How to Invest in Fine Wine, Vintage Bordeaux
Best Way to Make an Investment in Vintage En Primeur Wines
Nov 12, 2009
The average investor may never have considered fine wine as an alternative market, yet records over the last hundred years show that vintage wine has outperformed many other forms of investment. Even in recent times, when stock markets around the world have suffered major setbacks, some fine wine portfolios have given better returns than the FTSE 100 or the Dow Jones.
For the novice, however, it is critical to get expert advice on fine wines before making any financial investment, especially as prices for top class ten year old Bordeaux wines like Château Mouton- Rothschild can be as high as £450 per bottle. Buying the wrong wine could prove a costly mistake.
Fine Wine Investment from Bordeaux
While there are some amazing fine wines available from New World regions, many experts still consider vintage Bordeaux to be the best in the world. Grand vin from the region is always produced in limited quantities, keeping demand high due to limited supply. Plus in recent years, new buyers from Asia, America and the Far East have developed an insatiable appetite for actually drinking rather than storing fine wine; the result is ever diminishing stocks of an already rare commodity.
The finest “blue-chip” wines from Châteaux like Latour and Mouton-Rothschild are hard and expensive to get hold of as wine buyers usually get there first, so for the novice, buying through a specialist wine investment company is an excellent choice.
Buying Fine Wines En Primeur
One way to purchase top class wines before the price becomes prohibitive is to buy wine en primeur; this means purchasing wine the year after the grapes are harvested, several years before the wine will even be bottled. Wine buyers will have had an initial tasting based on a blend of wine from different casks and can make an assumption of what the final wine will taste like, although nothing is guaranteed as winemakers do not know what the final blend of grape varieties will be.
The novice may therefore see buying en primeur as something of a leap of faith, but this is where a good investment company comes in. They should only recommend wines from the top houses along with a balanced mix of stock from less expensive yet high quality vineyards. For example, a case (12 bottles) of Château Lynch-Bages 2003 purchased in July 2004 at a cost of £331 was worth £1620 in July 2009.
Use a Wine Investment Company or Buy Fine Wine Direct?
It is possible to buy fine wine direct either at auction or from top wine merchants by first getting expert advice from a wine expert. Good advice, however, comes at a price and most experts offering buying services will take a percentage of the total investment cost and then walk away.
A better option for novices is to look at companies which make money based on the value of the investment portfolio. Rather than a one-off up-front fee, an annual management fee is charged which increases in line with any investment gain; a sure incentive to do the best job for the client.
Buyers also need to factor in insurance costs to protect against spoiled wine plus storage fees for bottles held at specialized climate controlled warehouses, unless of course the buyer has a private underground wine cellar.
Buy Vintage Bordeaux Wine as an Investment
Even novices can safely invest in fine wine by using a specialist wine investment company. Given the performance of stock markets in the last few years, even if prices do suddenly fall, bucking the trend of the last hundred years, at least buyers can drown their sorrows by quaffing some of the finest wine in the world.
Related Articles
Also of interest may be Fine Wine Gifts Make a Good Long Term Investment and Wine Gifts for Wine Lovers.
Sources:
- Wine prices from Wine and Co UK.
- Investment performance statistics from Premier Cru Fine Wines Investments Ltd and author’s personal wine portfolio established in 2004.
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