At Revel, we are passionate about wine cellar design, but we’re also keen to share insights from the world of fine wine collecting. Last March, we explored whether collecting fine wines could serve as a viable investment strategy within a broader portfolio. The conclusion? In strictly economic terms, the answer is “no.”
However, the world of wine is not just about numbers—it’s about passion, culture, and enjoyment. This is why many collectors continue to pursue this fascinating hobby despite the financial realities. In this blog post, we’ll revisit some key points and offer a more nuanced perspective on the subject.
Why Wine Isn’t a Great Pure Investment
While certain wines, particularly from prestigious vineyards, do appreciate in value over time, several factors complicate the idea of fine wine as an investment:
- Transaction Costs: Buying and selling wine isn’t like trading stocks. Transaction costs, including auction fees and buyer’s premiums, can erode profits.
- Legal and Bureaucratic Barriers: There are regulations on shipping, taxes, and other legal issues that make trading wine complex.
- Holding Costs: Fine wine requires careful storage in temperature-controlled environments, and this comes with additional costs for storage, shipping, and insurance.
Even if you were able to secure highly sought-after wines such as Screaming Eagle or Domaine de la Romanée-Conti directly from producers, this opportunity is available to a select few collectors. For the vast majority, holding costs and transaction fees make it difficult to generate consistent and competitive returns.
The Real-World Example: Selling Part of My Collection
Having recently sold a portion of my collection, I can share a real-world example. I initially acquired wines with a total cost of $61,350, and I sold them for $115,000. That sounds impressive on the surface, and I was happy with the outcome. But after considering the costs, the annualized return was about 5%—after 10 years. This does not include the cost of storing the wine, which is significant.
Let’s say I used a commercial storage facility at $100 per month. Over ten years, that adds up to $12,000. Then, there’s insurance, which I chose to forego due to the high cost. When you factor in these costs, the “investment” returns quickly diminish.
Wine as a Passion, Not Just an Investment
Despite the financial hurdles, my experience with collecting wine has been incredibly fulfilling on a personal level. Sharing wine with friends and clients has led to deep, memorable experiences. It even helped me form lasting professional relationships and eventually led me to start Revel, specializing in the design and construction of wine cellars.
If you’re looking strictly for a return on investment, fine wine collecting may not be your best option. But if you appreciate the artistry, culture, and enjoyment of wine, the non-financial rewards can be immense.
Conclusion: Is Wine Collecting Worth It?
Based on my experience, wine collecting isn’t a great investment purely from a financial standpoint. However, the joy of learning about and savoring fine wines, bonding with others over shared experiences, and even the potential for enhancing your lifestyle and professional network are invaluable.
If your budget allows and you have a passion for wine, the rewards go far beyond dollars and cents. It can elevate your quality of life in ways that few other investments can.
At Revel, we understand the unique needs of wine collectors, from storage to enjoyment. If you’re ready to take your wine collection to the next level with a custom-built wine cellar, contact us today!