Investing in Wine Stocks
Investing in wine has long been a popular alternative investment away from more traditional asset classes, such as stocks and bonds. However, as with any physical asset, buying wine presents certain logistical issues, particularly when it comes to storage.
So, what if you could combine this alternative asset class with one of the more traditional ones? In this article, we will take a look at investing in wine companies. We will highlight 5 of the best wine stocks to watch and demonstrate how you can get started.
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Why Invest in Wine Stocks
Like other alcohol stocks, wine stocks fall into the category of consumer staples. Whilst not many people would try to make the argument of wine being an absolute necessity, it is still a staple product for many consumers.
This means that those who drink wine will tend to continue buying it regardless of what is happening in the economy, which can allow top wine companies to generate fairly stable revenue.
However, this also means that wine is not a particularly high growth industry. But for investors looking to create a well-diversified portfolio, wine stocks offer the potential for steady returns and, in some cases, income.
The Best Wine Stocks to Watch
Unfortunately, for those looking to gain exposure to wine through the stock market, there are not that many wine stocks which focus exclusively on winemaking. In the following sections, we highlight 5 of the best wine stocks to watch in 2024. The first two are pure play options, whilst the rest are more diversified alcohol companies.
The Duckhorn Portfolio
The first of our two pure play wine stocks was founded in 1976, but only made its stock market debut in 2021. The Duckhorn Portfolio is based in Napa Valley, California and includes Duckhorn Vineyards, Decoy and Paraduxx.
Since its stock market debut, the wine company has churned out decent results. In the fiscal year ended 31 July 2023, net sales rose 8% and operating income jumped 21%. However, despite earnings moving in the right direction, its share price has not followed suit.
Despite performing well in its first six months as a public company, the wine stock has subsequently trended downwards and, at the time of writing, trades roughly a third below its IPO price.
Treasury Wine Estates
Treasury Wine Estates is an Australian winemaking and distribution company, which was formerly the wine division of Foster’s Group, before being spun off in 2011.
In 2022, it was the largest wine company in Australia in terms of both revenue and total wine production. Amongst its sizeable portfolio of wine brands are Penfolds, Blossom Hill, Beringer and 19 Crimes.
However, the wine company has struggled somewhat since the outbreak of the pandemic, with net sales, earnings and share price yet to recover their pre-pandemic levels.
LVMH Moet Hennessy Louis Vuitton
With the pure play wine stocks out of the way, we move on to the more diversified options, the first of which is LVMH.
As well as its namesake Moët & Chandon, the company is responsible for a range of other premium champagne brands and wineries including Krug and Dom Pérignon, and a number of top-shelf spirits to boot. Looking beyond alcoholic beverages, LVHM also owns various luxury fashion, jewellery and perfume brands.
However, although LVMH’s revenue and profit both rose by 23% in 2022, its wine and spirits division only contributed around 10% to these total figures. Consequently, for those looking to exclusively invest in wine and other alcoholic beverages, LVMH may not appeal.
Nevertheless, the diversification offered by LVMH’s other sources of revenue can help reduce the risks involved in investing in wine stocks. It also offers investors a modest dividend, which currently yields around 1.8%.
Pernod Ricard
Besides its popular namesake aperitifs, Pernod Ricard owns a vast portfolio of 240 brands of wine and spirits. Amongst its wine brands, it counts Campo Viejo, Jacob’s Creek and Kenwood Vineyards.
Unlike LVMH, Pernod Ricard is focused exclusively on alcoholic beverages, but its portfolio of brands is dominated by spirits. This might make it a good option for those who are interested in diversification across the alcohol sector, as opposed to those who are only seeking an investment in wine.
In the full year ended 31 August 2023, net sales rose 13% whilst operating profit increased 11%. Pernod Ricard also pays a dividend, which currently has a yield of 2.8%.
Constellation Brands
Constellation Brands is a diversified alcoholic beverages producer, which has over 100 brands of wine, beer and spirits in its portfolio. Its wine labels include Empathy Wines, Kim Crawford and Woodbridge.
The company generates the majority, almost 80%, of its revenue from beer sales, with wine accounting for just under 20% of net sales. Spirits still only account for a very small proportion of sales. In the year ended 28 February 2023, net sales and operating profit both rose 7% and 22% respectively.
Like Pernod Ricard, Constellation Brands is a broader play on the alcoholic beverage industry, with a heavy focus on beer. The company pays a dividend which, at the time of writing, has a yield of 1.5%.
How to Buy Wine Shares
With an investing account from Admirals, you can buy shares in all of the wine stocks highlighted in this article. Follow these steps to start investing in wine companies:
- Open an Invest.MT5 account with Admirals and log in to the Dashboard
- Find your account details and click ‘Invest’ to open the MetaTrader Web Terminal
- Search for the wine stock you want to invest in and click the symbol to open a price chart
- Enter the number of wine shares you want to purchase and click ‘Buy’ to send the order to the market!
Investing in Wine Stocks with Admirals
With an Invest.MT5 account from Admirals, you can buy shares in more than 4,500 companies and over 200 Exchange-Traded Funds (ETFs) from around the world. Click the banner below in order to register for an account today:
Investing in Wine Stocks – FAQ
Is It Good to Invest in Wine Stocks?
Wine stocks allow investors to gain exposure to the wine industry without dealing with any of the logistical issues associated with investing in the physical asset. Whether or not wine stocks are a good investment depend entirely on the individual investor and the wine stock in question.
Are Any Wineries Publicly Traded?
Yes, there are some publicly traded wineries, such as the Duckhorn Portfolio and Treasury Wine Estates.
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