Red or Neat? Everything You Need to Know About Investing in Wine vs Whiskey

 Red or Neat? Everything You Need to Know About Investing in Wine vs Whiskey

Your drink of choice might come down to personal preference, but when it comes to investing in wine vs whiskey, there's more than just tannins and spice.

 Red or Neat? Everything You Need to Know About Investing in Wine vs Whiskey
Moriah Costa

ByMoriah Costa

Published Aug 5, 2022Updated Aug 6, 2022

Wine

Wine

Extra Income

Extra Income

Whiskey

Whiskey

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Drinking a glass of Scotch on the rocks might make you think of wearing suits and smoking cigars Mad Men style, but whiskey, wine, and other luxury distilled spirits aren't just for cocktail nights and fancy dates.  

Fine wines and whiskeys are increasingly popular alternative assets for investors looking to diversify their portfolios since both can sell for hundreds to thousands of dollars – like this 1945 red wine Romanée-Conti that sold for $558,000 in 2018.

Both wine and whiskey have outperformed the S&P 500 by 15% to 32% in the past year.

But wine and whiskey are two very different, yet similar investments. So how do you choose which drink to invest in? Ready your stemware and tumblers as we unpack the key differences between wine and whiskey.

Why invest in wine and whiskey?  

While wine, whiskey, and other spirits are consumer goods, some bottles can also be an investment and fetch sky-high prices on the market – a Macallan Fine and Rare 60-Year-Old 1926 bottle sold for $1.9 million at auction in 2019. 

The two beverages are considered long-term investments of five years or even longer since older bottles are more likely to increase in value. They’re also in high demand since many luxury bottles are produced in limited quantities. Some producers may make as little as 500 cases per year, such as the coveted Screaming Eagle Cabernet Sauvignon red wine. And as demand for the assets goes up and investors snatch up bottles, prices tend to rise due to limited supply.

Both wine and whiskey have outperformed the S&P 500 by 15% to 32% in the past year. In fact, our recent study found that, across 20 + asset classes, wine comes out as the second best performing asset class over the past year.

With that said, there’s a good argument to be made for including them in any well-diversified portfolio.

Differences between wines and whiskeys

There are numerous differences between the two drinks, besides how the alcoholic beverages taste, their alcohol level, and what they're made of, such as fermented grapes or malted barley. These differences can, in turn, help you decide whether to start investing in fine wine or stick to hunting for luxurious whiskies like The Macallan.

Age

Wine is usually aged for 8 to 12 months before being bottled and continues to mature in the bottle. As the alcoholic drink ages, its chemical composition changes, and the fermentation process turns the wine into vinegar. The majority of wines should be drunk within a few years of bottling. Very few wines last beyond a decade and those that do are usually the ones worth investing in.

Whiskeys, on the other hand, are aged for many years in a barrel before being bottled and have higher alcohol content. This is why there are whiskeys, such as single malt whiskeys, that are 12, 20, 50, or even 75 years old. The alcohol bottles themselves are not that old, but the barrel in which the liquor matured is. This is one reason why it’s not uncommon for investors to buy barrels of whiskey as opposed to individual alcohol bottles.

Once bottled, the flavor of the hard liquor doesn’t change (unlike wine).

Storage

While both alcoholic drinks need to be stored, whiskey is much easier to store than wine. That’s because the value of fine wines can decline if not properly stored in a well-maintained cellar. This is one reason why most invest in red wine instead of white wine.

For investors who don’t have access to their own cellar, they can keep their wine in a storage facility. Wine storage is key to increasing the longevity of your wine investment and is an added cost you should keep in mind. Storage costs can range from $1.25 a month for 12 bottles, to hundreds of dollars a month. 

Whiskey bottles, on the other hand, can be kept in a cool area away from direct sunlight and excessive humidity. That means investors can keep the drink in their house without having to worry about their investment suddenly losing value (provided they can resist opening it, of course).

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Source: 30 Rock (NBC)

What about wine vs cognac?

Both white wine, cognac, and other fortified wines are made from fermented grapes, which can cause some confusion about whether or not they're the same type of alcoholic beverage. The key difference is where it's made.

Cognac is a type of brandy produced in France, specifically from the Charente and Charente-Maritime departments of western France and made from white grapes. Wine, on the other hand, is made in many countries, with many fine investment wines coming from Italy, the U.S., Argentina, and France. It's made from both white and red grapes. 

You can invest in cognac, the same as wine or whiskey, although it’s a less popular investment. Cognac does not age once it is bottled and the drink can be kept for many years if properly stored in a cool, dark place.

Wine vs whiskey: Which one performs better?

The two alcoholic beverages are long-term and generally low-risk investments. According to one of our recent studies, wine crushed the S&P 500 for the first half of 2022, rising 11% compared to the S&P 500’s lackluster -20% return. In fact, both assets have both performed well over the past year, with whiskey appreciating by over 15%. But how do they compare to each other?

In 2022, wine has outperformed whiskey as an asset class, jumping 14.73% compared to whiskey’s rise of 9.53%. And over the past year, wine still remains the winner, skyrocketing 32.35% compared to whiskey’s still impressive 15.15% increase.

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Source: MoneyMade Whiskey Asset Page

When we compare these two asset classes over the long term, however, it’s a whole different story. 

Whiskey performed better than wine over the past five years, escalating by 98.31% compared to wine’s growth of 58.95%.

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Source: MoneyMade Whiskey Page

So while fine wines are doing better this year, it hasn’t always performed as well as whiskey in terms of investment growth. Still, with wine’s performance this year, it could very well catch up with whiskey over the long term. And it’s worth noting that a 58.95% growth over five years is still an incredible return for the alcoholic beverage.

Pick your poison

Pick your poison

Do you prefer a Boreduex or a Glenfiddich?

Where can you invest in wine and whiskey?

If you’re interested in investing in wine or whiskey (or even both), don’t run out to your local supermarket just yet. Acquiring investment-grade wine and whiskey bottles can take time. Plus, you’ll need to make sure you have the proper storage. This is especially true for red and white wines since they can lose value if not properly stored.

For convenience sake, many investors prefer to buy exchange-traded funds that track alcohol or stocks in whiskey distillers and wine companies in the drinks industry. Some major publicly traded companies produce both and some may even pay dividends.  

Another option is to invest through platforms like Vint, CaskX, or Vinovest, which give investors access to a portfolio of fine wines or whiskeys that are stored and managed on their behalf.

vint
Vint

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If you’re interested in both wine and whiskey investing, then check out Vint. With Vint, you can buy SEC-qualified shares of their wine and spirit collection for as little as $50 each. Their collection is curated by experts and they have no management fees. They also recently made their first distribution, returning nearly 20% to investors.

vinovest
Vinovest

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Collectibles

Vinovest is a wine-focused investing platform that takes a hands-off approach. All you need to do is pick your investment style and fund your account. Their sommeliers and AI program do the rest. 

CaskX is yet another alcoholic beverage investing platform, but this one is only open to accredited investors who want to invest in barrels of young Scotch and Bourbon that are insured, properly stored, and managed by the platform.

caskx
CaskX

Collectibles

Red wine or malt scotch? Raise a glass to your next investment

When it comes to investing in one asset class over another, it comes down to a few factors like returns, ease, and personal choice. 

Over the past year, wine has outperformed whiskey by 17.2% but lags behind wine when looking at the assets' long-term performance. Over the past five years, whiskey has performed better, skyrocketing 98.31% compared to wine’s growth of 58.95%.

Outside of their price performances, investing in wine vs whiskey is really just about personal choice. If you prefer to drink a standard glass of red wine made from merlot grapes to a glass or two of single malt whiskies, then investing in wine might be a better choice, especially if you have a wine cellar or don’t mind paying extra for a storage facility. But, if you prefer to keep your investments close to home and have an affinity for hard liquor, then whiskey just might be an investment worth considering.