Wednesday, June 16, 2010

Wine as an Investment?

I had a conversation with some friends yesterday about wine as an investment. Ever since I became aware of the magnitude of this activity I have been somewhat suspicious as to whether this isn’t just something for people with LOTS of money to burn. Opinions vary and the auction market is chugging along strong, even in a down economy.

The conversation started on the topic of fraud of investment grade wines. Billionaire wine collector William Koch has been waging war on what he believes are fakes that he has purchased from several auction houses. While not a new issue, the industry has taken notice for sure. The December 15, 2009 issue of Wine Spectator had several articles on fakes, include the cover feature on Koch, and a piece about how wineries are taking steps to mitigate the possibility of fakes while providing enhanced methods of verification of authenticity of their wines. This was an interesting read and is scary to consider if you are the type of person who is going to go after the big money wines.

There is much that influences the value of a vintage even before it has been made. Weather, pests and blights/molds all work their magic on vines even as vineyard managers fight back. The winemaking process isn’t foolproof either, although technology has improved the repeatability from one year to the next. Technology has also provided tools to correct issues (some of the above in particular) with the fruit when it arrives for processing. The pedigree of the winery, the critical opinion of the wine by the established wine rating outlets and the broader global economy also all get their turn to influence how investment-worthy a wine ultimately is.

Here are some links from various media outlets that provide additional perspective or delve in deeper to the issue of wine as an investment.

http://www.nytimes.com/2008/11/28/your-money/28iht-mwine.1.18173820.html (October 2008)
http://www.nytimes.com/2009/05/21/business/businessspecial3/21wine.html (May 2009)
http://blogs.reuters.com/felix-salmon/2010/03/30/why-wine-isnt-an-investment/ (March 2010)
http://online.wsj.com/article/SB10001424052702304370304575152421952773844.html (April 2010)

So what does all that mean to you and me? I say you should buy wine to augment your lifestyle. If you cook, pairing with wine will be a fun challenge and with a few successes you should find increased enjoyment of both. Wine makes great gifts; matching wine with people is just as hard as matching it with food. Travelling to wine country opens the possibility of discovering new (new to you) wines that you will want to seek out for the right occasion. Opening a bottle with friends can inspire conversation and enhance your social activities. Those are REAL investment returns to me, and your capital expenses don’t have to be large to achieve them.

Cheers!

--Jason

6 comments:

The Housewife said...

I agree with you. For me, wine is something that marks a good time with friends and family. While I collect wine (I'm very very much an amateur!), I do more for the love of it than the investment! :)

The Food Apprecianado said...

I keep leaving mine too long to drink in my horribly non temperature controlled home. So now I try to buy what is drinkable, but long for the day when I'll have a small controlled wine keeper.

Cook with Madin said...

My husband and I love to drink wine, and I like to cook with wine also. I agree with you, wine is something that you can enjoy with friends and family. Enough said.

Lisa {Authentic Suburban Gourmet } said...

My husband and I enjoy our wine! We converted the hall closet and under the stairs to a wine cellar which can hold about 450+ bottles. We were inspired by the wine cellar at Ruths Chris. Luckily our house is on slab foundation and the cellar is in the middle of the house, so it stays cool. Next purchase is the cooling unit to keep it at 55 degrees. As far as wine as an investment, in my mind it is meant to be enjoyed and the "good" stuff saved for special occasions. Life is too short to not enjoy it.

Magic of Spice said...

Very informative and excellent post!

Jason Phelps said...

Thanks everyone. I suspected I wasn't alone in the way I thought about wine as an investment. We don't generally have too much commercial wine in our celler on the count of making 300-400 bottle of our own each year. We often buy commercial wine specifically for meals or to try styles we hope to replicate. What fun!

Jason