The wine market can be a very profitable market for all investors. In recent years, wine has been selling very well at auctions. In 2010, 3 bottles of an 1869 Chateaux Lafite-Rotschild were sold at a price of $ 230,000.00 per bottle, and a year later, two bottles of champagne recovered from a shipwreck from 1840 were sold for $ 78,400.00. In 2014, 114 Romanee-Conti Burgundy bottles were sold at a price of 9,800 pounds per bottle!
In retrospect, the wines that proved to be a good investment are Bordeaux and Burgogne. Tuscan wines such as Sassicaia, Tignanello, Ornellaia and California wines such as Cabernet “Screaming Eagle” have also proved very promising, similarly to Champagne from the Signs Dom Perignon, Krug, Bollinger and Cristal. However, Tuscan and Californian wines and Champagne do not have as strong a position on the market as Bordeaux and Burgogne, which is why experts suggest they should form only a small part of your collection.
Before you decide to invest in wine, you should research. The Telegraph and the Daily Mail can be your starting point: both journals present very good observations on the pros and cons of investing in wine.
You should also look at the trends and the demand on the global market. For example, in recent years, “a fad” for red wine in China has been noticed. In 2013, the Chinese bought 1.86 billion bottles of red wine. Although there are several reasons for this, some believe that this increase may be partly due to cultural trends. Red wine can be deeply associated with the cultural roots of China and the symbolism associated with red (e.g., it is seen as the colour of happiness).
As with any investment, investing in wine is risky, there is always a possibility of losing your capital. Therefore, it is suggested not to invest all the money you need to live.
Before you invest, be sure to carry out proper research:
The wines that are worth investing in are those that are produced in smaller batches. Each batch with fewer than 20,000 boxes is considered to be small. This imbalance between supply and demand causes the value of a bottle to grow. Therefore, the longer you store a bottle, the higher your profits will probably be. When investing in good wines, it is important to consider whether the production is limited and whether there is a high demand on the market.
You should also be prepared to wait. Collecting wines does not pay back quickly and every investor should be prepared to have to store their bottle for at least 5 years before trying to sell it.
The history of a given bottle or its origin are also extremely important. Knowing how the wine was manufactured and stored before the purchase can significantly affect the value of such wine.
“The best way to unquestionably prove origin is to store the wine in wooden boxes in a secured and paid warehouse, such as London City Bond or Oktavian Vaults. These protected warehouses provide optimal storage conditions where temperature, humidity and other microclimatic factors are adjusted accordingly.”] (Oliver Pickup, Investing in Wine: seven things you need to know, Telegraph, 1/01/2015).
Remember to find out what year your wine comes from. The year of origin of a wine relates to the year in which the grape was grown and harvested. Many collectors believe that the weather in a given year can affect the quality of the harvest. There are several online sources where you can easily find some of the yearbooks, such as The Wine Advocate.
Although the year is still considered important, this concept is sometimes challenged by some critics who say that it is “unthinkable” and that a bad year is only the fault of a bad producer, not the weather.
It’s also important that your wine survives for a long time, so check if it ages well. Contrary to popular belief, wine is easily spoiled. So, you must find out how well your wine will age. There are four features that guarantee that you are investing in a ‘well’ aging wine:
Wines with higher acidity are usually able to survive longer.
Red wines with a higher content of tannins tend to age better. Tannins are released from grape seeds and skins during production, as well as the oak barrels during storage. Well-balanced wine will become smooth over time. This is a typical feature for red wines – white wines do not need tannins to age well.
High alcohol levels can make wine turn into vinegar quickly. A lower alcohol level in unrefined wine means that it will last longer. There are exceptions, but this is usually the case for both red and white dry wines.
There is a large group of people collecting dry wines, however sweet ones such as port, sherry, riesling and sauterne are usually able to survive longer. Visit Wine Folly if you want to learn more about the aging process of wine.
As with any other market, the wine market is vulnerable to crashes.
It should also be remembered that the wine market is unregulated. This means that it’s important to carefully choose a fair and recognized seller who already has a sales history.
Prepare yourself and see if the wines are sold at competitive prices, remembering, however, that wines which value will increase in the future are usually expensive.
Buy only what you can afford.