How technology can support wine investment

In the last decade, the fine wine industry has been steadily embracing technology to support its various processes from harvesting, to production, retailing and storage. More recently with the pandemic, the traditional forms of wine retailing through restaurants, cellars and wineries were shut down, which forced the industry to further to adopt technology.

The managing of portfolio assets has also experienced a shift to the virtual world and doing everything online has become the norm for investors. Technology has allowed investors to have complete control of their portfolios, transparency of market pricing, trends and supporting information, and gives them direct access to global markets.

Fine wine is attracting new investors through its potential to serve as an inflation hedge and to perform well in times of broader economic stress. Younger investors have different expectations and are keen to see data and use it to influence their buying decisions. Therefore, the data-driven technology is the reassurance they’re looking for to help with their decision-making process.

Today, firms in the wine investment industry are increasingly leveraging the benefits of technology to provide a competitive advantage and support the changing demographic of the investor community.

Importance of Data

The greatest asset that technology has brought wine investment is access to a plethora of data and information. Access to data from a combination of informative sources has enabled investors and retailers to gain a comprehensive understanding of what the wine industry has to offer. More importantly, it has opened the doors to undervalued wines that could be worthy of investment.

The internet has revolutionised logistics within the industry. Investors can now know where their wine is and what condition it is in with a level of accuracy unimaginable 25 years ago. Even something as simple as digital photography is hugely important in this. Digital pricing tools mean that investors can know the value of their wines at any time of the day or night.

For example, our proprietary technology, Wine Track, collates and analyses data so investors can navigate fine wine markets with confidence. Combining industry data with over 400,000 daily wine prices collected independently from 250 leading wine merchants across the globe, Wine Track calculates an average for a case of wine, enabling investors to identify the right, undervalued wines to buy and sell at the right time and price.

This robust, bespoke platform aggregates more than 100 wine critics’ scores from 12 publications around the world to produce a simple and transparent score that marks each wine out of 100. This helps investors reference a wine’s quality at a glance, as some critics use different scales to grade wines. With the help of technology, we have been able to bring more accessibility, transparency, safety, and credibility for investors.

By leveraging technology and automating processes that were traditionally manual, we can pass on large cost savings to investors. This is the foundation stone for much of the data we use to drive our bespoke tool and has allowed us to make this information much more available to the ordinary investor, democratising wine investment.

Outlook

The industry continues to examine new ways to leverage technology to enhance the wine investment experience. Vineyards are already eager to adopt technology to improve crops, manage costs and track environmental impacts, such as through the use of drones and robotics for intelligence gathering. However, many are continuing to look ahead for the next big thing that will shake the wine industry.

Blockchain technology has been adopted by some in the industry to speed up internal warehouse logistics, however, it still has a long way to go. The technology is fantastic but faces the ultimate issue that wine is a physical asset that needs to be moved around.

Blockchain technology is largely being used to monitor wine once it has reached the warehouse, but it’s crucial to track the products before this. Blockchain systems will only be truly valuable when the high-end producers unanimously adopt the technology, and it is implemented at production level.

The authentication methods required by blockchain technologies to track wines through stickers and proof tags are often applied by third parties rather than manufacturers which presents issues. Attaching scannable labels on wine bottles also has the potential to diminish the value of these assets.

Technology absolutely has its place in wine investment, however we firmly believe an expert-led wine investment company, where you can speak to your advisor, is and will continue to be the best way for the wine industry to serve its clients.

Alexander Westgarth is CEO of WineCap, a wine investment platform