In this review, we will examine Vinovest, the wine and whiskey investing platform “democratizing the world of fine wine and rare whiskey.” We will explore the platform’s features, potential returns, and fees, as well as the pros and cons of investing with Vinovest.
Vinovest takes care of the entire investment process for you, including authenticating, insuring, and storing your collection of grape-or grain-based assets, making wine and whiskey investing hassle-free and accessible. And the best part? When you invest in wine with Vinovest, you own the bottles themselves. In fact, fancy a tipple from your liquid investment? Say the word, and you can have one shipped to you anytime.
The wine and whiskey investing platform was launched in 2019 by Anthony Zhang and Brent Akamine and is based in Culver City, California, with over 20 employees and more than $100 million in assets under management.
What is wine investing?
Types of accounts
While the managed account is curated and maintained by Vinovest’s team of industry experts and an AI algorithm, the trading account grants investors full authority, enabling them to decide which wines to include in their portfolio, when to buy and sell them, and at what price.
Trading account: Vinovest Marketplace and fees
The Vinovest Marketplace offers complete control over your wine investment portfolio and comes without lockup periods or minimum balance requirements, as well as the need for a portfolio manager. This real-time trading platform essentially operates like a stock exchange, allowing you to buy and sell wine at its true market value.
Moreover, at Marketplace, investors can buy wine per bottle rather than per case, allowing for greater diversification at a more affordable investment threshold.
Wine investing through the Vinovest Marketplace will incur the following fees, which will automatically be taken from your cash balance:
- 2.5% purchase trading fee (inclusive of 3 months of storage): Fee that applies when buying wine on the Marketplace;
- 1% sale trading fee: Fee incurred when selling wine to another user;
- 1.5% annual storage fee, invoiced monthly: Fee to cover storage.
The trading account is only available for wine investing.
Managed accounts: Vinovest member tiers and fees
Vinovest has four distinct membership portfolio plans available, each with a different fee structure and minimum balance requirements:
- Starter: Minimum balance $5,000 ($1,750 for whiskey), portfolio management fee 2.85%;
- Plus: Minimum balance $10,000, portfolio management fee 2.70%;
- Premium: Minimum balance $50,000, portfolio management fee 2.50%;
- Grand Cru: Minimum balance of $250,000, portfolio management fee 2.25%.
Fees are allocated proportionally throughout the year and exclusively imposed on the invested capital within your account. Therefore, any residual cash in your account will not incur charges.
These management fees apply for both wine and whiskey investing.
Now, let’s first explore how you can embark on your journey into whiskey investing.
Whiskey investing with Vinovest
The Vinovest whiskey investing platform allows investors to buy, sell, and store entire casks of fine whiskey. And although the minimum investment begins at $1,750, you are getting a 53-gallon barrel that holds 266 bottles, providing ample opportunity for the investment to appreciate before being sold.
The platform provides two whiskey varieties: American whiskey, with casks priced around $1,750 and a holding period of two to four years, and single-malt Scotch whisky, with casks starting at $15,000 and holding times ranging from 15 to 25 years depending on the cask’s age at acquisition.
Vinovest partners with industry leaders such as the Glenor Cask Company, a specialized luxury single malt whisky cask business, to procure premium and unique whiskies from Scotland. Similarly, for American whiskey, Vinovest works with EthanolUS, a frontrunner in the field of bulk distilling based in Wyoming. As a result, if you invest in Scotch, your cask will be housed in bonded warehouses in Scotland, and if your investment is in American whiskey, it will be stored in Wyoming.
What is whiskey investing?
Upon maturity, Vinovest will collaborate with their global network of buyers to sell your cask, or you can opt to have it bottled and shipped to you for an additional fee. Bear in mind that a 10% early liquidation fee applies if you decide to sell before the advised maturation date.
Vinovest returns for whiskey
Next, let’s see how you can get started with wine investing.
How does Vinovest work?
Here is how Vinovest helps you create a tailored portfolio of investment-grade fine wines:
Step 1: Fund your account
After you create an account with Vinovest, you’ll need to fund your account. Vinovest accepts various payment methods, including bank transfers, credit cards, debit cards, wire transfers, paper checks, and cryptocurrency.
For wine investing, Vinovest requires an initial deposit of at least $5,000 for both opening an account as well as adding additional funds. You can get around this by setting up recurring deposits, which can be a minimum of $500. Smaller deposits are not accepted due to the required purchasing power for acquiring investment-grade wine.
Step 2: Specify your investment criteria
Vinovest allocates bottles into your portfolio based on your investment preferences and offers three options tailored to your investing time horizons:
- Short-term: Targets early liquidity and strategic allocations for 5-7 years;
- Medium-term: Balances risk and reward over 7-10 years;
- Long-term: Optimizes portfolio diversity and flexibility for 10+ years.
Step 3: Let Vinovest build your portfolio
After funding your account and specifying your investment criteria, Vinovest’s master sommeliers will use proprietary algorithms to look for the best wines for your portfolio. These wines will be sourced directly from wineries, wine exchanges, and merchants, ensuring greater market transparency and fair market value.
Their top wine-buying regions include Bordeaux, Burgundy, Champagne, the Rhône in France, Barolo and Piedmont in Italy, and certain areas in Spain and California. Additionally, they are keeping a close watch on emerging regions, such as those in Australia, Chile, Argentina, or other locations.
After sourcing the wine, Vinovest verifies its origin, including its history, source, life cycle, and storage, and confirms its authenticity, ensuring you don’t invest in counterfeit bottles.
Vinovest almost exclusively purchases wines by the case, which typically contain 3-12 bottles (remember, since most bottles cost at least $100, a $5,000 portfolio may have limited diversification). You’ll be notified via email when new wines are added to your portfolio, with the entire process taking about 2-3 weeks.
Your wine is subsequently stored in secure, bonded warehouses where the ideal temperature, humidity, light, and vibration levels are maintained. This proper storage is essential to preserving the wine’s investment-grade condition.
It’s important to note that Vinovest does not provide equity shares or fractional ownership. Instead, at Vinovest, you have full ownership of the bottles in your portfolio. Should you choose to sample a bottle from your wine investment, you can request to have one shipped to you whenever. Vinovest will handle the delivery (for a charge), and their insurance will safeguard your bottle against possible damage, loss, or spoilage.
Can I choose the wines in my portfolio?
Check out this Vinovest blog post to see what your wine portfolio could look like based on your initial deposit.
Shipping your wine
Step 4: Watch your portfolio grow
With real-time access, you can effortlessly monitor your collection’s growth and make informed decisions about potential adjustments.
Step 5: Sell your wine
Vinovest will inform you when your wines have reached their optimal selling point by monitoring each wine’s maturity date, which coincides with its peak value. Although most clients choose to sell at this peak, you can also drink or continue storing your bottles.
You can decide to liquidate a portion or your entire portfolio whenever you wish. After contacting a portfolio manager, they will work to sell your wines to the highest bidder within their network, typically taking 4 to 8 weeks. However, be aware that clients who sell within three years of acquiring their wine will incur a 3% early liquidation fee. Alternatively, you can use the Vinovest Marketplace to sell your wines (1% sale fee).
How long do I need to hold my investment?
What kind of returns can I expect with Vinovest?
In the fine wine market, returns are primarily driven by two key elements: maturity and scarcity. And while you have the flexibility to do what you want with your wine on Vinovest, adopting a long-term investment approach is generally more beneficial, given that most investment-grade wines require 10 to 15 years to reach maturity. Additionally, bottles grow increasingly scarce and valuable as more and more people consume the wine.
In short, wine is fundamentally a long-term and illiquid asset. Yet, at its optimal selling window, i.e., when the market determines that the wine has achieved its pinnacle quality, it becomes most liquid. This window varies for each wine. At Vinovest, the specific ideal selling window for your wine can be found on your wine detail page. You can count on Vinovest to pinpoint the best moment to sell wines in your portfolio.
Wine investing can be a profitable alternative investment option for investors looking to diversify their portfolios. Here’s why:
- It’s a hedge against recession: While the S&P 500 experienced a drop of over 50% during the Great Recession, the decline in fine wine was less than 12%.
- It has a low correlation to equities markets: Wine exhibits a low correlation with various global and regional stock market indices.
As far as potential returns, you can look at Vinovest’s quarterly portfolio reports that it publishes on its blog. For example, according to Vinovest, the average return for Vinovest portfolios in the first quarter of 2023 was 1.28%.
Now, in comparison, the S&P 500 returned 5.5% in the first quarter of 2023, with Bitcoin returning over 70%, becoming the top-performing asset class that quarter.
Impact of foreign exchange rates on your Vinovest portfolio
Similar to how oil prices are typically quoted in US dollars, most fine wine transactions occur in British pounds. As a result, not only do fluctuations in the underlying wine price impact your portfolio, but changes in your local currency’s value against the pound can also influence its worth.
For instance, assume you live in the US and buy a bottle of fine wine for $100 at the beginning of the year (keep in mind that the purchase is made in British pounds). After five months, the wine’s value increases by 5%. However, this gain is counterbalanced by a 10% depreciation of the pound.
Interestingly, a decline in the pound’s value may offer an excellent investment opportunity. This is because, as the US dollar gains value relative to the pound, you can acquire more wine for the same price. Conversely, if the pound were to strengthen against the dollar, your Vinovest portfolio would immediately see an increase in value.
For whiskey investments
Since your wine and whiskey are stored in bonded warehouses through Vinovest, it is exempt from additional tariffs and excise duty taxes. However, these taxes will apply if the product is removed from the warehouse.
The taxation of wine or whiskey gains, however, depends on your country of residence. In the United States, your liquid investments through Vinovest are subject to collectibles taxes. Collectibles kept for more than one year are subject to long-term capital gains taxes, capped at 28%, while those held for less than one year are taxed at the same rate as regular income.
In the United Kingdom, on the other hand, alcohol beverages are considered a wasting asset, which means you likely won’t have to pay capital gains tax on it. The same holds true for clients in Hong Kong, Singapore, Germany, France, Austria, and other countries.
As with any investment, make sure to consult a tax advisor for more details.
Is Vinovest safe?
Vinovest implements a range of measures to ensure the safety of your investment, including authenticating your wine and whiskey, storing it under secure climate-controlled conditions, and insuring it for improper handling or damage. Moreover, were Vinovest to go out of business, you still retain complete ownership of your physical assets.
Finally, according to Vinovest, the company undergoes multiple audits annually by insurance providers and a third-party auditor that works with bonded warehouses.
Vinovest’s customer support
To assist users with any issues or questions they may face while using the platform, Vinovest has made available a variety of customer support options, such as:
- Vinovest help center: Find everything from setting up your account to understanding Vinovest fees;
- Submit a request: If you didn’t find what you were looking for at the help center, feel free to submit a request, an option available to all account holders;
- Email: You can contact Vinovest by emailing [email protected]; you can expect a response after 48 hours;
- Vinovest blog: Educational articles on wine and whiskey investing, the latest news on the wine and whiskey industry, as well as articles on the different wine and whiskey types and regions;
- Terms and conditions: The terms and conditions form a legally binding contract between you and Vinovest as it pertains to your use of this website and the services offered on its platform;
- Accessibility: Vinovest complies with the Web Content Accessibility Guidelines (WCAG) 2.1 Level A and the Americans with Disabilities Act (ADA) to guarantee that the website is accessible to everyone, including individuals with visual impairments, motor impairments, cognitive disabilities, and more. If you encounter any issues gaining access to material on their website, you can contact Vinovest through email at [email protected];
- Social media channels: For the latest updates and dynamic interaction between the platform and its community, check out their social media channels, including Facebook, Instagram, Twitter, and LinkedIn;
- Vinovest community: Users can join an online community dedicated to wine and whiskey investing, where they can discuss, learn, and network with other Vinovest users.
Pros and cons of investing with Vinovest
- Accessible: Vinovest is open to anyone in the world (except in Cuba, Iran, North Korea, Syria, and Crimea) as long as they meet the legal drinking age requirements in their country of residence and have a minimum of $1,750 to invest;
- Hands-off investment: Vinovest offers various options for fully-managed, diversified portfolios tailored to your risk tolerance and investment timeline. No need for prior experience in wine or whiskey investing;
- Comprehensive management: Vinovest takes care of sourcing, custody, storage, and insurance for your investment, eliminating the common barriers to fine wine or spirit investing;
- Access to wine futures: Premium and Grand Cru clients can participate in the wine futures market, typically only reserved for industry insiders;
- Low correlation with the stock market: Wine and whiskey investments are less likely to be affected by stock market fluctuations, offering portfolio protection during uncertain market conditions;
- Ownership: With Vinovest, you own the underlying asset you invest in and can request a bottle delivered to your doorstep at any time.
- High annual management fees: Ranging from 1.9% to 2.5%, these fees cover the sourcing, authentication, storage, and insurance of your investments but may slowly eat away at any returns you may experience;
- Minimum investment of $1,750: The entry-level plan requires a relatively high minimum investment compared to more traditional asset classes like stocks and, as such, may be inaccessible for some investors;
- Long-term, illiquid assets: Most investment-grade wines take 10 to 15 years to mature;
- Slow liquidation process: Liquidating your investment takes 2-4 weeks, and selling your wine on the Marketplace will incur additional fees;
- Penalties for early withdrawals: Vinovest imposes a 3% penalty for wines liquidated within three years of purchase;
- Limited customization options: Only Premium (minimum $50,000 investment) and Grand Cru customers can customize their portfolios.
Vinovest is unquestionably the most straightforward way to uncork the potential of fine wine and rare whiskey, as they handle everything from sourcing to storage on your behalf, making this traditionally gated domain finally accessible and hassle-free.
However, it’s worth noting that while fine wine and whiskey have consistently performed well as asset classes, Vinovest remains a relatively recent entrant in the arena. As such, it might be sensible to first only dip your toe in with a modest initial investment and hold off on committing funds you might need in the short term. Remember, with wine and whiskey, you’re in it for the long haul.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
FAQs about Vinovest
What is Vinovest?
Vinovest is a platform for fine wine and whiskey investing that handles the entire investment process for you, including sourcing, authenticating, insuring, and storing your collection of investment-grade alcoholic beverages.
How does Vinovest work?
Vinovest employs a combination of industry experts and machine learning algorithms to choose wines and whiskeys with high appreciation potential for your portfolio, taking into account your specific investment time horizon. The bottles and casks are sourced, authenticated, stored, and insured by Vinovest on your behalf, and when they reach maturity or when you decide to cash in on your investment, they’ll also manage the sale.
Is Vinovest legit?
Yes, Vinovest is a legitimate platform for investing in fine wine and rare whiskey. It allows the average investor to invest in the fine wine and spirits industry by providing various services, including sourcing, authentication, storage, insurance, and selling assistance.
Is Vinovest safe?
Yes, Vinovest is safe. Your investments are authenticated, insured, and stored in appropriate facilities. Moreover, if Vinovest goes bankrupt, you still maintain ownership of your underlying assets.
Is Vinovest regulated by the SEC?
Vinovest does not deal in securities and, as such, is not regulated by the SEC. Nevertheless, according to Vinovest, the company undergoes several audits annually by insurance providers and a third-party auditor that works with bonded warehouses.