Tips on Exit Strategies for Wine Investing
When you are ready to sell your wine there are several options available to you. You should consider these options before you begin your investment, so that you can estimate the transaction fees and other costs that will impact your overall financial gain.
Before describing these selling options, you should be aware of the US alcohol laws that may impact your ability to sell. All alcohol laws, except importing to and exporting from the country, are driven by state legislation. Therefore, your restrictions on shipping, selling and sales tax tracking vary in each of the 50 states. For example, some states will seize and destroy any shipments that are not legally authorized, and other states prohibit unlicensed individuals from selling wine (even to friends) by issuing fines and prosecuting misdemeanors. We recommend consulting a wine retailer with experience in selling nationally, or even internationally, for specific restrictions within your state.
There are three primary outlets for selling your personal wine inventory. In the past each outlet would attract a unique type of customer, but over the past decade the lines have blurred and buyers big and small are accessing all channels.
Wine Retailers - There are thousands of retailers that are capable of selling your wine. Only a handful of retailers in the US specialize in selling investment grade wines (Aabalat being one of them). Most retailers are familiar with the alcohol laws in all 50 states and can tell you the restrictions that exist with their licenses. Internet retailers have a broader customer reach than local brick-and-mortar retailers, which can be helpful in selling your wines quickly. In exchange for a 20% (on average) commission retailers will market your wines, manage the buy/sell process and advise you on market pricing. Typically you will also be responsible for the transportation costs to the retailer's site. Reputable retailers will only work with clients that have good provenance history, and they will thoroughly inspect your bottles prior to listing them for sale.
Auction Houses - Similar to retailers, auction houses also command an average of 20% buyer's commission, plus sellers are charged additional fees. Auctioneers thoroughly inspect the bottles for provenance and quality. Most auction houses offer an online option for buyers, so customer reach is also vast. Unlike the retailer market, auction sale prices are unpredictable. In some cases the buyer frenzie behavior will push the sale price up and yield higher profits for you. In other cases there are few interested buyers and your bottles could be sold for a price under market value.
Online Auction Sites - There are several independent online auction sites that allow individuals to post their wines for sale, and the commission is typically 8-10%. However, there is no way to monitor provenance during this process, so buyers will likely expect lower prices in exchange for assuming a greater risk.
Before you decide to sell you should know.
a) The approximate value or price you want for each bottle
b) How long you are willing to wait for the bottles to sell
c) How you want to transport the bottles to the retailer's facility