Deciding Which Bottles to Buy: Wine Investment

Deciding which bottles of wine to invest in.

While investment in stocks, shares and bonds remains an uncertain option, alternative investments, such as art, cars, coins and stamps, have become increasingly attractive. The rate of return can be spectacular, and this is true nowhere more than in the world of wine bottles. Between 2012 and 2017, for instance, the Petit Mouton 2011 vintage appreciated from £690 per case to £1,831, an increase of 165 percent. 

Last year, two of just 600 surviving bottles of 1945 Romanee-Conti Burgundy were sold for a total of just over $1 million at Sotheby’s in New York. At the same auction, three bottles from the 1937 vintage sold for a total of $930,000. In 2017, a bottle of 2015 Cabernet Sauvignon was sold for $350,000 at an annual charity auction for the Emeril Lagasse Foundation’s Carnivale du Vin, making it the most expensive bottle of wine sold at an auction in the world—though as the sale was for charity, the record would not normally count.

Clearly, wine is now being treated as an attractive investment—in fact Bloomberg says it “Can yield tremendous profits”.

1945 Romanee-Conti Burgundy among best-selling bottles of wine.

Beware of Corkage

Valued at around £2.5bn annually, the global fine wine market has its risks and drawbacks. One is that it tends to be a long-term investment; you may not see a good return for up to 10 years. Another is that it requires a good deal of expertise; few have enough knowledge to buy and sell bottles of wine themselves, so the wise take on a specialist portfolio manager. 

Though you will pay management and storage fees, as well as commission to a specialist, it’s worth it, as they buy from only trusted sources and can confirm authenticity, protecting you from the many frauds and ‘boiler-room’ scams which can plague the wine industry.

Another source of advice and guidance is Liv-Ex, the London International Vintners Exchange, which has been offering a fine wine index and price tracking service since 1999. 

Market activity centres on the top 25 châteaux in Bordeaux—the Left Bank premier cru (first growth) such as Haut-Brion, Lafite-Rothschild, Latour, Margaux and Mouton Rothschild, and the ‘super second’ growths, along with premier Right Bank wines such as Pomerol and St Emilion, generate as much as 75 percent of the secondary market trading in fine wine.

Savour the Banquet

But Jamie Ritchie, Worldwide Head of Sotheby’s Wine, reports that diversification has begun, as it’s now difficult to profit from premier crus unless you get in very early. “We’ve seen a huge, growing demand in Burgundy,” he says. “Great Bordeaux is selling well, but there’s actually too much of it.”

Coche-Dury Les Perrieres, Meursault.

A riskier investment option is the en primeur, or wine futures market. Here you invest in unbottled wines still in the barrel—the catch being that there is no guarantee how well it will be received when bottled. Wines are purchased by the case exclusive of duty and VAT, and usually shipped two to three years after the vintage. A popular vintage may yield a 20 to 40 percent profit.

But the market for rare and mature wines continues to be the most fascinating and unpredictable.

In March 2019, Sotheby’s in Hong Kong presented TRAN•SCEND•ENT/Wines, the highest-estimated auction of wine bottles in history. Expected to bring in $19-26 million, the three-day sale offered 2,704 lots (16,889 bottles of wines) from private cellars.

Highlights of the Sale

Jamie Ritchie said: “With Sotheby’s Wine’s annual worldwide sales surpassing $100 million in 2018, we continue to focus on offering outstanding single-owner wine collections, and it is with great anticipation that we presented TRAN•SCEND•ENT/Wines, the highest-estimated collection of wine bottles ever to be seen at auction, anywhere in the world.”

The sale offered a broad range of the greatest Burgundies, featuring over 250 lots of Domaine de la Romanée-Conti encompassing five decades; as well as over 80 lots of Maison and Domaine Leroy, over 90 lots of Meursault from 1989 to 2015, and a strong collection of the greatest Rhônes, featuring over 140 lots of Guigal including the legendary 1985 vintage and the debut 1978 vintage from La Landonne.

A further highlight was a vast collection of mature Champagnes, led by the entire range of Dom Pérignon, focusing on the outstanding vintages from the 1960s   and 1970s.

But the burning question of whether to open a bottle of wine or lay it down perhaps still remains unresolved. The oenophile’s heart may call for  immediate enjoyment, while the head may recommend patience, and potential profit.

This feature was originally published in the spring edition of Arts and Collections, which you can also read here. 

See Also:

Guide to Investing in Wine

Explore the World of Etna Fine Wines with Tenuta delle Terre Nere

Wine Mine

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