As for any other asset class, valuing fine wine collections as an investment is more complex than it first appears. In terms of investment, there is a difference in meaning between value and cost.
Market slumps, economic conditions, market timing, terroir, provenance and other factors can all affect how much your fine wine is worth on the secondary market. When you’re ready to resell your wine collection, here’s what to consider for valuation purposes.
Fine wine valuation should include producer reputation, terroir and vintage
The better the reputation of the producer of your wine, and of its terroir, the higher the price you’ll achieve from a collector. For example, Grand Cru wines from Burgundy routinely sell at four times more than Premier Cru wines. One step further, Premier Crus sell for at least three times more than wines produced in villages and less esteemed areas.
The vineyard’s terroir matters too, with prices varying enormously when wines are sold on the secondary market. The first step when valuing your wine is to compare it to other producers in the same wine classification. You can then adjust your price based on the terroir. To find out precisely what your wine is worth, you can search for critic scores of its vintage. If you find it has a near perfect vintage score, then it will be worth more to collectors.
For example, a bottle of Schrader Cabernet Sauvignon T6 2012 can sell for around £246 ($300) per bottle. The next year’s vintage (2013) will sell for more, even though it’s newer. This is entirely down to the scores given to the wine by expert Robert Parker. He gave the 2013 a score of 98, but the 2012 only 92-95. This is why it’s important to check back on the scores given to the wine you want to sell by renowned wine critics.
The importance of provenance – and proving it
If you store your wine in a professional storage warehouse, which is properly temperature controlled, then your collection has a direct provenance that you can show to prospective collectors. The provenance is simply a record of who has owned the wine and is proof that it is authentic. Wine fraud is a problem in the wine collection world, and investors are absolutely prepared to pay more if there is a proof of the wine’s provenance. Below is a list in order of the wines with the most valuable provenance, to the least valuable.
At the top of the list, with the most useful and valuable provenance:
- Wine purchased directly from a winery and stored in-bond.
- Wine bought from a winery and stored out-of-bond but professionally.
- Wine purchased directly from a winery and stored in a cellar at home.
- Wine bought from a trusted distributor or retailer.
- Wine bought from a respected auction, and that comes with a receipt showing its owner history.
- Wine purchased from a private seller with a similar receipt.
- Wine bought from a private seller without any proof of ownership history.
Buyers and collectors want to see exactly where your wine is stored and have proof that it is authentic. This is why wine collectors should always make the investment into professional wine storage.
Selling your wine collection to the secondary market
The secondary wine market ebbs and flows along with the economy throughout the year. It works in a similar way to the stock market, although it does appear to be rather more robust when dealing with major economic shocks.
To make sure you are getting the best fine wine valuation out of your wine collection, make an estimate on its price. Take this estimate and compare with average market prices, using the Liv-ex index. If the price here is higher than your estimate then consider selling it, as the market is in your favour. Should your wine estimate be significantly lower, then hang on to it and wait for better market conditions.
For valuable bottles of wine, it’s a good idea to track market pricing at least once a month for 24 months. This allows you to see the patterns you’re working with and gives you more of an idea when the wine market periodically changes. Champagne is an easy example, as it tends to increase in value over Christmas and New Year. So, for wine collectors with pricey Champagne to sell, November would be a sensible time to put it on the market.
Fine wine valuation will generally have two major peaks: when it’s released onto the market and when it reaches its peak in terms of maturity. So, selling wine immediately upon receipt or after waiting until it’s nearer maturity (one or two years) makes the most sense for wine investors. The latter requires more patience but will mean you’re likely to get the best possible price for the wine and a high return on investment when you do sell. For a free wine valuation, contact us here.