Wine has outperformed the Stock Market!
$100 invested in the US stock market 60 years ago would have become $130,000
But the same $100 invested in wine would be worth $240,000 today
Here's why this happened:
$100 invested in the US stock market 60 years ago would have become $130,000
But the same $100 invested in wine would be worth $240,000 today
Here's why this happened:
Negative returns. That is what an investor would have made to date if they had bought the Nifty 50 ETF in October last year.
That's right. The index has only managed to slip down in a year!
Gold also gave negative returns last year.
That's right. The index has only managed to slip down in a year!
Gold also gave negative returns last year.
Now, if you are a retail investor busy with your full-time job or course or your side hustles, it is very likely that you haven't made any real money out of this slump.
If only there had been an asset that would only grow in value with time.
If only there had been an asset that would only grow in value with time.
If only there was something that would get better and better as it ages.
And...there you go. Yep, you guessed it right.
The name's Wine. Fine Wine.
And...there you go. Yep, you guessed it right.
The name's Wine. Fine Wine.
With annual returns of around 10% or more in the last 15 years, Wine investments have literally equaled global equity returns.
But how exactly do you invest in wine, a commodity? How exactly do the economics work here?
Let's take a sip of it.
But how exactly do you invest in wine, a commodity? How exactly do the economics work here?
Let's take a sip of it.
The global wine market is estimated to be somewhere around $350 billion.
And it is at least expected to grow around 5% CAGR till 2028. Now, this doesn't look like a lot, but let us explain its dynamics.
First, let us explain how wine investing works.
And it is at least expected to grow around 5% CAGR till 2028. Now, this doesn't look like a lot, but let us explain its dynamics.
First, let us explain how wine investing works.
It is as simple as purchasing premium bottles of wine and then reselling them later at a higher price.
Pretty similar to stocks. Except here, you are actually buying something tangible that can be seen, tasted, and enjoyed.
Pretty similar to stocks. Except here, you are actually buying something tangible that can be seen, tasted, and enjoyed.
Now let's get into how wine is able to generate such healthy returns.
You see, wine has become a status symbol over the years. The average price of 1 bottle of good red wine is around $15-$20.
It costs slightly less in India, but let's take a look at the bigger picture here.
You see, wine has become a status symbol over the years. The average price of 1 bottle of good red wine is around $15-$20.
It costs slightly less in India, but let's take a look at the bigger picture here.
The price of a bottle of wine reflects the expertise and effort that has gone into making it.
And wines are expensive because they can be.
There's something called perceived value, wherein a consumer is willing to pay as much price as charged.
And wines are expensive because they can be.
There's something called perceived value, wherein a consumer is willing to pay as much price as charged.
Since wine has become a status symbol and comes under the luxury category, its price knows no limit.
Literally! For example, some burgundy wines cost as high as $40,000!!! Crazy.
In fact, since 2004, Burgundy wines have yielded a return of 652%.
Literally! For example, some burgundy wines cost as high as $40,000!!! Crazy.
In fact, since 2004, Burgundy wines have yielded a return of 652%.
You see, wine-making is considered an art.
It involves a lot of parameters: the territory, type, and quality of soil, sun exposure, rainfall, drainage, the barrels in which wine is made, climate conditions, etc.
With so many factors in play, the price of wine is unstable.
It involves a lot of parameters: the territory, type, and quality of soil, sun exposure, rainfall, drainage, the barrels in which wine is made, climate conditions, etc.
With so many factors in play, the price of wine is unstable.
Unstable, in the sense that additional overheads or production costs can be borne by the consumer, and the consumer will PAY for it.
And most importantly, wine has time by its side. Scarcity and longevity are the 2 factors that drive the cost of wines.
The older, the better.
And most importantly, wine has time by its side. Scarcity and longevity are the 2 factors that drive the cost of wines.
The older, the better.
And making exclusive wine isn't easy. The factors involved in making a vineyard to produce quality wine cannot be accounted for.
The best vineyards are already fully planted and are difficult to extend.
This means that production can't be increased to meet the increased demand.
The best vineyards are already fully planted and are difficult to extend.
This means that production can't be increased to meet the increased demand.
Which in turn means that increased demand can only be met by higher prices.
All this makes wine look like a pretty attractive investment. And it doesn't stop here.
Since the 2007-08 market crash, the stock market has gone under correction nearly 4 times to date.
All this makes wine look like a pretty attractive investment. And it doesn't stop here.
Since the 2007-08 market crash, the stock market has gone under correction nearly 4 times to date.
But all this while, wine prices weren't hit.
So statistically, wine prices have to be inflation-proof & have no direct correlation with the equity market.
That diminishes the uncertainty factor quite a bit. And who doesn't love a certain guarantee when it comes to their money?
So statistically, wine prices have to be inflation-proof & have no direct correlation with the equity market.
That diminishes the uncertainty factor quite a bit. And who doesn't love a certain guarantee when it comes to their money?
Wine is produced and consumed a lot in the west.
It might make you wonder about its Indian market. So here goes.
In India, the wine market is estimated to be about $150 million, and is expected to grow by $274 million in the next 4 years.
It might make you wonder about its Indian market. So here goes.
In India, the wine market is estimated to be about $150 million, and is expected to grow by $274 million in the next 4 years.
And as of now, typically 30% of the most premium wine is imported.
Because of the high import duties, their prices do not sync with the Indian public. YET.
But as we get more exposure to western culture, the social relevance of commodities like wine will increase by manifolds.
Because of the high import duties, their prices do not sync with the Indian public. YET.
But as we get more exposure to western culture, the social relevance of commodities like wine will increase by manifolds.
All of us love to possess something bragworthy. Something that gives us that status of being a part of the creamy layer.
Societal status, especially in India, is given a lot of importance.
And this psychological tendency has been showcased by the increase in wine consumption.
Societal status, especially in India, is given a lot of importance.
And this psychological tendency has been showcased by the increase in wine consumption.
Wine is not seasonal, but occasional.
And today, where we live in an era of an expression economy, wine fits right in.
We love to express, and show off every little achievement or occasion.
And today, where we live in an era of an expression economy, wine fits right in.
We love to express, and show off every little achievement or occasion.
And adding premium, luxury commodities like wine to that moment of expression increases our standard and our value as to how we are perceived in society.
So yeah, spending on wine does seem to have its intangible benefits.
But it's time to make some money out of it as well.
So yeah, spending on wine does seem to have its intangible benefits.
But it's time to make some money out of it as well.
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