Wine as an investment

Luxury Lifestyle and Fine Wine.

Investing in fine wine is seen as a profitable investment alternative. It’s a much less volatile market than gold or property. Just don’t drink it all…

Between the years 2003 and 2011, the value of the most sought-after wines rose by 250%, making a huge return on investment.  This led to a new interest in the Wine market, including numerous, new to this market, Asian investors. Which in turn re-invigorated the USA/European markets.

In the past three years classic cars are no longer the most popular luxury asset of the rich. Instead, these cars are being replaced by collectable bottles of wine. 

But what to collect?

Experts tell you to read and attempt to learn before dabbling in this wine market, however almost all agree that young Bordeaux will almost always give you a better return on investment than the stock market. Within as little as five years you can easily see a 16% increase on your wines value. 

There are collectors for luxury wines and collectable wines – which are not the same thing at all. A luxury bottle of Mouton Rothschild will likely increase in value at a predictable rate every year. In fact, 10 bottles of 1945 Mouton Rothschild recently sold for $343,000 at auction, which is far more than its predicted $120,000 value estimate. Luxury asset wines like this have a long track record of outperforming their previous returns year after year.

In comparison to that a rare collectable wine – highly desirable amongst wine enthusiasts – doesn’t mean a good return on investment. They will be limited in number, incredibly hard to find but never resell for much more than $100 a bottle. People collect these as they are rare, and a joy to drink or have in your collection – but its not the choice if you are investing for profit.
Advice is to study the past 20 years investment value of your choice of wine – in general, wine should be worth 20% more than its original selling price once it reaches maturity. And to keep your wine collection in professional storage – so not your attic/garage or cellar- to increase its market value. 

Fine Wine facts

The most expensive –
The most expensive wine on the market is Domaine de la Romanee-Conti “Romanee-Conti” Already rare with 600 bottling at a time, October 2018 saw the sale of one of these bottles going for  $558,000. Not one to drop on the way out of the auction…

The oldest –
In May 2018 a bottle of a 1774 Vercel “Vin Jaune d’Arbois” sold for $1120,800 at a Christies auction.

The top Collectors –

Hardy Rodenstock, of Germany,(1941-2018) was a prominent wine collector, connoisseur and trader with a special interest in old and rare wines. Famous for his ability to track down very old and incredibly rare wines, he was also infamous for both his extravagant several day long wine tastings and the allegation of wine fraud. The book, and film rights, ‘Billionaire’s Vinegar’ are about his claim to have, and have sold, wine belonging to Thomas Jefferson.   

 

Leslie Rudd, the founder of epicurean US deli Dean & Deluca, is reported to have 10,000 bottles of wine stored at his Napa Valley restaurant Press. Including some of the rarest and oldest Napa Valley wines, from current day to early wine pioneers. He died in 2018 leaving the wines as part of his Rudd Foundation. 

 

Michel-Jack Chasseuil has a collection of some 40,000 wines featuring bottles from some of France’s top estates. He’s considered one of the worlds top Wine collectors, and says his cellar is a vault dedicated to France’s wine heritage. In 2014, the then 72 year old was held hostage for two hours at gun point by intruders attempting to get  into his wine cellar, {they never did} but the key is held at the Bank.
The collection can be found a few feet underground in western France’s La Chapelle-Bâton, through a long tunnel with armoured doors. The cave is kept at a measured 80% humidity, at a temperature between 10 to 15 degrees celsius.

 

Closer to home, former Manchester United manager, Sir Alex Ferguson, is a well-known collector of wine.  There are thousands of bottles making up his vast collection. He has auctioned some off for various charities over the years, including a London sale of just over £2m.

 

Could this be the next investment venture for you? Experts suggest caution in your start, chose to invest in Classic wine styles from regions like Bordeaux, Burgundy, and northern Italy, as these traditionally perform well over time. And do not spend more than you can afford to lose!  It’s worth noting that seven out of the top ten wine collectors in the world have been at least accused, if not prosecuted, of wine fraud. One can only imagine the depth of wine fraud much further down the investors market.