“Fine wine – a real asset or “just” passion?“
Updated: Feb 24, 2021
Fine wine is about passion and emotion. It transports cultural heritage, but is it also a real asset? Long-term fine wine investments protect purchasing power and offer other unique investment characteristics. However, there are also risks involved by investing in fine wine – authenticity, transparency as well as secondary market liquidity. Luckily, we at vinID are going to solve these issues by combing blockchain and IoT technology.
Fine wine has unique investment characteristics offering stability, differentiation, and long-term value appreciation. Most interesting are the supply and demand characteristics. There is a finite supply of each vintage. As wine bottles are consumed it decreases further while at the same time demand increases as the bottles ages and evolves.
Fine wine as a real asset. It offers protection against monetary debasement and negative real interest rates (inflation greater than interest rates).
Fine wine as a value storage. Superior risk-adjusted long-term value appreciation
Fine wine as a diversifier. Low correlation to traditional asset classes
Fine wine as a passion asset. Fine wine does not produce any income, but it is a relic of the past with cultural heritage, which can eventually be consumed and enjoyed.
As mentioned earlier, there are also risks involved when investing in fine wine.
The existence of counterfeited fine wine is one issue. There are estimations that around a fifth of the most sought-after wines are not genuine. Counterfeiters are either faking the whole bottle or they refill an empty original bottle. vinID solves this problem and stops the counterfeiting of wine. Each wine bottle gets equipped with a NFC tag, which detects any opening or manipulation. Additionally, the NFC tag gives each wine bottle a DNA – the unique identity (UID), which is stored on blockchain. This identity is dynamically encrypted what makes it impossible to duplicate the chip and therefore any wine bottle.
To maximise transparency is another vinID mission. Fine wine is a biologically active substance and therefore storage is important. This is especially relevant for sought-after wines travelling the world with frequent changes of ownership. More change of ownership means more variable climatic conditions and other adverse effects. This increases the risk of premature ageing and fragility. Constant temperatures of around 12 to 14 degrees and a humidity of 65% to 75% are ideal conditions. Low temperatures are important for slow aging and the correct humidity moistures the cork, while protecting the bottle labels.
vinID maximises transparency by combing blockchain and IoT technology, providing a secure and transparent product authentication ecosystem. Each transfer of ownership creates a new entry on the ledger and thus a unique transaction history for each bottle of wine. Fine wine has a long life-cycle and deserves to have its own “passport” showcasing its own history.
Are you as excited as we are? This is the future. Let’s connect!
My passion for wine has started with trips to Tuscany with my parents in the 90s – long before finishing school or starting a professional career. The investment perspective is much younger and a child of my career in financial services and the extraordinary times we are living in. I am currently studying for WSET Level 4 (Weinakademiker) after I have completed WSET Level 3 in 2015.