Fine Wines are Veblen goods (unlike other investment products) whose preference for buying increases as a direct function of their price. Fine wines are produced in limited quantities worldwide which puts upward pressure on their prices as they are consumed. As the prices of these Wines increase the demand further increases due to Veblen effect.

Of late, Wine investment has been marketed as one of the most lucrative alternative investment by some Wine investment companies. They usually quote double figure annual return figures over a period of five to ten years. They usually give following reasons for investing in fine Wines:

• Fine Wines have limited availability.
  
• Duty and Vat are not payable upfront.
  
• Retunrs on Wine investments are tax free.
  
• Fine Wines have often outperformed the world major stock indices.
• You have a tangible product as an investment, not a piece of paper or certificate.

It all sounds fine and dandy. However, the truth is there are very few Wines that have performed up to the expectations. Investing in Wine is a risky business and you must not invest more than what you can drink. Know your Wine and Wine region inside-out before you invest. Keep the following in mind:

• Focus only on top of the range wines from the best vintages. There are very few Wines that improve over time (or age well) and go up in value. If you are a Wine novice, consider investing in top Wines from Bordeaux regions such as Lafite-Rothschild, Mouton-Rothschild, Latour, Margaux, Cheval Blanc or Haut-Brion.
  
• It is rare for a Wine to go up in value in less than five years time. Consider Wine as a long term investment.
  
• Take advice and buy only from reputable merchants or companies as there are many scammers around.
  
• Store the wine in professional temperature-controlled cellars.
  
• Buy proper insurance to cover yourself against anything unexpected.
  
• Knowing import/export laws of your country helps.

Literally speaking, an investmesn is defined as refraining from consumption in the present in hopes of a greater return in the future. Nevertheless, as with any other investment, the value of your Wine can go down as well as up. Still, a fine Wine seems to be a perfect investment because, even if the monetary value goes down the joy of drinking a rare fine Wine would remain unbeatable.