Investing in wine Treasure in the wine cellar?

Twenty years ago, buying French château wines would often have earned you more money than stocks. Is it worth investing in wine?

by Shirley Amberg 29 Mar 2016

Wine subscriptions are a matter for connoisseurs, but they can also be interesting financially. Picture: iStock


For every bottle of expensive wine that is opened somewhere, the value of the ever-shrinking supply increases. That is why every day, auction houses receive countless photos of dusty wine bottles with yellowed labels from people who want to know whether the wine will make them rich or is at least a little bit valuable.

In the vast majority of cases, the answer is no. Most really valuable wines have been in safe hands for a long time.

You are about as likely to discover a liquid treasure trove in your deceased uncle’s cellar as you are to find the Blue Mauritius in his stamp collection.

Lucrative wines are rare

There are few opportunities to earn money with wine. Just two percent of all wines worldwide are suitable for investment, and most of them come from the Bordeaux region.

Since the really lucrative brands sell out quickly, it can make sense to take out a subscription. Every year around early April, the various Bordeaux wineries hold tastings of the previous autumn’s harvest in the presence of specialists. The prices of the wines tested are then announced between May and July. The list of wines available on subscription is published towards the end of June/early July, and this list can then be used to reserve wines.

In the process, it is worth looking how many points a wine has been awarded by Robert Parker, the world’s most famous wine critic.

The Parker Points system is enormously influential, and his taste has brought about a great deal of change, especially in the work of winemakers. Producers react to his criticism, often making dense, dark and dramatic wines to suit his taste. He was even awarded the Legion of Honor by ex-French president Jacques Chirac, despite the fact that his ratings have ruined a number of small French producers.

Understanding Parker Points correctly

The Parker Points system – which ranks wines on a scale from 50 to 100 points – is based on the grading system used in American schools. Parker believes that the more common 20-point systems do not provide enough flexibility. His principle is that it is better to underrate than to overrate a wine.

  • 50 to 69 points: unacceptable to below average
  • 70 to 79 points: average
  • 80 to 89 points: above-average to very good
  • 90 to 95 points: outstanding
  • 96 to 100 points: extraordinary

Parker also awards plus signs when he believes a wine will improve with storage. Question marks denote that he is unsure whether a wine provided was in the correct condition, and that it could potentially develop flaws.

Nowadays most wine critics work with this 100-point scale. Mövenpick Wein, a partner of UBS KeyClub, provides ratings from Parker, James Suckling, Tim Atkin and well-known wine magazines such as Falstaff and Wine Spectator.

Asians prefer Bordeaux

Parker has taken the trouble to rate around 8000 wines. Around 10 percent of the brands on the Liv-ex wine marketplace have over 97 points. The most interesting among them are those from the Bordeaux region which were awarded 99 or even 100 points. It goes without saying that these wines are far from cheap.

However, a purchase may still be worthwhile. A bottle of Bordeaux fetched an average price of 490 dollars at Sotheby’s auction house in 2013, whereas in ordinary trading, the same wines sold at an average of 122 dollars each.

Although wines from other famous regions, such as a premium Californian Cuvée, might taste better and have the same high rating, they remain the second choice. One reason for this is that almost without exception, Asians only want to buy wines from old, traditional regions with wineries that are steeped in legend.

Many an investor who has tried to sell Peter Sisseck’s Pingus, the most famous Spanish wine, in Asia’s most important wine trading center Hong Kong has been met merely with an uncomprehending shake of the head from his Chinese customers. The Ribera del Duero region, where the grapes used in Pingus are grown, is practically unknown among Asian consumers.

A good nose and plenty of patience

Viewing wine as a pure capital investment would be about as frustrating as decorating your living room with art you do not like.

To invest in wine, you need a good nose and plenty of patience, as it can easily take ten years for the value to rise. That’s why you should pay close attention to the shelf life – that way, if the wine doesn’t generate the expected return, at least you can drink it. In other words, never invest in wine just to make a profit.

 

The author Shirley Amberg worked as a banker before turning her passion into her profession and training as a sommelier.
 

Five tips for liquid investments

  1. Beware bargain prices. Nowadays, bottles and labels are forged on a systematic basis. Expensive wines should only come from authorized specialist wine dealers or recognized auctions.
  2. Wine is sold by the case at auctions. The case should therefore be as well preserved as possible.
  3. Labels should also be in perfect condition, as any damage to them can massively reduce the wine’s value.
  4. The condition of the capsule and the fill level of the bottle are also significant.
  5. It is essential not to economize on storage. Wines should be tended to regularly and with passion.