Is Wine A Good Investment? For These Investors, Wine Content Could Be

The fine wine tier has long been a playground – and an area of serious commercial interest – for collectors, investors and critics. As we explored in the first post of this mini-series last week, the evolution of content tailored to that specific audience of wine enthusiasts has inspired breakaway platforms such as The Wine Independent, which aims for “fierce independence” from a pay-to-play model that founders Lisa Perotti-Brown MW and Johan Berglund believe have become the rule rather than the exception.

Which immediately struck me, in principle, as a great idea. The next question quickly on its heels, however, is its feasibility as a sustainable business model, when the tried-and-true revenue generators are off the table.

Enter the investors.

In the case of The Wine Independent, that’s a group of eleven people — ten from Sweden, one from Norway — who are enthusiastic consumers of wine and successful business people, but are not involved in the wine industry commercially. I sat down with three of them — Pär Josefsson, Peter Erlandsson and Björn Amlér — to ask some direct questions, from their motivations for investing in a wine content platform to their research about the market to the financial risks they’ve assumed.

Here are four characteristics that make them tick as investors, not just of wine but of wine content as well.

Same but Different

There are obvious commonalities within the group but also important differences.

For starters, they are already familiar with each other, they enjoy wine and they want the experience of it to be part of their lifestyle. “We are a tight gang of investors, almost all from the southern part of Sweden,” Josefsson said. “I know that they’re honest, and that everyone will have a fun ride together.”

On the other hand, their professional and business experience are differentiators. “These eleven people are very supportive and come from different backgrounds, like IT, marketing, start-ups,” Erlandsson said. “This team gives you access to international businesses in a multitude of different industries. They have good know-how.”

Risk and Reward

Their own experience and limitations as wine enthusiasts and collectors informed the investors’ decisions. “I like good wine but I’m not the kind of expert to know if it’s going to be good in 10 or 15 years,” Josefsson said. “Buying and collecting wine started to be quite a gamble, and I believe that there are more like me that feel the same experience.”

The personal risks, both of collecting wine and investing in wine content, were mitigated in part by the group’s research into the business of wine content and publishing, and by the principals of the business.

The way The Wine Independent is structured, it “doesn’t have a big overhead, but it’s a very promising business,” Amlér said. It’s also clear that the investors are betting on the people who are the founders and leaders. “If you were to ask the top 100 wine critics in the world which job they’d like to have, most everyone would say Lisa’s,” said Johan Berglund of Lisa Perotti-Brown MW. “Chief editor of Wine Advocate, cover Napa and Bordeaux, and have the highest salary. Lisa gave all that up to start The Wine Independent. That says something if you’re able to listen.”

Convincing the Gatekeeper

Björn Amlér was “a difficult guy” at the beginning, vetting the business plan. For good reason: Amlér facilitated the connections between the investors and the principals of the business. “Before I went out to other people to say this is a good idea, I spent a lot of time with the roll-out plans, calculations, market, looking at the competition, trying to understand what’s happening, why this is moving away from the subscription model and going instead into premium subscriptions,” he said. That research informed some 150 conversations with potential investors, before narrowing the final group to eleven.

Patience for the Long Game

Patience for the long game is at the heart of the investment; wine content is no get-rich-quick scheme. But in the long run, as Josefsson summarizes, “independent wine critics are good for the business.”

A deep pool of potential customers is also attractive. “The tide of subscribers is not finite, we can expand,” Berglund said. “We have an extremely low break-even point compared to our competitors. I’m from Sweden and I know that Scandinavian countries are completely untapped for the kind of subscription that we are. We can make a tidy little profit.”