6 Useful Things To Know About Wine Investing

Wine And Whisky

6 Useful Things To Know About Wine Investing

Are you thinking of putting some money into a few cases of fine wine? It’s not as simple as it sounds. Here are tips on buying and storing your investment so that you reap the best returns.

Published on 23 November 2016

You don’t have to enjoy drinking fine wine to invest in it, but if you want the biggest returns on your collection, it pays to know your wine labels and a few important things about the viticulture industry.

Wine is not a traditional investment, so it might surprise you to know that in 2014, the famous Sotheby’s auction house sold six bottles of Chateau Petrus 1982 for a staggering £19,975. The same year, Sotheby’s in Hong Kong sold a 114-bottle set of Romanée-Conti wine for US$1.6 million.

The sale of American billionaire Bill Koch’s massive wine collection has been one of the most impressive in recent times. According to a May article in the Decanter, the record-setting auction lasted for 27 hours over three days and fetched US$22 million. Highlights included 10 bottles of Château Mouton-Rothschild 1945, which sold for US$343,000, and a 12-bottle case of DRC Montrachet 1978, which sold for US$171,500.

If you are keen to start a wine collection with the intention of reselling your bottles at a higher price in the future, there are several important things to consider.

1) Deal only with established and reputable merchants.

To avoid being a victim of fraud, which is common in the high-end wine market, you shouldn’t invest with just anybody. London-based wine and spirit merchants, Berry Bros & Rudd, says it’s fine to shop around for the best prices and advice, but you should go with reputable wine retailers when you’re ready to put your money down. You can check out wine prices online, on websites like wine-searcher.com. Another handy resource is Liv-ex, the global market price for wine.

2) Focus on top wines from top vintages.

In his article on investing in wine in The Telegraph, reporter Oliver Pickup suggests purchasing the very best you can afford. He says that, while most merchants would tell you to stick with the main chateaux of Bordeaux because they have greater profit potential, the key is to invest in wines with a record, those which have a truly global secondary demand.The rarer the wine, the better the investment. Almost all investment-quality wines come from five regions: Bordeaux, Champagne, Tuscany, Burgundy and the Rhone. Californian cult cabernets like Screaming Eagle are also good if you can get them.

3) Invest at least $20,000 if you want serious returns.

Ask any wine investment expert and they will tell you that this should be the minimum you put down. But Oliver adds that, like any other investment or gamble, you should only part with this amount if you can afford to lose it, since high returns are not always guaranteed.  

4) Know how much to buy.

According to experts at The London Wine Cellar, wine for investment tends to be sold in sets of three, six, nine, 12 or 13, the latter being for collectors who wish to try a bottle. Some wine exchanges require a full case, but selections of three wines can allow you to start collecting verticals of single wines. If you are buying cases, make sure they are unmixed and sealed, in original wood. You should also know the condition and provenance of the wine.

5)    Know how long to invest.

Oliver advises you to invest for a minimum of five years. He writes: “The best investment-grade wines are produced in small quantities (up to a maximum of 20,000 cases) and it’s the demand-supply imbalance brought about through their consumption that drives prices higher over time. There is a finite number of bottles in existence, and for the best returns a medium- to long-term view needs to be taken. As the wines mature and improve they also become rarer and more desirable – which drives prices ever higher.”

6)    Storage and insurance are important.

Wine Searcher says that correct storage is essential for your wine to realise its full potential. Ideal wine storage environments are dark, stable and cool – about 13°C with relative humidity around 70 per cent. For cork-sealed bottles (which effectively ‘breathe’ very slowly), air quality is also a consideration. There are a few wine storage facilities in Singapore, like Extra Space, Primeur Cellars and Winebond. And don’t forget to purchase insurance for your investment, in case of accidents or theft.

What’s Affecting Your Money?
Sign up to receive investment news and ideas