EigenAnalysis

For alternative investments such as wine, for instance, investors need to understand what exits are available to them and then consider how they want to respond. If you know the market, investing in wine can be very profitable.

Let me illustrate. I bought Australian wines three years ago through a broker. Fresh-faced and wide-eyed, I was ready to tread into the sophisticated world of wine investments. My wines were stored at a temperature-controlled warehouse run by Cougar Express Logistics in Boon Lay Way.

It was my first foray into wine investing, having figured that I wanted to hold fine wine as part of a diversified portfolio of traditional financial assets. My broker had priced the shipping, insurance and three years of storage fees into the cost of my wine bottles.

When my storage contract expired, I didn’t renew it, as I wanted to ‘test the market’ to see how much my wines could fetch. With my broker’s help, I sold my bottles, reaping a return of about 12 per cent in three years. While my gains were not spectacular, I do count myself fortunate, as I could have ended up with zilch returns, or losses, or even a damaged liver from being forced to guzzle every drop of wine to clear it.

I have come across people in the wine investment community sitting on tens of thousands of dollars of wine, as they are unable to ‘offload’ them to buyers.

The more prominent brokers in Singapore include the Australian Wine Index, Premium Liquid Assets and Universal Assets Group.

Clients often invest at least $10,000, if not more.

There are at least thousands of investors who use the services of wine brokers, although the actual numbers are not known. One such investor I spoke to last year said his broker had advised him that since ‘market conditions’ were not good, he should hold on to his wines for the time being, or add more wines to his collection to diversify his holdings.