For many wine-lovers, the only thing holding them back from investing in wine is… well… they love wine. Parting with a wine via your glass and your guests’ glasses is sweet sorrow. Parting without opening it, surely that’s for those who simply see it as a tradeable commodity? So, wine collectors are different to wine investors and never the twain shall meet?

Not so, says Gregory Swartberg, founder and CEO of Cru Wine: ‘Some of our customers might come to us with the view to just buy to drink, some purely to invest. But if you store the wines in bond at our dedicated professional warehouses, where you don’t have to pay VAT on them, you can take a decision at a later date. A lot of our customers buy, say, five cases of a wine that they like, keep them for five years then ask us to sell three cases, which will usually pay for the five and deliver two cases to them to drink for free.’

While the portfolio managers at Cru Wine will take instruction from a connoisseur as to the exact wines to acquire, they also offer investment advice about the assets – both in terms of asset performance and as wine for wine’s sake.

Senior portfolio manager Matthew Small gives an example: ‘I have one client with a decent-sized portfolio, but he and his wife both have landmark birthdays coming up in the next five years. So, among the investments, we’ve been sourcing wines – champagnes, magnums of red – that will be in their perfect drinking window for those occasions. Bordeaux is more of a long-term hold because they have very long drinking windows. If you wanted more of a short-term trade, champagne is great because it’s released when ready to drink.’

Diversification is at the heart of all Cru Wine investments – a split of drinking and selling is just one example.

‘As markets mature, they diversify,’ says Small. ‘Up until 2010, fine wine investment meant Bordeaux – it accounted for over 90% of the business. It took a while for interest to shift to Burgundy and other regions; now the split is 40% Bordeaux, 20% Burgundy, 20% Champagne and 20% Italian and others.’

Diversification is important because tastes can shift. For Burgundy, with its proliferation of smaller producers versus Bordeaux’s famous châteaux, it took a while for investors to understand what was available. Also, there is a little less emphasis on “en primeur” buying (a form of investing, after all), and the market had to move past the “wine bro” culture that didn’t bump chests over lighter pinot noirs.

Gregory Swartberg points out there are surprising influences that can shift the market: ‘In 2019, when the Boeing versus Airbus dispute was going on and the US objected to the support the EU was giving to Airbus, they imposed tariffs on wine imported from France, Spain, Germany and England. But Italy was not involved in Airbus, so they were exempt from the 25% levy. As a result, the demand in the States for Italian wine was exponential, until the tariff was lifted in 2021. So a dispute between governments can shift a country’s taste in wine.’

As a younger demographic of wine investor and collector grows, factors that didn’t used to be important make certain regions appealing. ‘Take Barolo,’ says Matthew Small. ‘Not only is there an appeal because there are so many small, artisanal winemakers, but they are also focussed on organic and biodynamic production; and there is a high number of women winemakers, which appeals to younger investors, where there is a somewhat more even gender split.’

Another region that appeals to the under-40s is Champagne. Small says, ‘We’re about to have the great wealth transfer – something like $60 trillion moving from Baby Boomers to Millennials. And champagne is their style of wine. What’s more, China is currently only the 14th largest importer of champagne in the world – Denmark is ahead of them – so there is huge potential. We saw it with Burgundy too – China was slow to shift to Burgundy; now they are one of the biggest importers in the world.’

So what amount allows an investor to achieve a diverse portfolio that takes all of this into account? ‘I recommend clients have a minimum of £20,000 in the market,’ says Small, ‘but we don’t have to do that all at once – we can start with £5k, £10k and build from there. But, for me, 20 grand gets you a good representation of the majority of the main wine investment regions. That diversification effect increases risk-adjusted returns and reduces your standard deviation returns.’

Diversification is welcome in the market, of course, but it does mean that more information is needed than ever before when it comes to investing. Gregory Swartberg claims of Cru Wine, ‘We offer superior customer service because we give them a much more transparent overview of what their investment or collection looks like. But also, they’re informed quicker than anywhere else about something that could affect their portfolio, whether it’s a wine that has become available to add to it, or an action they should take with what they have.’

cru-wine.com