Vinovest has recently started the first online trading platform for Fine Wines. The first time you can ‘day-trade’ wines online. It is still in the beta, so there are many things that need to be adjusted, like the ability to sell the wines you purchase.
They have begun this process by allowing access to certain wines, and their first ‘drop’ was 10 different bottles of rare and fine Champagne. The next two have been Burgundy and a Burgundy Encore because the first one did so well.
Champagne was a great first region to start this trading platform. Champagne is one of the most well known regions of wine in the world (even if most people think Champagne means sparkling wine) and it also had a phenomenal 2021 with an increase in value over 21%.
The least expensive bottle was $71 dollars for Bollinger, Pn Vz16. The most expensive was a bottle of 2006 Krug, Clos Du Mesnil, selling for $1,192 per bottle.
Currently it’s not really a ‘trading’ platform. As of today (2.25.22) you cannot sell your wines yet, although that should come soon. They released the Burgundy collection on the 22nd which was only the second time you could buy wines using this platform.
It’s interesting to think what will happen with this trading platform. The fees are quite high if you plan to ‘day trade’ these wines at 2.5% buying (includes 3 months of storage and insurance), and 1% sale fee. There is also a 1.5% annual fee if you plan to hold the wines long term.
Unlike their normal ‘managed’ platform, you do not have access to these wines yourself unless you purchase a full case of the wine. So, if you buy one or two bottles you cannot have these shipped to you for your enjoyment, this is purely an investment unless you can get your hands on an entire case worth of bottles, which may be difficult depending on your budget.
But a benefit to only needing to buy 1 bottle is that you can get investment grade wine for under $100 which is a very cheap way to enter fine wine investing.
Another thing that I both like as a new wine investor but also don’t like is that they control which wines are allowed on the platform. Of course this ensures that the wine is legit and that is extremely important when dealing with wine. Another benefit is that you know that the wine you are buying is actually an investment worthy wine, which many people that are new to the wine world would have no idea which wines to start with, thanks to their vetting process. Any bottle that they are offering is both worth the price and investment grade wine.
The con to this is that the bottles they offer may spike in price specifically because it is the only option for investors on this platform, so the gains that you see in your trading portfolio may actually just be because the price is temporarily artificially inflated due to a quick spike in demand.
Without knowing how many bottles they are offering it’s hard to say if they could have a drastic impact on the price, and I’m not sure if it even matters if they do. Demand is demand and the more people buy the less available for everyone else. So even if the price is ‘artificially inflated’ from the limited offering, people will still want to trade these wines so it may hold that boosted value. It’s hard for me to tell.
It also makes me think I will end up overpaying for bottles on the secondary market if I want to get enough bottles to have them shipped to me, but that may also mean I can sell at a premium for people who want to do the same. Once again, its hard to tell until the selling begins.
It’s exciting to think where this could go, I tend to be more optimistic, so I think this will end up having far more pros than cons. As they have more and more wine collections being offered to the market, in one or two years most of the common fine wines could be available on the trading platform, meaning all of the ‘artificial inflation’ talk that I mentioned above would be irrelevant with a significant amount of different wines being available, and none having the advantage of being ‘Vinovest trading’ exclusive wines, which right now there are only about 20 wines available.
This platform is a great step in the right direction for both Vinovest and fine wine investing. It will be interesting to see how it progresses. Once many regions slowly get added and more and more bottles from existing regions get added it will be fascinating to see how the ‘trading’ will work in this fine wine ecosystem.
Prices across the board could skyrocket, as more people gain access to wine, the supply stays the same, so naturally prices will go up just because there are more people becoming interested in these easy access platforms like Vinovest Managed and Vinovest Trading.
Will the limited supply make it so most people are priced out of the secondary sales of bottles? Will people use this as a long term storage location? Over a period of a few years, it is cheaper to hold wine in the trading platform, and not the managed platform, which is something I’m personally considering.
I would like to find out how many bottles of each wine they are releasing on the platform and if they plan on allowing people to add their own wines on the platform, for example customers using the managed platform to sell their wines on the trading platform.
This platform is very exciting and the next few months will be enjoyable to witness as a wine investor and trader.
I have a feeling more and more of my investments will be going into this trading platform and less into the managed platform, however I still plan to use both platforms as a ‘buy and hold’ long term interment location. I likely won’t actually be ‘trading’ the wines I purchase very often.
Vinovest is once again increasing my bullish view on fine wine investing.
None of this is investment advice, it is just my personal experience with wine trading on Vinovest.
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