One of the things I’m interested in learning about wine is the investment side. With China’s growing interest in good wine and the inherent limited quantity of good wines, I think the wine market is an interesting one to invest in. Like most things I’ve jumped right in. I purchased a bottle of 1830 Sercial Solera. Here’s a nice shot of it.
I won’t say how much (because I’m thinking that I paid too much right now). The good news is that it wasn’t totally as an investment since I’m gonna drink it. The bad news is that I really didn’t understand how to do the financial due diligence around such a purchase.
A good site to learn about wine investing is wineinvestor.com. Wine Investor is collecting (in one place) all the types of information I would need to explore investing in wine. The guy that runs Wine Investor is from the financial services field, works with technology, and loves wine. What a killer resume.
I’ve also discovered a site to explore the history of the Sercial (which is a kind of Madeira wine) — www.madeirawineguide.com. Did you know Madeira wine was used as the toast at the signing of the Declaration of Independence? And incredibly you can still get vintages that old. Even more incredible they are still drinkable!
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5 Responses to “Wine Investing”
Bill, thanks for the shout out. I’m afraid I’ve bad news - you cannot drink the wine and invest in it! However you are following a well beaten path. Buy the wines you love, find out if they are Investment Grade Wine (IGW), buy a little more of it (never a hard bit of persuasion) and then sell off some later to buy the next lot.
Your Madeira, similar to Port, is out of fashion at the moment and therefore is not doing well, currently, as an investment. However 1/ enjoy it - they are incredible wines and 2/ fashions change -inevitably the fortified dessert wines will come back into vogue, making it a possible value play.
Investing may be harder than I think. I’ve never been tempted to eat a hedge fund, but I’m definitely gonna drink the wine. I like your suggestion of buying more. I can see it now. Five years after the price has increased dramatically making any VC jealous of the return…pop sniff sip drink. Oh well. I am going to drink the Sercial! I’ve been justifying it as a loss leader. My way to experience the money side.
Here’s a couple question for you. How do you know something is an investment grade wine? How do you know what is in favor? Is there a beta for wine?
Bill, you’re going to drink the wine ALREADY?! Maybe wait a few months to trick yourself somemore that it was more than just a very expensive bottle of wine. At least wait for sometime Kim and I are over.
Picking up on your questions.
What is Investment Grade Wine? The surprising thing is there are very few IGWs. This makes it easy for the wine investor. By definition you must be able to sell it and there are fairly few wines that are always in demand. If you stay with Bordeaux, First Growth and Super Seconds, and Burgundy DRC you are safe. If you are more adventurous you also do California cult wines and a few other select wines. In total there are about 100 wines which are IGW.
Is there a Beta for wine? As you know beta is a factor of volatility in investing - there is no such thing currently in the wine world although the London wine exchanges (Liv-Ex etc) may calculate something. The anecdotal story is that for a beta lower than 1 (low volatility compared with the rest of the wine market) you would buy the aforementioned Bordeaux, for a beta greater than 1 you would be into the cult wines (California, Aussi, Pingus etc).
How do you know what is in favor? This is more difficult unless you follow the wine secondary market. There are a number of sites that allow you to see how wines have sold on the secondary market. One of the best is http://www.decanter.com and go to ‘fine wine tracker’. You can quickly do comparisons.
Trying not to sound self-serving, this is all explained on http://www.wineinvestor.com in more detail.