Wine Investment 101
At one point I owned 30,000 bottles of wine. People always ask, “Can you drink it all before you die?” Obviously not. So I’ve reduced my cellar and continue to do so. The next question people ask is, “Are you investing in wine?” Whenever you buy wine, you don’t drink immediately, you are making an investment. You hope to get either an improvement in taste or value. I never bought one bottle of wine for resale but the value of most of the wine I’ve bought has risen.
Dave Sokolin has written the definitive book on investing in wine. The book is titled LiquidAssets. If you’re really interested, buy it. Here are my thoughts on investing in wine.
First, if you have a cellar, you are a defacto investor already. The price of wine, like real estate, in general goes up. Unlike real estate, every day the supply of old wine goes down because people like me are drinking it.
However, if you’re serious about wine as an investment, then you want to buy low and sell high. How do you do that? Well, the current prices of investment grade wine are easily accessible. The London International Vintners Exchange (Live-ex) is an electronic exchange of about 150 merchants and professional traders in the global fine wine market. This index is like the stock market and tracks the price of highly sought after rare wine. Liv-ex has estimated that wine investment activity represents $3 billion internationally. There are also lots of websites that sell wine. You can Google “wine prices’ to find them.
So how do you know how to price it? How do you find it? Well, your local retailer can help you. This is the first place you should always go. They have answers that you don’t. If they can’t help you, you can go online and look. Ifthat doesn’t work, you can go to auction houses.
However, if you intend to resell it for a profit, there are some rules about acquisition. First, it’s always better if it’s in its original wooden case unless, of course, the original case is cardboard. People just want the thought that it’s just like it came from the winery. If you’re going to drink it, it doesn’t matter. If you’re going to resell it, it does.
Second, the fill of the bottle…obviously stained bottles or bottles with low fills won’t resell well. If you’re buying for investment, you must check both the fill of each bottle (it should be in the neck or close) and the condition of the label.
Third, only buy from a known provenance. I just don’t buy wine over the internet from people I don’t know. Eventually, an investment grade wine’s whole life will be tracked. However, if you’re investing you should know the history of the wine or the people you’re buying it from. Most reputable sources will give you a 100% money back guarantee.
Fourth, what else makes a wine investment worthy? High liquidity Bordeaux is widely considered the most liquid. It’s a safe bet because it’s easy to buy and sell.
In conclusion, wine is unique as an investment. If you want to play, expect losses like any other investment category. The most common investment advice I’ve been given is buy 2 cases, one for consumption, one for resale. If the investment case goes bad, you can always drink it.
As John Milton said, “Wine: one sip will bathe the drooping spirits in delight beyond the bliss of dreams. Be wise and taste.”
Wine Investment 101