Leading London wine merchants Berry Bros. & Rudd offer expert insight into investing in one of the luxury market’s most tangible assets in 2018: fine wine.
2017 saw robust returns at auction for wine sellers—despite the potentially destructive impact of Brexit on most U.K. investment markets. Auction house Christie’s’ top-selling lot in 2017 was a 12-bottle case of the wine world’s revered Romanée-Conti from a 1988 vintage, raking in £198,000. Meanwhile, a single bottle of Château Lafite-Rothschild (vintage 1908) sold for a staggering £45,600 in its December wine auction. The wider global market has also produced similar screaming triumphs for wine sellers. A 12-bottle case of a 1947 Château Cheval-Blanc saw returns of more than $200,000 USD at a Christie’s auction in Hong Kong while the Sotheby’s global wine auction total reached an eye-watering $64 million by the end of a successful 2017.
So, what makes fine wine such an investable commodity? The buying team at Berry Bros. & Rudd tells Arts & Collections that the wine market has always been fairly resilient in comparison to other luxury investment markets including jewellery and property. ‘Fine wine is a tangible asset; it’s a luxury product that we aspire to own, consume and know more about,’ they say. ‘For many, it’s far more useful than gold and easier to enjoy than art. Moreover, demand and interest in fine wine is growing around the world and supply of the top wines cannot be increased—supply is limited.’ Investing in fine wine is straightforward in its approach, too. ‘Wine is an easily transferable asset, plus there is an established fine wine market and a thriving auction market in place.’
Old World, New World
This year is set to be a healthy one for wine investors, with strong 2017 harvests already being prepared for 2018 ripe-for-the-picking en primeur options—and not just from the traditional Old World wines of Europe. According to Berry Bros. & Rudd, New Worlders Sadie, Mullineux and Kershaw from South Africa are strong contenders for good returns this year: ‘All three are producing wines that are globally recognised.’ As for sparkling wines, the centuries-old merchant suggests choosing products from English vineyard, Hambledon. ‘The wines really are some of the best—if not the best—and just get stronger every year.’ So worth it, are these wines, that the experts go so far as to say that Hambledon’s fizz is ‘the best of the English fizz bunch’. Keep an eye out for a crop from the Greek wine region of Lyrarakis. This region focuses its energy on celebrating, reviving and protecting indigenous grape varieties, making it a unique choice. Greek winemakers have seen a surge in popularity in recent years, pushing investors to expand their Old World portfolio to include a more eclectic selection beyond the ‘safe’ French varieties.
A sparkling choice
Sparkling wines have long been a favourite among connoisseurs and casual drinkers alike. In recent years, however, varieties including Cava are having their day and are seeing massive growths in investment. Berry Bros. & Rudd suggest that the ‘prosecco bubble may have burst a little, down in part to pressure on supply and therefore pricing’. In contrast, Crémant de Limoux (which is similar to Champagne in its nuances) by French winemaker Antech has seen a 191 percent increase in sales volume year-on-year at Berry Bros. & Rudd alone. ‘Crémant has on its side variety (regional and otherwise) therefore complexity, competitive pricing and the fact that it is carefully regulated [make it] qualitatively both consistent and impressive.’
This year, buyers must be smart in their investment choices—not just in terms of which wine to invest in, but with timing and how to invest—in the current uncertain economic climate. Begin by sourcing a reputable merchant. ‘Many unscrupulous merchants and wine investment houses will have a few qualms about selling the wrong wines or the right wines and the wrong prices for investment. Only buy from established merchants,’ the wine seller experts explain. Buying en primeur may also prove to be financially beneficial in the long term. En primeur refers to wine that is bought before it is bottled and distributed to the wider public. ‘This should be the opening and hopefully cheapest time to buy.’
Would-be buyers are often told that they should have a healthy minimum of £10,000 in the bank for their portfolio if they expect to garner decent returns. Berry Bros. & Rudd offer alternative thoughts, recommending that buyers ‘invest in wines that they can afford to drink’. The merchant adds: ‘Most people who enjoy wine can see that treating themselves to a fine bottle at home or in a restaurant for £100 is conceivable. Wine at £500 a bottle has eliminated the vast number of wine lovers. Stick to what you feel you might treat yourself with.’
On a final note, remember that wine is (most definitely) not a fast or quick returns investment. ‘Experience suggests that a minimum of a five to 10-year term is a good benchmark,’ says the merchant, ‘But one should bear in mind that for the most part, you will be buying wines with a lifespan of 10 to 20 years and more and that their financial maturity will be linked with their drinking maturity.’