From Bordeaux to Fläsch: the evolving landscape of wine investment and the role of Switzerland - Instead of stocks, bitcoin or gold, you can also invest in luxury goods such as wine. In fact, not all wines qualify, as they must meet certain requirements in order for them to be suitable for trade. Dr. Jean-Philippe Weisskopf, wine connoisseur and professor at EHL Hospitality Business School, explains how best to invest in wine.
HIGHLIGHTS
- Wine investment is in a worldwide boom.
- Not all wines are suitable for investment.
- You can make a profit by trading wine.
- For the wine investment to be lucrative, several criteria need be taken into account.
What kind of people invest in the wine trade?
On the one hand, we have investors who are not necessarily wine connoisseurs who aim to make money from it. On the other hand, there are the classic collectors, similar to those who like to collect luxury watches or classic cars. These people sometimes attach great importance to the reputation or the rarity of a wine brand or winery. And then, of course, there’s the wine enthusiasts.
What criteria must a wine meet to be suitable for trade or to be referred to as “fine wine”?
A key criterion is undoubtedly the shelf life of a wine. If it can only be stored for a short time, it is not worth investing in. Indeed, wines must have a certain shelf life in order to be tradable once or multiple times.
Are there any differences, for example, depending on the region?
No, most reputable regions can produce wines suitable for a longer shelf life in an appropriate warehouse.
So, do you need a large wine cellar at home to store large quantities?
Of course, this would be the perfect solution. However, numerous suppliers are available with whom you can store fine wines professionally at the optimal temperature and humidity.
What else do you have to consider in order to select the right wine as an investment?
Rarity, production must be limited. For example, if only a certain quantity of a variety and a vintage was produced, this helps increase the value over time.
How small does such a production have to be?
This depends on the region and the other four criteria. In Bordeaux, we are talking about 200’000 to 300’000 bottles, while in Burgundy or Piemont, we're talking about production runs of less than 5’000 or even 1’000 bottles. You should also pay attention to the quality of the wine. Because over the long term, only excellent wines can increase in value.
So, are only very rare wines suitable for trading?
No, because in order to trade wine properly, it must be available relatively quickly in significant quantities. In other words, market liquidity needs to be high enough. Thus, you have to estimate how many bottles are available on the market and how many the producer releases at which time. This has become a key strategic advantage and is a well-kept secret by producers, especially in Bordeaux.
Is it better to rely on well-known wine producers or certain varieties?
A brand’s reputation and history certainly play into a wine’s value. However, it’s definitely not everything. For example, despite Swiss wines having a good reputation in this country, they are hardly known abroad. For instance, Switzerland only exports around 2% of its production, which does not help create international visibility. At the same time, the brand “Switzerland” is strong in terms of quality and can thus increase the value of a product.
Where can you trade wines? Is there a wine exchange?
Currently, this is still limited in Switzerland. In Zurich, for example, Steinfels and other smaller merchants allow customers to buy and sell wines or conduct auctions. Internationally, this is done through private networks, large wine merchants, auction houses, and increasingly via the Liv-ex platform. However, overall buyers of fine wines are today mostly coming from Asia.
