For those with more esoteric pursuits in life – such as collecting and drinking wine – there’s a chance that their hobbies can form the basis for alternative investments.
In the past, it was seen as a modest way of enabling a more sustainable hobby. But in recent years enterprising wine hobbyists have turned basic supply and demand into an alternative investment that can yield quite astonishing returns.
Benchmarks like the London International Vintners Exchange (Liv-ex) Fine Wine 100 and Sotheby’s Wine Index are two of the most respected indexes – though as an index, they don’t necessarily reflect the performance of a specific bottle – and they show consistently good performance when measured favourably against the S&P 500 index.
And in a year of economic uncertainty, Liv-ex performance has been remarkably stable. Its modest performance of 1.3% growth in Q3 this year already puts it ahead of other equities and commodities.
But collectable wine is built a little differently. Interest levels for the most prized wines almost never wane with respect to supply, which is almost always diminishing with time as people drink them.
In other words, if you buy wines that are objectively great and are harder to come by, your ‘investment’ is always safe – there will always be a demand for it if you know where to look.
And most importantly, if all else fails, you can always drink it.
Take that, crypto.
Wine investment vehicles
The most traditional way of wine investment is simply buying a bottle and squirrelling it away. However, more often than not, the best bottles – including en primeur – are often inaccessible to the average punter. And bottles commanding the best prices require an excellent provenance record, one that often involves minimal physical movement of the bottles. Neither of these two variables is easily accessible without cost. Some wine merchants specialise in these transactions, and typically in storage solutions as well.
If you’re more interested in the invest-and-forget approach, US citizens have an SEC-qualified option in the form of Vint, which allows you to buy shares in bottles that the platform owns, subject to your accreditation. It’s not very flexible in terms of what you can do with your share, and you have to trust Vint to manage the portfolio. The qualifications reduce risk if that’s your jam.
On the flip side, Vindome and Alti Wine Exchange are examples of modern platforms that have a live secondary market with blockchain technology to track bottles and transactions. You are often charged per transaction but this is most like an actual marketplace if that’s what you’re looking for.
Taking things up a notch, Vinovest and Cult Wine Investment are likely the most familiar names when it comes to wine investment. It’s suitable for investors that are planning to invest a fair sum of money (think at least US$10,000). In return, these platforms also offer resources to help you make more shrewd investments in the form of consultations or AI if you’re using Vinovest.
Benefits of the Bank of Wine model
Then there’s Bank of Wine (BoW).
The idea of shoving NFTs into everything on God’s good earth might be a turn-off for those tired of hearing the same spiel, but Bank of Wine’s mechanics, unlike many NFT projects such as Bitwine, addressed a real need in the South Korean market.
The Bank of Wine platform was created by South Korean startup Blinkers to facilitate the sale and trade of wine for wine lovers who are hamstrung by the country’s regulations and restrictions on the sale of alcoholic beverages online.
But there’s more to it. BoW’s NFT-based platform can help to enhance the wine experience for enthusiasts and collectors alike. It all starts from the fact that each NFT token is a completely unique representation of a specific bottle that also serves as proof of authenticity. By facilitating the ability to trade with a token that holds all the relevant information – including transaction history – wine bottles can be held undisturbed in ideal conditions without having to be transported around the world while they change hands, thus preserving their provenance.
Bank of Wine is more than just a trading platform, of course. They crunch data to curate highly-rated wines that have the highest investment potential so that every bottle that is released on BoW is both great for drinking as well as investing – past examples include a diverse range of labels from usual suspects like Chateau Latour and Chateau Margaux, to cult labels like Screaming Eagle and Opus One, as well as up-and-coming cult wines like Mollydooker’s Velvet Glove. BoW will mint an NFT for each bottle, and owners can retrieve the actual physical bottle that they own from BoW’s physical outlets.
Upon redemption of the bottle, the unique NFT becomes what BoW calls an M-NFT. It is used to keep a record of the memories you had with that bottle of wine and serves as a digital archive as well. You can share that bottle with up to five other people, who will all receive an NFT with a record of these memories too. Even non-members too. They can add these M-NFTs to their own archives upon signing up as a member.
As you would expect, Bank of Wine operates on basis of memberships. The Public membership covers the ability to purchase, trade and store wines purchased via BoW. Public members will also be eligible for affiliate membership benefits, which will be rolled out over time. The SPCL and OG (no longer available) memberships are more exclusive and have additional benefits like offline wine storage and access (free access for OG, raffle system for SPCL) to exclusive parties and events.
Wine investment and market platforms thrive as the user base grows, and Blinkers is currently considering expanding BoW to other countries. As the platform accumulates new users, the marketplace and community potential will flourish as well.
To learn more about Bank of Wine, visit their website.
This article is presented by Bank of Wine. Spirited Singapore is not a financial advisory service and the opinions stated in this piece do not constitute professional and/or financial advice.
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