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July
07
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Investing: Wine
Wine investment is not at the top of investors' minds. For some
investors, it may be at the back of their minds to keep a few
bottles in case the prices appreciate, but no one is explicitly
buying wines as an investment.
It's very much by chance to those who discover that their wine
collection is worth a lot more over time. The lack of interest in
wines as an investment could be due to the fact that investors are
still at the appreciation stage and don't view wines as a commodity.
Those who are looking to invest seriously in wine face several
issues. The main obstacle is the lack of a marketplace for selling
wines. Serious wine investors will have to look to establish markets
for fine wines, where they're able to liquidate their stocks and get
good prices. For instance, London is traditionally a strong trading
market for fine wines where investors can sell to established wine
merchants or consign their collections to auction houses like
Christie's and Sotheby's, which regularly hold fine wine auctions.
Storage or rather, concerns about bad storage and freight, is also
another obstacle that wine investors in this part of the world face.
It's advisable for those interested in wines as an investment to
consider 'en primeur' or futures, particularly of blue-chip wines
like Bordeaux First Growths. If you want to reap the best benefits,
you have to buy 'en primeur'.
However, with futures, it's crucial to get the vintage right. With a
good vintage, the prices can appreciate by as much as 50% by the
time the wine hits the market 18 months from the sale of its
futures.
The key to buying wine futures, however, is that one needs to be an
established buyer to actually catch them at the best prices. The
current market for wines is not as vibrant as in its heyday in the
1980s, when the 1982 Bordeaux vintage was released into the market
and American collectors were eagerly buying it up and also during
the year 2000 millennium craze.
The market today has softened. The collector's bubble has somewhat
burst since the US economic slowdown.
Ninety percent of wines bought for investment would be Bordeaux,
which today has become a commodity. First Growth Bordeaux would be
most in demand but the supply is not exactly small. On average, most
First Growth chateaux produce between 200,000 and 400,000 cases a
year.
By and large, however, people still stick to blue chips. Thus, it's
advisable for budding wine investors to go for well established
First Growth Super Chateaux, if they want to play it safe.
Buy a top vintage at a high price and hope to sell at an even higher
price. Then, it's a matter of how much it will rise and what your
holding power is. You can also consider taking a punt on top-ranked
small production Chateaux like Le Pin, which produces only 500 cases
a year. At the end of the day, few in this part of the world take
wine investing seriously.
By
Michael Russell
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Happy shopping.
Indulge your senses,
Leslie Maliepaard
WineWeb.co.za Editor
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