Why Being a Fine Wine Aficionado Makes You a Better Investor (in Some Cases) 🍷💸📊

In the world of investments, fine wine 🍇 holds a strangely prestigious place. It doesn’t generate cash flows, pay dividends, or create economic output — and yet, the market treats it like a serious asset class. So what makes fine wine special? And how can loving a glass of Montrachet or Chambertin actually make you a better investor?

Let’s uncork the logic, the economics, and the behavioral edge behind investing in fine wine. 👇

1. Fine Wine as an Asset Class 🍇

🍾 In 2024, the fine wine market was at €30 billion. The top 10 fine wine brands account for 35% of market share, which makes the market structure comparable to luxury goods (39%). Europe produces roughly 75% of fine wines, while the Americas and Europe together consumed 80% of it. The Asia Pacific region and the Middle East and Africa make up for just 5% of production and 20% of demand (Bain & Company, 7 April 2025).

🍷 Fine wine is often seen as a non-productive asset; just similar to art, stamps, or gold. It doesn’t produce anything, it mainly is, according to widespread belief. But this is not fully true. In fact, there is a certain intrinsic value generating process in fine wine which makes it differ from the fully non-productive assets. More on this later.

💼 Fine wines are increasingly seen as a separate asset class, where its attractiveness comes from limited supply combined with healthy demand. There is also a vivid M&A market with several deals per annum, particularly in the US, Italy and France.

2. The Investment Logic 🧠

Since wine doesn’t pay dividends, investing in it is a pure price appreciation play. You buy a bottle today and hope it becomes more valuable tomorrow 🍷➡️💎.

But for this to be a good investment, it has to show attractive risk/return characteristics. I.e. the expected return must be relatively high taking its risk profile into account. But keep in mind: this is an often illiquid market which makes measurement of performance characteristics quite challenging.

3. The Economics of Wine Pricing ⚙️

Two forces shape the price development of a fine wine bottle over time:

🍷 A. Aging – The Underlying Trend

Fine wines regularly improve with time. Their taste, aroma, and complexity evolve. This “natural maturation” makes older vintages more valuable (to a point), creating a predictable, slow upward drift in price. Think of it as passive appreciation.

It is this underlying aging trend that makes fine wine differ from stamps or gold. Fine wine gets better and more valuable, just by the passage of time (to a point).

📉📈 B. Supply & Demand – The Surface Trend

The fine wine market is a quite thin market. Even small shifts in supply and demand can have a meaningful impact on prices:

• Poor harvests, the weather and climate events impact supply

• Development of general wealth and economic wellfare, not only but particularly in emerging markets, and shifting consumer tastes, e.g. the move away from alcohol, impacts demand.

A textbook example: the surge in Chinese demand during the 2000s and 2010s significantly drove up prices for Bordeaux wines. When that demand cooled, so did prices.

💸 Costs

Fine wine is, however, not a cheap investment in terms of carry. Fine wine requires insurance and storage. insurance fees amount to roughly 0.5 % of market value p.a. (Meltzer, Insuring Your Wine Collection, https://www.winespectator.com, 30 November, 2025). For storage we assume about 0.25 % of the value (based on information on https://wine-stories.de, this is an average fine wine estimate as storage costs is not value dependent).

4. Over 100 Years of Empirical Evidence ⏳

🎓In the very interesting study “The Price of Wine” (Dimson/Rousseau/Spaenjers, 2015, Journal of Financial Economics, vol. 118(2), pp. 431-449) one can have a look at financial data for fine wines over more than a century. The highlights:

🍷In terms of pure aging trends, it can be observed that fine wines on average appreciate by 4 % p.a. over the first 20 years and by 2 % p.a. over the second 20 years (the window of the second 20 years, i.e. years 21-40), is for most fine wines the average top maturity windwo). Increase in value between age 40 and 80 is limited (0.9 % p.a. on average). But when fine wines become antiques, price start increasing stronger again (1.7 % p.a.), probably due to increasing attractiveness in the eyes of collectors. On average this gives a 1.89 % (1.14 % if adjusted for insurance and storage costs) price increase over 100 yeears just by aging.

🎓 Some academic studies look deeper into this aging trend and find that it is particularly the oak barrels aging that explains the maturity-driven price increases (most of the fine wines are barreled, but not all), Masset/Mondoux/Weisskopf (2022), International journal of wine business research 35 (1), pp. 164-186.

🔢 In pure financial terms we could observe over the last 100+ years: Total Annual return: ~8.1% nominal p.a. in total, Volatility: ~15%, Sharpe Ratio: even a bit better than equities (even post-storage & insurance costs)

⚠️ However, the fine wine market is illiquid, which means that volatility is actually higher than shown here. I guess that - at least in the past - sharpe ratios are quite similar to equities after correcting for liquidity.

🌊🔼It is also worth mentioning that the historical outperformance of total financial returns over aging is to a large degree the result of a decades long wealth increase in consumers' countries, a trend that is not necessarily to be expected to continue at this pace in the future.

5. Forecasting Returns: A Tricky Task🔮📉

In pure financial terms we could observe over the last 100+ years: Total Annual return: ~8.1% nominal p.a. in total, Volatility: ~15%, Sharpe Ratio: even a bit better than equities (even post-storage & insurance costs)

🫧Looking ahead is harder than looking back. This is particularly true in terms of fine wine return forecasts as a) short selling is not possible in organised structures and b) fundamental values are quite difficult to determine anyway. This might lead to price bubbles or at least periods of prolonged extreme pricing (in one or the other direction). 🫧

📊Dimson/Rousseau/Spaenjers (2015) try to forecast returns for fine wine investing by looking at trends observed from other collectibles' markets (stamps, art) and at valuation ratio developments of stock markets in order to understand the markets appetite for spending. They, however, only find some (weaker) in-sample predictability of retuns. No results on out-of-sample predictability.

🧩The problem of forecasting fine wine returns: The thinness of the market makes (even smaller) supply and demand shifts highly impactful for fine wine pricing. The underlying fundamental trend of aging is strong per se but is clearly dominated by market dynamics.

Predicting the non-aging return component requires forecasting:

• China’s consumer sentiment: currently slowing, additional economic uncertainty are currently major headwinds.

• Luxury spending in Asia: softening due to shifting wealth dynamics and regulations.

• Younger affluent consumers show broader tastes: craft spirits, experiences, wellness trends.

• Traditional markets (e.g., Europe, U.S.) remain stable but are not driving growth.

🛃And do not forget the tariffs topic which might have a major impact on international fine wine trade! Past examples (e.g., U.S. tariffs on French wine in 2019–2020) led to stockpiling, rerouting, and demand drops.

Recent performance of the Liv-ex Fine Wine 100 Index has also been underwhelming, mainly due to weaker demand from China.

🧪But it is up to your research what you can expect for the future

6. The Fine Wine Aficionado’s Edge: An Embedded Call Option 🍷📉➡️😋

Whatever your view on future financial fine wine returns is, here’s where being a wine lover 🍷 gives you an edge over a cold-blooded wine trader💼: If prices disappoint, you can simply drink your asset 😋.

Sounds trivial, but from a decision theoretical point of view it is a strong positive. Being willing to drink creates a built-in floor.

• If prices go up, sell ✅

• If prices go down, drink 😁

A fine wine aficionado's position is acutally similar to a Financial Call Option 📈: The underlying is the wine, the strike is the price level where the aficionado rather prefers to drink wine than to sell it ("aficionado's resistance level"); the higher the quality (and price) is one is willing to drink, the better, Expiration: until end of the maturity window (until roughly 40 years of age on average, but different for different bottles). Early exercise is of course possible.😉

This existence of the "aficionado's resistance level" gives asymmetric upside with capped downside — the dream of every options trader. 📈➕😋 And this additional option of the aficionado (which a coldblooded investor has not) leads to the improvement in the investment position. Before expiration the value of a call option is always > 0.

💡 If you like to consume fine wine (wherever your aficionado's resistance level is) you are always in a better investment situation than someone who does not like to drink fine wine.

Final Sip: A very narrow field of investment position improvment 🥂📊

Fine wine investing requires patience, passion, and an appreciation for nuance — not just in taste, but in economics. It’s not for everyone. But for those who - if in doubt - drink what they buy, there’s a unique investment edge: When the market underperforms, you're not left holding a worthless asset — you're left holding a bottle of something beautiful. 🍾💖

⚠️Despite all these important findings, a caveat at the end:

If you are a fine wine connoisseur you might be able to improve your position in wine investing, but only in wine investing. 🍷🍇 For other fields of investment decision-making the impact might be neutral at best.😜

Additonal Comment 1: This article is just a valuation illustration based on cursory research, a bit of valuation entertainment.

Additonal Comment 2: Drink responsibly!