Myth Busting: We Answer the Critical Questions

Investing involves many things, including the ability to see through the noise, having some analytical sense, and, most importantly, maintaining a critical attitude toward what you experience. At RareWine Invest, we benefit from intelligent investors who do exactly that. This means we enjoy many factual and constructive dialogues about why, how, and what – exactly as it should be in a good partnership. Here, we’ve gathered the most frequent critical questions.

“How can you almost always be the cheapest in the market?”

Saying we are always the cheapest in the market is an exaggeration – but striving for it is definitely part of our DNA and business model.

Every trader ideally wants to buy low and sell high, but in reality, this is a utopia. Attempting this can sometimes reduce liquidity. But if you have the right products – and time and patience – it’s certainly worth striving for.

An important factor for a trading house like ours is turnover rate. Offering the best products at the most attractive prices gives us a very strong market position – one we’ve built over many years and which you benefit from as an investor.

Our “secret sauce” is our ability to buy in so that we can always be “the cheapest on the market” – and then later sell at attractive prices while ensuring the best possible liquidity.
This is attractive for you as an investor when you buy, attractive for future buyers – and again attractive for you when an investment is eventually liquidated.

“You’ve started selling all kinds of wines from random producers nobody knows…”

It’s true that over the past year especially, we have been able to present many “new” names – with opportunities for direct allocation investments.

However, this is by no means something that just suddenly appeared. It is the result of many years of hard and focused work. Ten to fifteen years ago, few producers were interested in talking to some Danish wine merchants. And those who were interested were not relevant to us. But over time, that changed. Step by step, we got a foot in the door with one producer, which later opened access to another – a more interesting – producer.

Through mutual value creation and years of focused work, we now have direct allocations from over 60 producers, all of whom have grown better, larger, and more prominent over the years, strengthening RareWine’s market position.

This is the work from which you, as an investor, can reap the benefits when offered direct allocation wines – both for drinking and, especially, for more prestigious, investment-grade bottles.

Even though we’re welcomed into this “good company,” we do not compromise on the criteria for selecting investment wines. Even with good cooperation, we don’t buy just anything – only a fraction of purchases become investment wines.

And just because the layman doesn’t know the name doesn’t mean it can’t be strong names in the industry – even if they are still “upcoming.”

“There’s no transparency in pricing, and you can just control and dictate the market.”

The wine market is complex – no secret there. Staying updated on pricing requires effort. It’s like following the used car market: With some effort, you can quickly get a sense of the price range for a newer Golf station wagon or a Tesla through online marketplaces and dealers. There are many on the market, so pricing is relatively efficient. The same often applies to a bottle of Dom Pérignon – it’s widely available and easy to find a market price for.

But if it’s a classic Porsche 911 from a specific year or a bottle of Roumier Musigny, it becomes much harder, requiring more effort, work, and deep market insight.

At RareWine, we do this work every day. Our work stands on nearly 20 years of experience and massive amounts of internal trade data. This experience and data are combined with resources such as data from trading platforms, auction houses, and other international wine merchants and distributors. This enables us to paint as precise a picture as possible of the market situation and pricing.

Part of RareWine’s value proposition is that as an investor, you don’t have to do this work – and very few people understandably want to follow pricing at this level. To ensure transparency and security, all transactions undergo third-party audit (Deloitte), so you as an investor always have a guarantee that the quoted sale price matches the actual sale price – and of course, payment is made accordingly.

As merchants, it would be wonderful to be able to dictate the market. But although RareWine has grown significantly compared to when it started, the overall wine market remains enormous – with strong competition and powerful players on both sides.

That means the market cannot simply be dictated. That said, some cuvées are so rare that strategic buying can give a strong market position. When supply can be controlled, prices can be optimized – and you can sometimes benefit from this when investing with us.

“How can you find attractive investments every single week?”

Depending on how closely you follow our channels and your engagement level, you might encounter many exciting investment opportunities. But why can we keep presenting investment-worthy options week after week?
Let’s put it in perspective:

• There are around 200 different producers of Brunello di Montalcino
• Approximately 2,000 champagne producers (depending on how you count houses, growers, and cooperatives)
• Over 4,000 individual domaines in Burgundy – 85% of which farm less than 10 hectares.

These examples tell one thing: The global wine market is astronomically large – as is global consumption. Otherwise, these producers would not exist. Most of the above producers belong to the super league globally.

Even though only a fraction qualifies as investments, there are still many exciting cases to work with. The challenge is not finding them – but securing them, at the right price and preferably in volume.

That’s why you’ll often see wines sell out quickly – shortly after an offer is sent.

So when you encounter an exciting investment case with us, it’s not just another new wine in an endless stream – it’s a carefully selected wine among thousands that, due to temporary availability, special market conditions, a strong price, or something else, is an attractive investment opportunity.

“It’s just a carousel where you only sell wine from one investor to another. The wine is never drunk.”

For most people, it seems unreal that a €20,000 bottle of wine actually gets drunk. If you’re not part of these circles, it can take time to understand – even for industry insiders.

Nonetheless, even the most exclusive wines are regularly consumed somewhere in the world – if not daily, then several times a week. In the RareWine Trading store, which ultimately sells your investment, we are in close contact with buyers – and if it’s not the end consumer, it’s usually someone just before.

Pictures and videos of bottles being opened and enjoyed are regularly exchanged – it’s part of the “game.”

That said, we do not commit solely to reselling wine for consumption. When a portfolio with X wines is liquidated, all are evaluated – and Y of them may still have potential. If we believe potential is exhausted, the goal is to sell them to wine lovers worldwide – otherwise, we face the same problem later.

“Why should I keep buying wine when it’s only you making money after two years?”

After some turbulent years in the wine world, it’s understandable that investors from that period ask this question.

It’s important that you as an investor stick to your strategy and don’t panic – no matter the asset class.

Wine investment is long-term. A correction must be seen in that light. But it can be hard to accept, especially because wine investment as a physical asset carries negative cash flow – e.g., storage, insurance, and handling costs. These are necessary expenses – but not a significant part of RareWine Invest’s business model.

Our business is more based on realized gains – the higher the sales price of your wine, the greater the value in the agreed commission rate. This creates a shared fate between you and RareWine Invest.

But should you buy more if you’re in the red? That depends on your strategy and temperament. Like the stock market, corrections often offer attractive buying opportunities.

The broad wine market is currently down 22% over the past two years* – back to the level of five years ago. That creates opportunities.

As a certain American investor said:

“It’s wise for investors to be fearful when others are greedy and to be greedy only when others are fearful.”
– Warren Buffett

*Liv-ex Fine Wine 1000