Investing in wine, art, Lego, luxury handbags, whisky, or violins may seem to share a common thread—they are all driven by passion. But for professional investors, most of these categories fall short of being viable investments, regardless of enthusiasm.
Take Lego as an example. According to BrickEconomy, a platform that tracks the secondary Lego market, a limited-edition Spider-Man figure obtained at the 2013 San Diego Comic-Con now sells for nearly 16,000 euro. The BrickEconomy 100 Index, which monitors the top-performing Lego sets, has risen more than 8 percent since the beginning of the year.
Yet, as Gertjan Verdickt, co-author of Investeren in Stijl and an expert in alternative investments, notes, Lego’s investment case is limited by a fundamental flaw: scalability. “Lego is ‘not done’ for professional investors,” he said. The same holds true for luxury handbags, watches, classic cars, and violins. These markets are niche and illiquid.
Scalable and liquid
By contrast, wine, whisky, and art offer the scale and liquidity that professionals require. “These are large markets, with significant transaction volumes, and even dedicated funds,” Verdickt explained.
One such fund is managed by Cellar Investment Partners, registered in Luxembourg. Eran Habets, managing partner, and Kristian Nooitgedagt, general partner, highlight the distinct advantages of wine over other passion investments. “Unlike Lego or whisky, wine becomes scarcer over time due to consumption and its finite shelf life. We treat wine as a financially driven asset class backed by data, not merely a collector’s passion,” Habets said.
Verdickt compared wine to corporate bonds: “It has a maturity date and limited issuance. Higher-rated wines offer higher returns, making them appealing to investors.” Single-family offices are already allocating portions of their portfolios to wine funds, recognising the combination of scarcity and liquidity.
Hedge against inflation
The appeal of passion investments like wine and art extends beyond diversification; they can also serve as hedges against inflation. Philippe Gijsels, chief strategist at BNP Paribas Fortis, recently told the CFA Society Belgium that real assets, including wine and art, offer protection against currency debasement. “After a decade of 4 percent annual inflation, cash loses nearly half its value. Investing in assets that rise with inflation is prudent,” he said.
Art, however, presents challenges in liquidity and valuation. Verdickt pointed out that art typically changes hands every nine years, making returns harder to quantify. Nevertheless, it remains a prestige asset for professional investors. “Significant sums are involved, but patience is essential due to the illiquid nature of the market,” he said.
Market performance and Outlook
Wine investments faced headwinds in 2024. The Fine Wine 100 Index, which tracks the most traded wines, fell 21 percent after peaking two years ago. Despite this, the index delivered an average annual return of 9 percent between 2000 and 2020, outperforming both the S&P500 and Dow Jones during that period.
Returns vary by region. Bordeaux offers stability, with annual returns averaging 8.5 percent, while Burgundy, though yielding nearly 19 percent annually, is more volatile. Champagne has shown an 18.6 percent historical return, benefiting from steady consumption.
Kristian Nooitgedagt advises limiting allocations to 10 percent of a portfolio for illiquid assets like wine. “For larger fortunes, this allocation can increase, provided the liquidity needs for the next decade are covered,” he said.