Most investors understand the concept of a well-diversified portfolio: If one investment goes down in price, others can help offset that loss. You can achieve that through a combination of assets, including alternatives such as real estate, private markets and crypto. But high-net-worth individuals are increasingly diversifying into a collection that has existed for more than 8,000 years: wine.
Yes, you read that right.
According to a recent report by WineCap, a UK-based fine wine growing forum founded in 2013, the same turmoil in the Middle East that has fueled the flight to safety in stock markets has caused investors to turn to rare wines as a hedge against rising costs and market volatility.
“As a commodity class, [wine] it’s definitely getting more attention,” said Vincent Birardi, senior wealth advisor at Halbert Hargrove. “Not just traditional equities, but a kind of hedge against general inflation.”
Diversity in fine wines can be achieved in two ways. You can buy shares of selected wine collections through investment platforms, or you can add investment-grade wines to your cellar using auction houses and specialty stores.
Full hedge for your portfolio
The WineCap report found that the percentage of respondents who view fine wine as a source of portfolio stability has increased from 54% to 70% over the past four years, surpassing sustainability and strong results as the overriding factor encouraging investors.
That change is driven by the tangible nature of wine and its fixed supply – two factors that influence supply and demand. But there are other things that cause other goods and dinner libations, too.
“Its market… generally moves at a softer pace than equities or the broader financial markets,” WineCap CEO Alexander Westgarth wrote in an email to Money. “Instead of replacing traditional safe havens like gold, fine wine should be seen as an additional hedge.”
Westgarth says that because the wine market is driven by long-term global demand from collectors, investors and enthusiasts, fine wine is a less effective hedge than gold when macroeconomic fears and global instability.
This year, the war in Iran has pushed prices higher, which in turn has encouraged investors to seek portfolio protection.
Since reaching a five-year high in October 2022, the US dollar has lost more than 12% of its value. Most recently, inflation as measured by the consumer price index stood at 3.8% year-on-year. By comparison, the Liv-ex Fine Wine 100 index – the industry’s leading benchmark for monitoring wine prices – gained 1.8% year-on-year.
But that’s nothing compared to the long-term benefits that wine has historically produced.
“Over the past 10 years, on average, fine wine has produced an annual profit of close to 10%,” Birardi said. “Gold has been up 4% to 5% annually over the same period.”
What investors should (and shouldn’t) expect from a good wine investment
Just because the rare wine market is relatively closed to external storms doesn’t mean it comes without price fluctuations.
WineCap’s wine tracker shows that over the past year, Hubert Lamy’s Derrière Chez Edouard has gained more than 54%. At the same time, Domaine Roulot’s Auxey-Duresses Premier Cru lost more than 78%.
Fees can also be a return. According to Birardi, research shows that the cost of holding investment-grade wine typically runs 1% to 2% per year when insurance and storage are included.
And, like any other asset, patience is necessary to succeed.
“We generally advise clients to approach fine wines with a five to 10 year investment horizon. “A large part of the value creation comes from increasing scarcity over time as bottles are used and supply decreases.“
Patrick Meyer, director of product marketing at Spectrum Wine, agrees. “People who do good with wine growing… are people who take it as a bond,” he said. “Diversity is important, though [investing in fine wine] patience is rewarded.”
Westgarth warns that if investors want to sell their assets, Achieving your desired price often takes longer than expected since wine is less liquid than traditional financial markets. According to Meyer, the typical sales process can take 30 to 45 days for a home at auction.
“It’s not like fine art or real estate,” Meyer said.
Fine wines also go through bull and bear cycles like other asset classes. From 2022 to 2025, the wine market has decreased by almost 30%.
“But in the last six months, we are already seeing good and good growth,” Meyer said. “After a major overhaul, we are very encouraged to have continued growth over the past six months.”
How to plant wine as a portfolio hedge
WineCap builds and manages portfolios of investment-grade wines, making it a popular choice for diversified investors and consumers. The company uses a modern underground storage facility built inside former military tunnels and charges a competitive 5% commission when investors want to sell.
But the company is not alone. There are several options for a managed wine collection. Platforms like Vint, for example, buy professionally selected stocks and sell them as SEC-eligible stocks.
“Platforms do all the heavy lifting,” Meyer said. “They are the ones who protect [the wine]guaranteeing its appearance and guaranteeing a series of conditions of preservation and storage.”
He also notes that the barrier to entry is very low, with some platforms allowing investors to start with as little as hundreds of dollars.
For wine lovers interested in a home wine collection, it is recommended to take steps to ensure that their wine remains investment grade.
“If you’re someone who has a cellar, there’s a lot more upside investment than buying wines,” says Meyer. “You have to keep it well, keep it and you might want to verify it.”
There is, of course, another benefit to the DIY approach.
“It’s a very exciting time because good wine has never been so easy,” Meyer said. “But if you have a cellar at home, you get to go, take a bottle off the shelf and enjoy it with dinner if you choose.”
