Cult Wines, a global leader in wine investment, is expanding into the North American market. New York and Toronto headquarters opened today, setting the company up to aggressively pursue new American and Canadian clientele.
With newly-planted North American roots, Cult Wines is one of the first wine investment platforms to make a play for the largely ignored North American wine investor.
“The US is a big player in the auction and collectors’ market but historically has been underserved in the wine investment market,” describes Tom Gearing, the CEO and co-founder of Cult Wines. “The idea and concept of investing in wine has never really taken off as it has in Europe and Asia.”
The New York office will be led by Jonathan Stevenson, the senior vice president of Cult Wines North America. The Canadian offices—a joint venture—will be helmed by Atul Tiwari, a former Vanguard Canada chief executive.
Cult Wines’s North American launch coincides with the Bordeaux 2020 En Primeur, an exclusive event that gives investors first dibs on purchasing 2020 Bordeaux vintages before bottling.
“Traditionally, En Primeur has been more of a focus for European investors, but as we establish our Canadian and American presence, we expect to gain new investors and provide them with this unique opportunity to enter the fine wine investment market,” said Gearing. Cult Wines is one of the largest buyers of Bordeaux En Primeur globally.
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London-based founders Tom and Phil Gearing launched the Cult Wines platform in 2007 to revolutionize the way fine wine investment works and make the asset class more approachable.
Cult Wines now commands $240 million in assets over three continents, expanding today to North America. The company continues to grow operations in London, Hong Kong, Singapore and Shanghai.
If you have $15,000 (or upwards) to spare, Cult Wines allows clients to invest in a global portfolio of fine wines, offering a variety of services ranging from condition reports to active portfolio management.
The company’s $45,000 portfolios open this month in North America, with the entry-level $15,000 level opening in July. The former offers full portfolio management service, including priority access to new releases and En Primeur allocations, bespoke proposals, 0% trading fees and buy and sell advice.
While Cult Wines also has a strong presence in the UK, Europe and Asia, the North American expansion poses a new set of challenges. “Purely from a wine investment perspective, awareness is a lot lower in North America,” said Gearing. “The structure of the North American wine market reflects this with the three-tier alcohol system and complicated inter-state laws. The complexity and confusion that brings have perhaps stifled historical interest in duty-free wine investing.”
The pandemic period has lowered many of these hurdles, as the wine world continues to shift to digital as drinkers move online.
“With the pandemic accelerating the digitization of wine (and broadly investing and alternative investing), it feels these historical issues are less of a barrier. Once the market educates itself on how you can invest efficiently and the benefits of doing so, there is undoubtedly latent demand.”
The last few years have served as the perfect breeding ground for wine tech and digital innovation, with the wine world seeing the introduction of a fleet of investment apps aimed at indoctrinating new investors. “Broadly speaking, there have been lots of exciting things happening in the alternatives space in North America,” Gearing notes. “Until this point, the space has belonged to either the auction houses or start-up platforms. Now, a lot of innovation and attention focusing on platforms and products has allowed North Americans easier ways to invest and get exposure to alternative assets. It is a natural extension of this that wine would follow this trend.”
The luxury class of fine wine investment has been particularly appealing over the pandemic period. Investing in wine allows investors to diversify a traditional investment portfolio and offers low correlation to equities.
That said, fine wine investment has its own set of unique hurdles—broker fees, auction house commissions for authentication, cost of temperature-controlled cellars, and the deep wine knowledge and monetary resources it takes to navigate the resale market.
Cult Wines aims at breaking down these barriers, helping investors navigate the unique realm of fine wine investment.
Over the last few years, we’ve seen a shift, with new avenues—apps like Vinovest and Rally and companies like Cult Wines—opening up and allowing consumers who don’t have the funds to build out a cellar or the knowledge to identify investment-grade wines the ability to buy into the investment world.
“From a product perspective, we are seeing more innovation around technology. From a market perspective, we are seeing a significant broadening of global investor appetite as well as a broadening of the market of investment-grade wines,” said Gearing. “Perhaps ten years ago, the market was dominated by U.K. and European investors, with a large focus on Bordeaux. Today, Asia plays a significant role, alongside traditional markets and new emerging wine investment markets such as North America. The focus here is much more diverse, with fine wines across the spectrum finding favor with collectors and investors.”
“These factors create what feels the right time to be opening our offices in New York and Toronto, to leverage this trend and to help create more awareness of wine as an asset class.”