You don’t have to be a wine buff to invest in wine. In fact, it’s arguably better if you’re not partial to a glass or two of the fermented grape. That way you’ll never be tempted to drink away your investments.Luckily, many are able to separate the two, as wine for business as well as pleasure is nothing new. And it’s just as well, since fine wine offers one of the steadiest investment opportunities.
After all, wine possesses certain characteristics that favour a positive return on investment, such as the potential to improve with age, coupled with a decreasing availability (hopefully accompanied by a rising demand) on the market. Add in the fact that the booming Asian market, particularly China, has developed a voracious appetite for top-end wines – especially red Bordeaux and Burgundy – how, you may be asking, could you ever go wrong with fine wine in your alternative investment portfolio?
Well, just like stocks and bonds, there are good and bad wines to invest in. No one would suggest spending big on cases of mid-range New Zealand Sauvignon Blanc, which may be the very definition of crowd pleasing, easy drinking, but doesn’t have the ageing potential or prestige of certain Old World (aka European) labels.
You will also need considerable patience, since returns will not be immediate, if indeed they ever come. Many Bordeaux Châteaux, arguably the most sought-after properties for any portfolio, will release their wines a good few years after harvest (yet put them on sale en primeur before they’ve even been bottled) and even then they are more than a few years from their peak drinking period.
As a general rule, the main grapes of wealth are red: Cabernet Sauvignon, Merlot, Pinot Noir and Syrah (Shiraz), although I’d also include the grand white grape Chardonnay on the list, thanks to its impressive ageing potential and importance as a key ingredient in everyone’s favourite fizz, Champagne.
The regions where these grapes are at their best (and most profitable) expression include Bordeaux (Cabernet Sauvignon and Merlot), Burgundy (Pinot Noir and Chardonnay) and the Northern Rhône (Syrah) in France; the Super Tuscans (Cabernet Sauvignon and Merlot) in Italy; and California (Cabernet Sauvignon) in the USA.
Yet it’s not a case of simply buying any wine that comes from these regions; research is crucial. Wine critics like Robert Parker have the ability to make or break the reputation of a particular wine or vintage, and therefore its value, although just how much longer his and other critics’ influence will hold is debatable. Robert Parker’s The Wine Advocate can be consulted online, as can the ratings of Wine Searcher and Decanter.
Of course, there are certain Châteaux in Bordeaux, especially the First Growths, who will always remain impervious to any critics, however respected they may be.
Industry websites such as Wine Searcher serve as wholesale marketplaces and are an essential step in ensuring the price you are paying is correct. Vendors also have a star rating; make sure they are reputable before finalising any purchases.
Another factor to consider is provenance. It is important that the wine is coming from a legitimate source with a trail of previous owners. Unfortunately, counterfeit bottles are all too common. Condition is also crucial – what are the levels of wine like in the bottle and are the labels intact? If in doubt, ask for photos. It’s also worth bearing in mind that wines still in their original wooden cases (OWC) of either six or a dozen also demand higher prices.
Any reputable fine wine company will be well placed to guide you through the myriad of considerations to take into account when starting out in the world of fine wine investment.
Yet, just like the more intangible investments, there’s a chance you may never actually see or touch your vinous collection, as fine wine can change hands without ever leaving bonded warehouses such as Octavian Vaults in Wiltshire. Which at least takes away the problem of cracking open that bottle of First Growth Bordeaux one night when you realise you’ve got nothing else in the cellar.