For wine enthusiasts, each step that precedes a glass of wine is an intimate ritual. The rasp of the foil cutter against the bottle. The tension of the cork before it finally releases with a pop! A brief meditative rest, allowing the flavors to bloom to their full potential. Then, finally, a taste. Whether earthy, jammy or grippy, a glass of wine boasting the perfect balance of fruitiness, acidity, bitterness and body can captivate the senses and even the mind long after the bottle is empty.

While flavorful wines can be the perfect accompaniment to a dinner party or social event, that’s not their only benefit. A carefully curated wine collection can also deliver a fine financial return on your initial investment.

According to our 2023 Gallagher Private Client State of the Market Report, rare and collectible labels continue to be sought after by Private Clients and collectors. The most popular types for collectors include Bordeaux, Burgundies and certain vintage champagnes. Vin-X, a leading fine wine investment company, opines that wine investments can produce returns that outperform stocks, shares, gold and other assets such as property. One stunning example is the legendary 1945 Romanée-Conti; a bottle was sold at auction in 2018 for $558,000 — more than 17 times its current asking price of $32,000.

Fine wine continues to attract attention as a powerful investment diversification tool capable of weathering global crises and market volatility. In this article, we’ll cover why wine is a good investment, the factors that can help you net a significant return and how to protect your wine collection.

Why is Wine a Good Investment?

Fine wine consistently ranks as one of the best-performing alternative asset classes within the Knight Frank Luxury Investment Index (KFLII). While categories like art, watches and jewelry dominated short-term investments by the end of Q2 2023, wine shows significant strength as a long-term investment. Over the past ten years, fine wine prices have risen 149%, and only one category — rare whisky — tops it with a 322% increase in price, according to the KFLII.

But how exactly can wine reach these significant returns, with the most expensive wine netting an average price of $298,474 per case in 2023? Here are some factors, according to the experts:

  • Low volatility –Unlike other investments, such as real estate, wine prices aren’t dependent on external market factors. Instead, wine prices largely depend on internal factors, like the region, weather, supply and demand. When the stock exchange slumps due to sudden global events and crises, your “safe haven” investment should remain relatively untouched. During times of economic stress, your fine wine investments can help you reduce the likelihood of a major loss as a portfolio diversification tool.
  • Scarcity – Less than 1% of the global wine supply is fine wine capable of aging and improving beyond five years — only the best among them is investment-grade wine, according to Vin-X. Much like luxury watch brands, such as Rolex and Cartier, low supply and high demand among collectors can easily cause prices to soar. Limited availability, something that might only increase due to the influence of climate change on grape growing conditions, will ensure the price of highly sought-after vintages keeps rising.
  • Brand appeal –A wine producer's reputation can significantly impact your wine's potential value. Many investible wines come from well-known and leading producers in their respective regions, with elite boutique wines getting snatched up by mailing list customers before their public release. Producers capable of crafting "blue-chip wines," a term investors borrowed from the financial markets to describe their high quality and likelihood of a favorable return, are among the most in-demand, according to Vinfolio. Blue-chip wine is a broad category, including everything from classic champagnes to cult California wines, making it easy to craft a diverse investment portfolio. There's no exhaustive, industry-approved list of blue-chip producers in the market, but Vinfolio put together a list of 43 producers their experts consider to be the most important in the fine wine market.

Protecting Your Investment

Your wine needs time to improve with age in the bottle, a vital step to ensuring a positive return on your investment — or simply ensuring you can enjoy an unmatched glass of wine. Therefore, protecting your collection from damage, spoilage or other risks of loss is essential.

If you plan on storing your investment wines at home or in a secondary property, your homeowners insurance policy can provide some assistance in the event of a loss. But its aid can be limited based on the overall value of your collection, according to Forbes Advisor. A small or modestly-valued collection can be insured under an existing policy, with typical coverage limits ranging from $1,000 to $2,500.

For those who are likely to purchase a single bottle of wine for that sum, but have a total collection valued less than $50,000, consider a personal articles floater. These policies can provide individual coverage for high-valued bottles or act as blanket coverage for an entire collection, according to Forbes. By-the-bottle coverage benefits collectors who want to hold on to a valuable bottle for a long time, whereas a blanket policy can make it easy to add or subtract from your collection as you see fit.

Specialty wine insurance is also available for individual bottles or entire collections and often comes with additional benefits designed to help protect your collection. Some carriers provide storage risk assessments — whether at home or a secondary storage facility — allowing you to identify and remediate site-specific hazards that could result in loss, such as:

  • Harmful environmental conditions
  • Natural and man-made disasters
  • Theft or burglary
  • Damage in transit

Your wine collection is an investment, not only of your money but also your valuable time. Due to the scarcity of these bottles and the highly competitive nature of auction houses and online wine platforms, securing a highly sought-after vintage is hard work. Putting all this effort into crafting your collection and losing a significant bottle without a mechanism to recoup your losses can be devastating — financially and emotionally.

The right insurance agent will recommend the proper coverage you need and help you mitigate any site-specific risks that can put your investment in danger. Contact your Gallagher risk advisor today to ensure your collection is covered.