A wine collection can be one of the most rewarding avenues of investing. It can be both personally enriching as well as financially rewarding. Since 2005, the most investment-worthy wines have increased in value at roughly twice the rate of the S&P 500.
This pool of the most investment worthy wines shows a 134% increase between 10/31/05 and 10/31/2015. The S&P 500 increased 72% in the same period while the FTSE 100 rose 20%.
In order to have a good result in wine investing, the first step is to be very selective about the wines purchased, as most wines do not appreciate over time. In the past, the wines that have appreciated the most have been the wines that are already at the top of the quality pyramid and from the best vintages. These are:
- California Cult Wines
Sources for Purchasing
The best source for purchasing any wine is always from the winery itself. Most California wineries have ‘wine clubs’ that will ship the wines to consumers in the US and abroad. However, some patience is required as many of the wineries have waiting lists and it can take months or even years to secure a spot in the wine club.
In Europe very few wineries making investment worthy wines sell directly to the public. So the next options are retailers and auction houses. As a general rule, wine auctions tend to offer better prices than retailers. But, more work is required on the part of the buyer and purchasing is typically only available at specific times of the year when the auctions are held. For investment purposes, it is generally better to avoid purchasing wine at charity auctions as the prices are often inflated – all in the name of a good cause, of course.
Fraudulent wine bottles pose a significant risk to the wine collector. For serious investors in older wines, it is best to invoke the opinion of an expert to avoid not just fraudulent bottles but also bottles that are out of condition.
It is very important that the wines be stored properly to preserve their condition and value. Professional wine storage will help the resale value of a wine collection. However, a sophisticated home storage system can be a good alternative.