Vinovest is a wine investment platform that offers investors an opportunity to allocate capital to a diversified portfolio of fine, investment-grade wines. The platform’s recent creation is particularly notable as it marks the first credible option for individual investors seeking to gain direct exposure to wine as an asset class. Previously, the wine market has largely only been accessible as a meaningfully scalable investment option to those with an intimate familiarity of the highly complex wine industry and collectors market. High broker and auction house fees, along with a well-known market for forgery, only serve to increase the difficulty of independently navigating the investment market. Vinovest eliminates these knowledge-based barriers to access with its turnkey investment platform, which offers curated portfolios assembled by its team of wine experts.
Vinovest’s portfolios are assembled based upon an individual investor’s investment amount, risk tolerance, and time horizon, among numerous other factors. When purchasing wine on an investor’s behalf, Vinovest authenticates and securely stores wines, fully insuring each bottle at market value. Additional benefits of the platform include favorable wine pricing afforded by the Vinovest team’s relationships and market knowledge, along with the ability to sell wines at any time with the assistance of Vinovest’s team, a process which the company claims to typically take 4-6 weeks. Value accretion can be monitored through Vinovest’s online dashboard, where prices are updated on a daily basis using numerous data sources. When packaged together with its intuitive user interface, Vinovest’s platform is one which allows even the most novice investors to include wine in their portfolios. As a relatively new platform, investors concerned about the potential default of Vinovest can be assured that their assets are safe. According to their site, if the company dissolves, investors will be able to take physical possession of the bottles in their portfolio.
As an asset, it’s important to understand the fundamental drivers which bely value accretion in wine: scarcity, age, and brand equity. Only about 1% of wines globally are considered to be “investment grade.” Fine wine is a medium- to long-term time horizon asset, with a minimum recommended hold period of at least three years. Investment worthy wines need decades to age in the bottle, improve in quality, and eventually reach their peak value. However, not all wines make it this far. Every year, as wines of a specific vintage year and origin are consumed, their scarcity increases. Historically, wine has offered investors long-term returns similar to that of equities with a much lower degree of volatility. According to S&P Global, from January 1st to March 31st, a stretch which includes the precipitous drop caused by the COVID-19 pandemic, the S&P 500 fell more than 23%, while the Live-ex Fine Wine 1000 (an index that tracks the prices of the 1,000 most popular investment-grade wines) dropped approximately 4%. A similar outcome occurred in 2007 and 2008, when the S&P 500 dropped 38.5% and the Liv-ex Fine Wine 1000 index fell by just 0.6%. The graph below, from S&P Global, illustrates the performance of wine relative to both gold and the S&P 500 from 2004 to 2020.
Despite being a relative newcomer to the alternative investment platform scene, Vinovest represents an interesting, highly differentiated option for those seeking to gain exposure to wine in their investment portfolios.