The romantic allure of owning a vineyard exerts a strong pull for many wine lovers, but does it make a sound wine investment? Here’s our guide to investing in wine.
For wine enthusiasts the cachet of owning your own vineyard or winery can be hard to resist, and it’s an option that has become increasingly popular in recent years. However, it’s important that romance does not overcome reality.
1. Location is everything
A vineyard in a popular region will be more expensive than one in a less prestigious area, but the wine it produces is likely to fetch more in price and be easier to sell.
‘Investing in new or lesser-known regions carries much greater risks, even if the land is often cheaper,’ says Alexander Hall, owner of Vineyard Intelligence, which offers advice on vineyard acquisitions in France. ‘The wines are likely to be harder to sell and it may also be difficult to source well-qualified staff. The old adage “location, location, location” also applies to vineyards, although in France you could substitute this for “appellation, appellation, appellation”, given the importance of the AOC system. Vineyards in the top appellations of the most famous French regions such as Bordeaux, Burgundy and the Rhône Valley are expensive but offer capital protection and, historically, good capital appreciation.’
2. Don’t be seduced by the fantasy
Buying the vineyard is just the beginning—you then have to consider the costs of maintaining it and making it profitable, which can sometimes take years.
‘A vineyard is first and foremost a business so there are many factors to consider,’ Alexander explains. ‘The key factors are: the potential of the vineyard to produce good quality wine and the cost of any necessary restructuring; the adequacy and condition of the winemaking facilities and equipment and the cost of any new or replacement items; the skills and experience of the employees; the quality and reputation of the wine; the pricing and distribution strategy.’
See also: Wine Investment: Pros and Cons
3. You need to love wine
While the practical considerations of buying a vineyard are important, it also needs to be a passion project. ‘There are lots of reasons why someone might want to buy a vineyard but first and foremost you have to have an interest in wine,’ says Alexander.
‘While it is possible to generate a good return on your investment, the rewards of investing in a vineyard are not only financial,’ he continues. ‘For most buyers it is as much about
the pleasure and challenges of owning and farming the land as it is about producing a unique and varied product that you can enjoy with others.’
4. Do your research and plan, plan, plan
‘The saying is that to make a small fortune in wine you need to start with a large one. It is fair to say that vineyards are capital intensive and that making and selling wine is a complex and challenging business,’ adds Alexander. ‘However, as with most investments, with sound advice, detailed research and careful planning it is possible to make a good investment that offers much more than just financial rewards.’
See also: Wine Investment: we offer guidance for the fine wine novice
5. Consider all your options
Some vineyards offer shared ownership schemes, where would-be vintners can try their hand at winemaking without making a large financial commitment. ‘In France there are shared ownership schemes such as the GFV (“Groupement Foncier Viticole”)—although these are principally of interest to French residents given the tax advantages,’ says Alexander. ‘More recently there have also been some crowdfunding initiatives in the sector, such as winefunding.com, which offer investors either an equity participation or a wine dividend.’ vineyardintelligence.com
Thinking about investing in wine, read more on Arts & Collections about the best wines for cellaring and drinking.