Investing in Wine with Your IRA

Investing In Wine from your SDIRA
Estimated reading time: 5 minutesLast updated on: August 1, 2022

For more than a century, investment-grade fine wines have generated strong returns.

For more than 8,000 years, people have been producing wine. Over 80 centuries, production has improved, tiers have developed, and the stories associated with wine have evolved through market expansion, extensive palettes, and wine culture.

One of the best-kept secrets of the wine world is that these tangible assets have been high-quality investments for a long time. We are here to focus on the top tier: the investment-grade fine wines that have consistently beaten other alternative assets over the last 121 years.

Let’s unpack why some producers have 10+ year waitlists, what makes wine a good investment, and how it is now possible to invest with your IRA in this asset class.

Investing in Wine 101: Supply & Demand

Screaming Eagle, considered the original cult wine of Napa Valley, has a more than 10-year waitlist. Shrouded in secrecy, only early adapters and the well-connected can get this wine direct from the producer. Once released, the market value of these wines has historically appreciated considerably over the life of the wine.

Screaming Eagle is not alone in showing strong returns as the wine ages, though. According to Cambridge Business School, over the last 121 years, on average, wine has returned 8.5% profit margins annually.

Let’s go back to Economics 101 to understand what drives this return. The fundamentals of microeconomics are based on the supply and demand graph.

Fine Wine at Price of Release

At release, all fine wine from a single vintage sells out immediately to winery member allocation lists, merchants, and investors. The release price is typically the lowest price point a highly collectible wine will ever see. Over the next 20–50 years, the wine trades and the powers of supply and demand influence price.

Fine Wine at Price at Year 5

As a consumable good, the supply of wine is ever-decreasing, and once released, no more wine of a particular vintage will be produced. In addition to an ever-decreasing supply, the demand for wines increases as the bottle ages and the quality improves. The combination of scarcity, decreasing supply, and improving quality drives long-term price appreciation.

 

Is Wine a Good Investment : A Look at High-End Champagne and a Vint Investment

Champagne has long been revered for its investment potential, the prices it commands, and the quality it achieves with age. Champagne prices have outperformed, and are up 48.5% over the past 12 months (as of June 2022), continuing to see increased demand as U.S. tariffs subside.

Given the favorable macro environment for Champagne, growing demand in Asia, and the significant age-to-value correlation, experts consider bottles of bubbly to be  one of the most promising wine investment regions.

With this analysis, Vint (more on Vint later) curated a Champagne collection featuring the best vintages from 2002–2008. In addition to the best vintages, Vint selected wines from the top producers in the region, like Krug, Pol Roger Winston Churchill, and Dom Perignon—described by experts as some of the “most sought after wines on the secondary market.

Upon public release, the collection sold out to 75 wine investors in under 90 minutes. Vint has since exited a portion of this collection returning a tidy profit to its investors of 22%, all in less than half a year.

Securitizing Fine Wine and Spirits Investing

With over 121 years of strong returns, stability, and limited correlation to other assets, everyone should be able to access this asset class. Vint has securitized access to fine wine and spirits investing by registering and selling shares in companies backed by these assets with the SEC. That has made it possible for investors to use tax-advantaged IRA funds to invest in shares in fine wines.*

Vint is an investment platform that allows anyone to purchase SEC-qualified shares in expert-curated wine collections and efficiently diversify into this asset class.

How to Invest in Wine with Your IRA

There are several trust companies that enable investors to invest their self-directed IRA’s into this and other alternative assets. These include Quest, amongst many others. If investing with an IRA, your investment returns could be either tax-deferred or tax-free, depending on whether you use a traditional, SEP, or Roth IRA.

Whether you’re trying to hedge against inflation, improve your downside protection, or invest in something you are passionate about, fine wine investing has something for anyone.

To start investing in wine and spirits using tax-advantaged retirement funds, create an IRA account today!

(*) This is not an offer or solicitation of securities or collectibles. Interests in securitized wine investments are offered by Vint and VV Markets, LLC pursuant to Regulation A. Investors and their IRA accounts do not purchase or obtain possession or use of underlying wine assets. See Vint website and offering circular for details. Past performance is no guarantee of future results. Investments such as those on the Vint platform are speculative and involve substantial risks to consider before investing.

Elle SeyboldElle Seybold is the Director of Business Development at Vint. Ms. Seybold has over twenty years of experience in investment and corporate management. She has led multiple business development programs globally and has held numerous roles in strategy and finance. Ms. Seybold received a BS from the Stern School at NYU, an MBA from Wharton and a Masters from Johns Hopkins University. Ms. Seybold has her Level III certificate with the Wine & Spirits Education Trust (WSET) with the goal to obtain her Master of Wine. Her extensive background in finance, from hedge funds to investment banking, paired with her passion and education in wine make her uniquely placed to speak about wine investing.

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