Investors are always looking for ways to diversify their portfolios, and wine can be a good option if done correctly. Though you will not get paid any interest or dividends, you will get some solid growth if you buy the right wine.
- 1 Fine Wine Investment Market
- 2 What determines a wines investment potential?
- 3 How to buy investment wines
- 4 Investment Wine Storage
- 5 Château Latour
- 6 Chateau Petrus
- 7 Chateau Lafite-Rothschild
- 8 Chateau Margaux
- 9 Investment Wines (Non-French)
- 10 USA – California – Napa Valley
- 11 Oakville – Screaming Eagle
- 12 Yountville – Dominus Estate
- 13 Australia – New South Wales – Barossa Valley
- 14 Penfolds Grange Hermitage
- 15 Italy – Piedmont – Barolo
- 16 Giacomo Conterno Barolo Monfortino
- 17 New World
Fine Wine Investment Market
The fine wine investment market has it’s own index, the Live-Ex Fine Wine 100 Index. The index, like the FTSE100, tracks the price of the top wines (by demand). The London International Vintners Exchange (Liv-ex) was created in 2000 and includes over 400 members across 36 countries. These members trade in fine wines very much like the stock market.
The majority of the wines are French and from the Bordeaux region, with around 20% coming from other regions and countries. You will also find that the majority of investment wines are Red.
Here’s a look at how the index performed over the last 10 years. As an ‘alternative investment’, prices are susceptible to large drops, so make sure you are in for the long term. The graph shows a large drop in 2011, where the average price fell by 22.5%, with Chateau Lafite falling 45%. This drop was thought to be a correction in the market after years of growth, but also due to the Chinese moving to new wines and whisky as investments.
What determines a wines investment potential?
Investment wines have built their reputations over decades and will always produce highly rated or scored wines. If an estate like Château Latour has an exceptional year, demand will increase along with the price. They may also hit a production problem, limiting the supply to the market which is also good news for investors.
How to buy investment wines
Websites like Wine Searcher let you search live prices across the World for hundreds of different wines
Only buy wines from reputable dealers where you are 100% sure of the provenance. A spate of fake wines hit the market over the last 10 years, highlighted by the Netflix documentary Sour Grapes – a must watch documentary for any wine lover, it’s fascinating.
Invest for the medium to long term to ensure you get a return, a minimum of 5 years is recommended.
Avoid buying wine ‘en primeur’, where you are investing in a wine before it is even bottled, this comes with added risks.
Like all high risk investments, only invest what you can afford to lose.
Investment Wine Storage
Investment wines need to be kept in 3rd party storage in dedicated bonded warehouses, not in your own damp cellar or kitchen wine storage. Here’s the main reasons why:
-Bonded wine cellars are kept at perfect temperatures and humidity, run by professionals
-Your wines are highly secure and unlikely to be stolen
-Your wines will be easier to sell. Buyers want wines from these types of storage facilities and know they would have been stored correctly and not tampered with. It is very hard to sell a high end wine in your home cellar to an international buyer.
-Wines bought as an investment and stored in a bonded warehouse are except from VAT
You will be charged a yearly storage fee, BBR charge £13.80/yr per 12 bottle case.
5 Top Investment Wines
Red Grand Cru wines of Bordeaux and Burgundy are the main wines people trade for investment purposes. In this article I will look at some top investment wines and their vintages from recent years, 2000 onward.
Château Latour is a very old wine maker in Pauillac, Bordeaux. The wines from this estate are exceptional as they are longer lasting than other Bordeaux. Unfortunately, some great wines will deteriorate over time.
Château Latour are known for their rich and complex wines created from the estate’s unique and varied soil compositions.
Château Latour best year is said to be 1961, these bottles are pretty rare and are around £2,000 for a single 750 ml bottle.
Every year Château Latour produce great wines which are highly scored by all critics and scoring systems, but they will still have some more collectable than others. Here’s a few exceptional years: 2000, 2005, 2010
Chateau Petrus is one of the smallest estates in Bordeaux, perfect from an investing standpoint. Small estates mean low production and limited supply to push up the price. Chateau Petrus can only produce 30K bottles per year, the estate business is valued at 1.5 Billion Euros.
Chateau Petrus’ top recent wines to buy as an investment are the 2009 and 2010 as the estate had perfect weather conditions for their production. The average price for a case of 12 from 2010 is around £15,000.
Chateau Lafite-Rothschild estate dates back to 1234, that’s a very long time to build a good reputation. The quality of Chateau Lafite-Rothschild wines greatly improved from 1981 and prices started to skyrocket. Demand increased after 2008, mainly from China after the estate started paying for product placements on popular Chinese TV series – genius marketing.
Chateau Lafite-Rothschild greatest year is said to be 2003, a 12 bottle case sells for around £7000 at the time of writing.
Other notable years for investment wines are 2009, 2010 and 2016.
Chateau Margaux goes back 1000 years when it was initially called La Mothe de Margaux. The estate has had a long, rich history owned by numerous families over the centuries. Currently the estate is owned by Mentzelopoulos family who acquired Chateau Margaux in 1977 due to large debt.
Chateau Margaux is one of the most consistent producers in France, with most of its Cru wines scoring 96+ every year. The 2015 is marked as one of the best wines the estate has produced, 12 bottles are selling for around £11,000.
Investment Wines (Non-French)
France is not the only country to grow grapes; new grounds are competing to make elite wines. In fact, the grapes that were once exclusive to certain areas of France are now growing all over the world. There is a long history of great French wines, but now other continents boast wines of equal standard. The Italians make more wine than any country, and they make it with over 2,000 years of knowledge behind them. A bottle of good wine needs to start with grapes from a well-located estate.
Let us guide you through the non-French valleys of some of the most collectable wines that you can find.
USA – California – Napa Valley
Home to movie stars and the best vineyards in the country. Napa Valley is close to the sea and at elevation to take advantage of autumn mists and clear air. The area started cultivating grapes at the beginning of the 19th century. Areas of France and Italy became too expensive and too congested for new growers to start-up. The Wine County is now home to over 800-wineries, each with a personalised view on what makes a perfect wine.
Oakville – Screaming Eagle
In the south of Napa Valley, Oakville shares the same luxurious and fertile settings. The area’s vineyards date back to the mid-19th century. New-World wines, considered as inferior to French wines, have improved with a century of hard work. Screaming Eagle is a well-respected and sort-after Cabernet Sauvignon. Made in limited batches, the winemaker limits its production to 700 cases per year.
Despite starting in the 80s, Screaming Eagle is now a cult winemaker. The producer now charges up to $3000 per bottle of their finest vintage Sauvignon-Blanc. Some of these bottles started with a list price of $250, which is over 12-times the initial cost. This makes current Screaming Eagle wines interesting for storage and future selling.
Yountville – Dominus Estate
This is one of the earliest vineyards, dating back to the mid-19th-century. Winemaker Christian Moueix has a long-standing reputation for his down to earth approach. Moueix’s wine has deep flavors and fine colors that improve with age. These wines make for a great collector’s choice. The starting prices for the Dominus wines are more achievable. Bottles of Vintage 1983 are still available for under $100.
Though this wine may not explode in price, it is a choice that will do a good job of keeping its value. There is an element of luck when it comes to finding a great collector’s wine. But buying vintage wines from Dominus should increase the chances for growth in value.
Australia – New South Wales – Barossa Valley
Barossa Valley made its name as the Napa Valley of Australia. The climate and geography are remarkably like other exclusive wine making regions. This has drawn in the ability of many experts that wanted to experiment with techniques and different soils. Barossa Valley is close to the sea and set in the rolling hills outside of Adelaide. The valley is now home to one of the best Shiraz growing regions in the world.
Penfolds Grange Hermitage
Penfolds grow their vines in the Barossa Valley. The wineries in the valley produce Shiraz wines that have intense aromas and colors. Penfolds is one of the best-known wine producers of Australia, set up in 1844. The grape varieties, sourced from France, are grown in a 500-acre plot at the base of Mount Bryan. The mineral-rich soil is perfect grape growing conditions for Shiraz and Riesling varieties. Bottles from the 80s have kept a steady increase in value over the years. Newer vintages from the last 10 years are holding their value well. The popularity of the wine may have a resurgence now that it runs with the power of Treasury Wine Estates.
Grange produces around 10,000 cases per year. This high production level will affect the growth in value of the wine. 2018 saw a reduced production and a corresponding price growth for that vintage. The Shiraz grape grows well in this area; there are many vineyards that produce amazing wines. Penfolds Grange Hermitage uses Shiraz grapes from many vineyards, which is unusual for a cult wine. This method of choice also makes the taste of the wine consistent and familiar to followers of the Grange. This has made Penfolds one of the most expensive Australian wines available. Numbers are limited to this popular and sort after wine. Penfolds is a great collector’s choice for storage.
Italy – Piedmont – Barolo
The area of Barolo uses the red Nebbiolo grapes in their wine production . The name relates to the fog that occurs in autumn when the grapes are harvested. These are a strong-flavored and tannic grape variety. Grapes from Barolo offer complex tasting notes such as aniseed and balsamic. Tight regional controls keep the wines exclusive and untainted by other breeds of the grape variety.
Giacomo Conterno Barolo Monfortino
Monfortino is an affordable wine from Barolo. Giacomo, known for making great wines in his own right, has seen a fantastic increase in interest. This is a family legacy at the hands of several generations of winemakers. Low production numbers and long aging periods improve the rarity of the Giacomo Wines. The Barolo wines from the start of the millennial period have shown the fastest increase in value.
The 2002 Monfortino is one of the best wines from Barolos ever made. Giacomo Conterno is one of the most famous winemakers in the region. The winery has a cult-like following, as well as the respect of leading wine critics. Using unaltered techniques for producing and selling the wine, a bottle of Monfortino is hard to come by. If you can find a case from a recent vintage, it is worth holding on to. The entry price of this collectable wine is more than affordable, and vintages have only increased in price.
There are plenty of countries that have access to similar climates as the South of France. Napa Valley, Barolo, and Barossa valley are tough competition for Southern France. France brings flavor and method to new horizons. These new world wines differ in a good way from their original themes. Any country can produce a collectable wine, and some of the best wines are those that are yet to be discovered.
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