What’s the most you’ve ever spent on a bottle of wine? Chances are it’s less than £424,000 which is what a 1945 Romanée-Conti went for at Sotheby’s in New York last month, breaking the sale record for a single bottle. With pretty consistent growth and the possibility of big returns, wine investment may seem like an easy win, but how should you go about getting a lot for your bottle? GQ is here to answer all your questions, advising you when to open your wallet and when to put a cork in it.
Do I have to be a wine expert to invest in it?
You don’t have to be able to sniff out a 1934 Château Lafite at ten paces, but it’s really going to help if you’re familiar with the essentials of regions, grapes and producers. Equally, tracking the numbers, movements and trends of the market is a good idea if you’re going to part with your hard-earned cash with no guarantees, so make sure you get your geek on and you’ll have a much better understanding of which wines are likely to outperform others. As Ella Lister, founder and CEO of Wine Lister says, “If you want to get your hands dirty, you need to have at least some basic knowledge. You can supplement that with online tools like Wine Lister to look up specific wines, their price history, liquidity, brand strength and relative value.” Liv-Ex is similarly a good online resource – they offer comprehensive coverage of the fine wine market.
So, once I’ve done some preparation, what’s next?
“First, decide how much you want to invest (not more than 10 per cent of your assets) and how involved you want to be.” advises Lister. “There are various investment-driven wine clubs, portfolio managers or even full-blown funds. Or you could simply open a storage account and start buying some wine in bond, maybe en primeur (upon first release and before the wine is bottled) – for this you’ll need a helpful wine merchant or three, but also independent information sources to make sure you’re buying the best wines at the right price.” According to Simon Larkin, master of wine and managing director of Atlas Fine Wines, it’s worth finding a reliable source for your forays into the field. “Finding someone who you trust is important; they should have a proven history in the trade, be able to show their experience and be able to explain exactly how they operate.”
Which wines and regions are worth investing in?
While the category of premium wine has never been more diverse in origin and style, you still need to limit yourself to the most traditional wine regions if you’ve got your eye on making some money. Lister explains further: “Bordeaux is the mainstay of most investment portfolios thanks to its liquidity, but Burgundy prices have grown much more quickly over recent years. Tuscany and Piedmont are the Italian parallels of Bordeaux and Burgundy and deserve some space in a wine investment portfolio.
As for the new world, there aren’t many wines outside California that are investment-grade, yet. Larkin has similar advice: “Investing in wine is limited to regions where the wines prove to be relatively long-lived and where there is the greatest liquidity, therefore there is a more European focus; areas like Bordeaux, Burgundy, Italy and Champagne. The value of some [other] wines may flatter on paper, but in reality their tradable value is much lower.” Essentially, cult wines from elsewhere in Europe or further afield like Australia and New Zealand might command high prices on wine lists and attract a buzz due to their limited quantities or superstar winemakers, but they’re not currently a reliable source of long-term financial growth.
How do I avoid wine fraud?
Wine fraud conjures an air of international intrigue and glamour, inspiring countless articles and even a film (Sour Grapes, about the infamous Rudy Kurniawan who fooled and defrauded millions of dollars from some of the world’s most respected wine traders and collectors). If it happens to you however, it’s much less glamorous and could be ruinous. You can limit your exposure by sticking to those trusted sources; “Go with the established names and avoid cold callers like the plague,” cautions Lister. Provenance and storage are both of absolute importance in wine and can have an enormous impact on value. Look for sales of wines that have gone straight from the producer or chateau into a bonded warehouse and have all the necessary paperwork to track their history.
Should I combine business and pleasure?
This is a complicated issue. It’s unlikely you’re considering wine investment without even a little interest in what’s inside the bottles but, as Larkin cautions, you need to understand whether you’re buying for kickback or just for kicks: “Wine is a fascinating subject and many clients buy for both consumption and investment. There is no problem if you choose to mix finance and enjoyment, but you should be clear on your aims and perhaps keep both activities separate.” He says that one way is just to keep the personal angle out of it. “If you are looking at it clinically as any other investment, invest where you believe you will get the best return – and know that it may be in a region or style that you would never consider consuming!”
However, Lister sees it from another point of view – “There’s an old adage that if you buy two cases of wine en primeur, you can sell one to pay for the other, which you can drink. Unfortunately it’s not quite that simple these days, but at least you know you’ll always be able to drown your sorrows if the wine doesn’t make you any money. In that respect, it pays to buy wine you would actually want to drink.” Ultimately, investing in your palate might be best kept separate from investing in your financial future, but it’s good to know that it may end up rewarding one or the other.