Drink Up or Auction Off? The Business of Investing in Wines

(FoxBusiness) - Buying and selling wines can provide a big payday for collectors, but experts say it isn’t for the faint of heart or budget.

Thomas Matthews, executive editor of Wine Spectator magazine, warns the investment can be risky.The ideal wine investor “has to be someone who can afford to the loose their money. The wine can spoil if it’s not kept in a good environment and people tend to drink it because it tastes so good. Prices are not back by anything else, other than enthusiasm.”

Matthews says investing in wine has steadily increased in popularity after wine auctions were legalized in the U.S. in 1994 with Hong Kong, America and London becoming the main markets.

In 2012, the total wine auction market was $389 million, compared to $478 million in 2011. This was the first decline since the recession in 2009, but Matthews called the drop “more of a market correction.”

“This has been for volatile as the Chinese [investors] come in and out,” Matthews says. “But if China’s economy continues to grow, and wine is a status symbol, it can comeback. If not, there is potential for another downturn.”

In the fourth quarter of 2012, Matthews says almost 13,000 lots, or batches, of wine were sold in the U.S. for $40 million.