Fine wine collecting is a fascinating asset class for investors. The fine wine market offers numerous financial opportunities for the discerning wine collector. Understanding how industry trends play out is important to understand how to take advantage of it.
Why is fine wine collecting so popular?
Wine is a drink that has always been in fashion. Back in the time of the Ancient Greeks, it was extolled as a source of pleasure, as well as a product that boosts economic growth. Thucydides, a Greek historian, wrote in the 5th century BC about civilisation and how it only really began when people learned to “cultivate the olive and wine.”
Many centuries after he wrote about wine, the market continues to thrive all around the world. And in the luxury wine sector, there are plenty of big money deals to be done. In 2016, French wine collector Christian Vanneque laid out an astonishing £75,000 for a single bottle of wine. He bought a bottle of Ch.d’Yquem 1811, and made it the single most expensive white wine sold in history.
What makes a successful fine wine collector?
Technological developments and a global economy have transformed wine from simply a pleasurable drink to a source of great financial reward – if you know what you’re doing as a collector. So, how to you build a collection of fine wine?
Successful wine investors and collectors generally have two main qualities. These are an instinct for a good deal, and a passion for fine wine. It’s important to understand the wine market itself, and that fine wine is a luxurious product. It also is one of the few asset classes that improves as it ages. Because it is produced in small, limited quantities, fine wine also becomes rarer over the years.
Fine wine is an ever-evolving market
And to successfully invest in fine wine, it’s vital to understand how the market is changing. There have been many changes for the fine wine market during the last ten years. New routes have been opened up, making it easier for fine wine collectors to buy wine from across the world. For example, there has been a surge of US interest in wines sold by traditional London vendors, which has put pressure on an already limited supply.
Buying fine wine online has also become much more accessible and has had the added effect of making fine wine prices more transparent. Social media has also increased the sway and influence of wine critics. In many ways, the fine wine market has become more mainstream. Check out our Collector’s Guide for information on fine wines and how to begin your personal collection.
Changes we are seeing this year include a diminished appetite for Bordeaux fine wines. Around ten years ago, the Asian market upped their interest in this marketplace, which only covered a few wine estates in the region. Due to this interest from Hong Kong and China, prices shot up faster than the secondary growths. By 2013, there was a marked contraction of this market as prices fell away. However, since then it has levelled out into a more mature market.
In 2019, Burgundy is seeing huge price polarisations. For example, the very top of the scale, including Roumier, Leroy and DRC have increased hugely. They are now going for more than £10,000 per bottle. However, other wine estates that used to be considered on a par with these are reaching far lower prices. Ponsot Clos Roche is selling for £3,500 per case of 12 bottles. This is the case for even the finest vintages.
For newcomers to fine wine collecting, the marketplace can appear confusing. It is packed with many different wine merchants, producers, regions and vintages. The best advice is to only buy the finest wines from the best winemakers. Identifying the best wines for your collection is the first step. Second, ensure you buy wines that have been kept under bond. This means in Government controlled warehouses that ensure proper temperature control. This also adds a layer of security that helps to stop the possibility of buying forgeries of fine wines.
