Demand for luxury spirits has skyrocketed in the last several years, creating a great investment opportunity that is not just for the wealthy, writes Debbie Carlson for The Wall Street Journal.

The Luxury Brand Index created by the Distilled Spirits Council of the United States, which determines demand for high-end spirits, increased by an average of 14 percent annually over the five-year period through 2023. A luxury spirit is defined by the council as a 750-milliliter bottle with a retail price of $50 or more.

Spirit collecting has been around for decades, but only truly took off around 25 years ago. Its popularity has exploded in the last 10 years, driving up scarcity and prices.

For novices, it’s important to understand that collecting liquor can be a tricky investment.

“You need to really buy something you enjoy drinking because prices are fickle, taste trends are fickle,” said David Thomas Tao, a collector, spirits writer, and competition judge.

New collectors need to develop a palate by tasting various spirits and talking to experts such as bartenders and liquor sales representatives. They can suggest products with similar taste profiles.

A good way to explore the core product range of a producer is to attend its tasting events. While core items will likely not rise in price, this can happen if products get discontinued at some point.

It’s also important to pay attention when buying limited-edition bottles, as producers can name anything “limited edition.” It is necessary to do some research to see how many bottles were produced and if the liquor really differs from their core product.

A lottery system used by some stores will also give you a chance at owning some popular bottles that are not readily available, such as bourbons from Pappy Van Winkle and Blanton’s.

According to experts, collectors should hold bottles for a minimum of five years for price appreciation.

Fred Hubler, the CEO and Chief Wealth Strategist at Creative Capital Wealth Management Group in Chester Springs, is a fan of alternative investments.

“We have been looking for a regulated firm in this space, and we are currently pursuing our due diligence on them,” he said. “The benefit we see is with the right information, a portfolio (of wine and rare spirits) can provide investors with exposure of bottles and casts that use data to capitalize on misplaced assets and attempt to generate investment upside. Our clients like to make money regardless of what the stock market does, and things like this, if properly executed, should be able to do that.”

Read more about investing in luxury spirits in The Wall Street Journal.

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