Jul 23, 2024 4 min read altassets

Alt Asset Report #001 - Wine

Discover the trends, sources, and information needed to start or grow your wine investment portfolio.

Alcoholic drink made from fermented grapes.
Earliest evidence of wine production is ancient China around 7000 B.C.
Made in nearly every country, “Old World” and “New World”
- Old World covers longest producing areas (Italy, Spain, France, and Germany)
- New World covers all other regions (US, Australia, and Chile)
Different types of grapes produce different flavors and colors

Region - Where the grapes were grown.
Vintage - The year the grapes were grown certain years have better weather patterns and make more delicious grapes/wine.
Winery - Each winery uses their own unique style to make wine.
Vinovest CEO - What Is Investment-Grade Wine?
- Strong critic score: Average score of 95% or higher from wine critics.
- Age-worthy: Proper acid, sugar, tannin and alcohol levels to develop secondary and tertiary flavors over several decades.
- Scarcity: Wines become more investment-worthy as the supply diminishes.
- Robust brand equity: A prestigious reputation can persuade investors into paying a premium for investment-grade wines.
- Favorable vintage: Great wine requires great weather, soil, and environment

Growth in natural wine - Additive-free in both the growing and fermentation
- Drizly: Organic wine sales totaled $154 million, compared to just $27.2 million for the 52 weeks ending March 25, 2017.
- Exploding Topics: 217% growth in searches for “natural wine” over 10 years
Traditional processes - Making everything by the standards of a specific historic era
Average wine consumption per United States resident was 3.18 gallons in 2021, up from 2.34 gallons in 2005.
- A large portion of this growth is cheaper "table wine" like Barefoot, Sutter Home, and Franzia.
Climate change making great wine more scarce
Gen Z's favorite brands differs from other generations, with Lindeman's, Real Sangria, and Charles Shaw the most popular.
New regions - Countries like Ireland, Japan, and Poland will see better growing conditions. Scandinavia already has.
With changing climate, new growth regions will emerge.
Fruit wine - Wine from non-grape fruits like pineapple, orange, blueberry, elderberry, and more.
Beer accounts for 40+% of the US market, but is falling and provides and opportunity for wine growth.

The sales share of wine among alcoholic beverages held at about 17 percent in the United States from 2010 to 2020. It declined to about 16 percent in 2021 and did not rebound in 2022.
Millennial and Gen Z don’t care about wine/alcohol.
- Generation Z spends 19% of alcohol dollars on wine, compared to 35% on spirits and 42% on beer, flavored malt beverages, and hard seltzers.
Pre-mixed cocktail sales grew 42% in 2021, showing another strong alternative to consuming wine. More options for alcohol consumption may lead to lower wine demand over the long-term.
Growth of non-alcoholic beverages could lower demand and value.
Potential impact of climate change on historically valuable regions and brands.
If big money leaves the market, price support may follow.
Broader market may lead to fewer true winners.

En Primeur Wine - Investors can purchase “future” wine, or wine still in the barrel. Helps to lower investment costs and provides higher future upside. On the other hand, you need a place to store all the wine.
Curated portfolio - Companies like VinoVest will build a portfolio specifically for each individual investor. It is a hassle-free way to get involved in fine wine.
Individual bottles - Buy a fridge, or have a cool basement, and start collecting! This is the cheapest way to get involved.
Auction house - High-end auction houses (like Sotheby’s and Zachys)

Country	Grapes
France	Cabernet Sauvignon, Merlot, Cabernet Franc, Pinot Noir, Grenache, Syrah, Viognier, Chardonnay
Italy	Sangiovese, Nebbiolo, Barbera, Moscato, Pinot Grigio
United States	Cabernet Sauvignon, Pinot Noir, Chardonnay, Merlot, Zinfandel
Argentina	Malbec, Bonarda
Chile	Cabernet Sauvignon, Sauvignon Blanc
Australia	Shiraz, Chardonnay
Germany	Riesling, Gewurztraminer, Sylvaner
Spain	Tempranillo, Albarino, Garnacha, Palomino
New Zealand	Sauvignon Blanc, Pinot Noir
South Africa	Pinotage, Chenin Blanc