Lifestyle Invest in your passions: Wine and wineries

Straddling the line between commodity and collectible, fine wine is an asset unlike any other—rooted in tradition, yet evolving within modern investment strategies. It’s a tangible asset that can provide a hedge against inflation and pass on an emotionally resonant legacy, similar to alternative assets like gold, fine art, and rare watches—making it a unique potential addition to your portfolio.

For high-net-worth (HNW) investors, fine wine may offer long-term appreciation and resilience in volatile markets. For these reasons and others, it’s a presence in nearly half of all luxury investment portfolios.^{Disclosure 1} But unlike traditional assets, the worth of fine wine isn’t measured in numbers alone. It’s a passion investment in craftsmanship, legacy, and sustainability—one that can yield financial, cultural, and personal rewards in equal measure.

Getting a taste of this category is particularly appealing if you already have a love for fine wine. But how can you determine whether your passion will pair well with your preexisting portfolio? To help answer that question for high-net-worth individuals, here’s an overview of the why, what, and how of where to begin if you want to invest in wine.

Purchasing bottles of wine because you enjoy them or they represent a special place or time in your life is something you can consider simply as an expense that contributes to your happiness.

If you’re considering fine wine as part of your portfolio, you’ll want to think about market conditions in the U.S. and abroad, and about profit potential. As with other passions, “potential profit” carries a broader meaning with fine and rare wine—the financial, cultural, and personal value should be part of the equation and may even outweigh any straight calculations of return on investment.

From a financial perspective, there may be benefits to investing in wineries and fine wine:

• Average bottle prices of rare wines have risen 340% over the past two decades.^{Disclosure 2}
• The annualized return of 10.6% for wine over the past 15 years^{Disclosure 3} is similar to the average annual return of the S&P 500 for the same period.^{Disclosure 4}
• From 2023 to 2028, a 7.9% compound annual growth rate (CAGR) is projected across all categories of wine.^{Disclosure 5}
• The value of the global wine market is expected to reach $478.98 billion by 2028.^{Disclosure 5}
• Fine wine appears in 45% of HNW portfolios, accounting for up to 13% of asset allocations.^{Disclosure 1}

Beyond financial gains, fine wine also offers less tangible, but equally valuable, returns. More than half of investors say they include wine in their portfolios because of its low carbon footprint, contributing to environmental sustainability.^{Disclosure 1}

Similarly, 56% of wealth management professionals invested a portion of their clients’ assets in fine wine for its historically low volatility and ability to hedge against inflation.^{Disclosure 1} However, recent shifts in global trade policy—including tariff fluctuations—have introduced new sources of volatility that investors should keep in mind.

Of course, there are also the subtler, more personal ways to profit from such an investment. A fine or rare wine can provide a point of entry to an exclusive social circle or can simply add to the enjoyment of a quiet night around the dinner table with friends and family.

Much like a well-aged vintage, fine wine investment requires a nuanced approach. Here are three considerations in determining your potential involvement:

1. Methods of investing – Your goals will shape your investment approach. For example:

• For portfolio stability, fractional investments via wine platforms or food and beverage ETFs provide broad, diverse exposure to companies that make, distribute, or sell wine. These can be bought and sold more quickly than physical purchases.
• If legacy planning is a priority, hands-on investments in bottles or wine futures can foster an inheritance with the potential for higher long-term financial, emotional, and cultural returns.
• Those seeking a deeper, daily involvement in the industry as a whole may benefit most from exploring winery or vineyard ownership with professional guidance. Distributors and retailers in the alcohol industry may be another ownership possibility.

2. Market parameters – If your investment method requires purchasing bottles or barrels, then it’s important to think about your time frame and other factors, including:

• A typical hold period ranges from 4 to 10 years.
• Liquidation due to financial emergencies can lead to losses if market conditions are unfavorable.
• Auction fees may apply to high-end wine sales.
• International tariffs on wine have varied in recent years, adding price unpredictability for both imports and exports.
• The acceleration of cyclical flood and drought conditions by climate change could increase the frequency of crop failures.

3. Tax considerations – Navigating local, federal, and international tax implications is critical:

• Bottle and futures investors can face capital gains taxes of up to 28% for “long-term collectibles.”^{Disclosure 6}
• Vineyard and winery owners must consider federal income tax rates of up to 37%, in addition to local taxes.^{Disclosure 7}

• Industry-specialized tax professionals can help optimize capital gains strategies, estate planning, and other matters.

Each of these layers adds complexity, but with expert guidance, they also create an investment with the potential for financial and personal fulfillment. To help ensure that potential is met, your Truist Wealth strategist can help calibrate your goals for investment wine and winery ownership with these and other financial realities in the fine and rare wine investment space.

Any comments or references to taxes herein are informational only. Truist and its representatives do not provide tax or legal advice. You should consult your individual tax or legal professional before taking any action that may have tax or legal consequences.

With the why and what of wine investment covered, the next step is navigating the practicalities of acquiring and maintaining your asset. While there are a host of considerations to make when beginning to peruse wine platforms and ETFs, stock your cellar, or plant a vineyard, almost all of them fall into three categories:

1. Selection – A discerning eye is key. Investment success often depends on careful choices regarding regions, vintages, producers, bottle quality, and grape varieties. Depending on your investment method, your choices for these categories will play a prominent role in determining whether you get the financial, cultural, and personal returns you want. Our wealth management advisors can help tailor these choices to align with your financial goals.
2. Authentication – Fraud and misidentification pose risks. Unless you’re already a certified expert in authenticating wines, this is not an area where independent study is a sufficient safeguard to prevent what could be significant financial losses. Professional authentication services help ensure investment security, providing verification critical to avoiding counterfeit products and costly errors.
3. Preservation – Proper storage conditions maintain quality and value to help safeguard your investment in terms of both purchase and sale. Whether designing a private cellar, evaluating leasing options, confirming the provenance of a bottle or barrel, or securing insurance, expert support helps protect your investment against damage and depreciation.

Fine wine production has always been a collective endeavor, and the same should be true of any investment in it. Truist Wealth strategists can connect you with specialists in authentication, storage, and market analysis, ensuring a well-integrated investment experience tailored to your financial aspirations. With the right guidance, fine wine investment can offer a blend of security, sophistication, and sustainable growth—one that matures as gracefully as the vintages themselves.