are upcoming investment wines in the fine wine industry. These include some of the Champagne, Italian, and Australian wine labels.

Here’s why.

In 2020:

Penfolds Grange 2016 was traded at $4,850 per case - higher than some of Bordeaux’s well-established wine labels.
66 Italian wine brands were included in the Liv-Ex (London International Vintners Exchange) Power 100 index (compared to just 47 in 2019.) This resulted in an 8.4% increase in Italy’s market share by value from 2019 to 2021.

Your wine portfolio manager should be tracking these trends so that you don’t miss out on the most promising gems in the fine wine industry!

7. Do Extra Research

The Liv-ex 1000 index rose by 2.4% in 2021, reaching a new record high. Meanwhile, the fine wine market has outperformed several other traditional investment and financial markets (like FTSE 100 and Dow Jones.)

That’s why wine portfolio managers acquire all the wine knowledge needed to create a winning portfolio. This includes:

The changing wine investing market trends
When and what to buy and sell (bottles, wine futures, or wine stocks)
Other crucial factors that can influence the way your wine portfolio is managed

In a gist:

Here’s Why You Need A Professional Wine Portfolio Management for Your Wine Investment

If you’re a wine lover who wants to build a winning wine collection, you should hire a professional wine portfolio manager.

A professional wine portfolio management service (like a wine merchant or a wine investment association) can do all the hard work for you, including:

Building a balanced and diversified wine portfolio.
Managing the risk that arises with the changing economic environment and hedging against the effects of inflation, recession, and other negative trends.
Acquiring the best performing wines based on your preferences.
Analyzing key fine wine market trends to ensure you have a winning wine portfolio.

Next, let’s see how you can start your wine investment journey with help from the professionals! We’ll tell you the best fine wine investment service you can use to build your wine collection.

Build a Successful Wine Investment Portfolio with Vinovest

Vinovest is a leading wine investment company that can help you buy, store, and sell fine wine bottles from around the world. You can even have your bottles delivered to your doorstep if you wish to pop a bottle open.

How does it Work?

Any wine lover can start their cult wine investment journey with Vinovest just by following these simple steps:

Sign up on the platform.
Complete a quick questionnaire about your risk appetite and investment preferences.
Add funds to your account.
Track the growth of your portfolio from the comfort of your home.

Benefits

Wine investing through Vinovest also comes with lots of benefits like:

Easy buying and selling of wines: The AI-based platform allows you to sell and buy wines with just a few simple mouse clicks.
Best prices: Vinovest sources wines directly from wine merchant and wholesaler establishments, ensuring you get the best possible prices.
Curated portfolio: Vinovest’s team of Master Sommeliers and wine experts curates your wine portfolio using financial models backed up by historical data.
Provence and authenticity: Vinovet checks the provenance of every single bottle to ensure it’s 100% authentic.
Optimal storage: As our client, you don’t need to have your own wine cellar. Instead, you can take advantage of Vinovest’s state-of-the-art bonded warehouses, where all wine bottles are safely stored under optimal storage conditions at all times.
Low overall cost: The annual fee is only 2.5% (or 1.9% for portfolios over $50,000). This covers the buying, authenticating, storing, and selling of your wines, a full insurance policy, and your portfolio management.
Insurance and security: All storage warehouses are equipped with surveillance cameras to ensure the safety of your wine collection. Additionally, the wine storage is protected with a full insurance policy in case of damage, theft, or loss.
Easy delivery: Vinovest takes care of all delivery logistics for you, whether you want to ship your wine to a buyer or just get a bottle or two for your next wine party.

So, what are you waiting for?

Get an Expert Wine Portfolio Manager for Your Winning Wine Collection

Fine wine is a great alternative investment asset class that offers substantial returns on your investment. However, to get the most out of your wine portfolio, you need to be an expert in prices and market trends.

Alternatively, you can hire a wine portfolio management service that can ensure you have a high-performing wine portfolio.

Sign up on Vinovest and start your fine wine investment journey today!