Wine Investing Is Getting Popular, but Pros Urge Caution in Complex Market

Tim O’Hearn, a New Yorker who worked in finance for nearly a decade, first saw an ad for investing in wine on Facebook in 2020.

Interested in claims of market-beating returns—and as someone who enjoys a nice bottle—he jumped in.

“I think part of it is the country club nature of the investment,” he told Business Insider. “There were many conversations I had dining at nice restaurants across Europe where I was able to have a conversation based on the wine in my portfolio.”

But for O’Hearn, who purchased over a hundred bottles of wine in his portfolio, the investments appeared to quickly sour. His wines were losing value, and in online forums, he saw complaints from people who said they regretted their investment, bemoaning double-digit losses and being unable to sell their bottles. Panic set in. When he tried to sell his own wines in 2023, the market appeared to be dead.

Financial documents viewed by Business Insider show O’Hearn sold $15,000 worth of wine at a 10% loss.

Wine funds saw an increase in interest from new investors last year. Three firms in the space told BI that newly curious wine buyers tended to be younger and knew little to nothing about fine wine.

The influx has come as investors like O’Hearn are lured by flashy social media ads for wine funds, the cultural cache of owning a $20,000 bottle of wine, and, of course, the potential for some bottles to see stunning returns over time.

But wine investing is tough, and many amateur investors are overwhelmed by the complexity, wine pros say.

Cult Wines, one wine investment firm, says it’s seen big growth on its platform CultX, which offers wine investing to a retail audience. The firm told BI that most new users are under the age of 40.

VinoVest, the wine investing platform that O’Hearn used, has also grown in popularity. In 2024, the firm increased its user base by around 40%, with around 80% of those users 30-45 years old, CEO Anthony Zhang said.

Many new investors know very little about fine wine, said Raj Vaidya, a wine consultant and the director of operations at La Paulée, which describes itself as a wine community with a consulting arm. He says participation from novices trying to play the market has surged in recent years.

“Definitely more enthusiasts who just like the idea of wine, but don’t really know very much, who are now interested in it,” Vaidya said.

The majority of VinoVest’s clientele fits the same profile, Zhang told BI.

Many new investors think of wine as a commodity, like gold, and make the mistake of thinking that wine is more stable than other kinds of risk assets, Vaidya says.

That hasn’t proven true recently. Cult Wines’ Gearing says most of the fine wine market has been in a downturn over the last two years, in part due to a broader slowdown in luxury goods.

The Liv-ex Fine Wine 100 Index, which tracks the price of 100 of the most sought-after wines on the secondary market, is down 24% in the last two years, compared to a 30% gain for the S&P 500 in that time.

Illiquid liquids

Investing in wine is more complicated than swinging by your wine shop and picking up what seems like a top-tier vintage. According to VinoVest’s Zhang, a wine needs to have three qualities to be investable.

1. It needs to be scarce. There needs to be a limited number of bottles produced each year.
2. It needs to be ageable. The wine should get better over a period of 20-40 years.
3. There needs to be brand equity. In other words, it needs to be a relatively well-known luxury product, the way Rolexes and Porsches are universally recognized as high-end.

If you pick the right bottle and time it right, typically by holding onto the wine for a period of five or 10 years before selling, top-tier wines can appreciate as much as 15% a year.

But navigating the market is tough.

La Paulée’s Vaidya, who worked as a sommelier in high-end restaurants prior to consulting, says the actual supply of fine wine is a lot smaller than investors may think. He added that investors he works with are frequently surprised by how hard it is to truly distinguish a “blue chip” bottle from a mid-tier bottle.

Many mid-tier wines are prime prone to speculation. Things like good press, a cool label, and hype on social media can easily jack up the price of a bottle before it quickly depreciates, Vaidya adds.

“It’s very difficult, frankly, even for me, and I’ve been in the business for 25 years. I know how to find the next big thing based on quality, but the next big thing based on speculation is difficult. It’s a best-guess scenario most of the time. And there’s painfully little data that can inform it, too.”

That’s not to mention that wine can lose value due to numerous errors that occur during the harvesting and storing process. Factors like extreme weather affecting the crop, wine being stored at the wrong temperature, or other quality-control problems can essentially crush an investment, according to Jason Hartman, the president of wine firm The Sommelier Company.

For those reasons, many investors end up selling their wines at a loss “all the time,” Vaidya says.

“Quinessentially, it’s kind of a broken business. It’s like, there’s no chance that they’re able to turn over and sell all the sheer quantity of less expensive, less fancy, less desirable wine at the right moment,” he said of some newer wine funds out there, which tend to market themselves heavily on social media to younger investors.

“It is a valid con of the asset class. Wine has very little liquidity until it reaches maturity,” Zhang said, adding that he believed wine was not for amateur investors, or for anyone with a short-term outlook.

Hartman actively vets novices who want to get into wine investing, as the market is ultimately too complicated for those with only a casual interest.

If you aren’t passionate about the asset class, it’s best to stay away, he said. “It’s so illiquid that it’s just not worth going in.”