Two weeks ago, the Business Observer ran a story titled “Millions dished out for rare Burgundy at Geneva wine auction”. It was a story about an auction house in Geneva, Switzerland, that took in more than US$4 million for a collection of wine from Burgundy’s renowned and very rare Domaine de la Romanée-Conti wine estate. The anonymous seller held the wines in near-perfect condition for over 15 years before selling them via phone to an anonymous buyer. No doubt tremendous profits were made; so it raises the question is wine a good investment?

Wine as an investment

Like any investment, investing in wine requires detailed research, a deep understanding of the market and even more important, a good understanding of all the risks involved. There are a host of organisations worldwide that offer services related to long-term wine investment; they will suggest what to buy and provide fancy graphs showing excellent returns over long periods of time. It is up to you, the investor, to make the right informed decision. Space does not permit us to delve into all the aspects of investing in wine, but there are a few things to consider. There is a difference between ‘collecting wine’ versus ‘investing in wine’ — they sometimes might even merge in the middle. Collecting implies we might drink it at some time, while investing in it means we are looking to sell it and profit from it.

We all ‘get a deal’ sometimes, be it a car or a new TV or a case of wine, and you feel great knowing that you have the use of this new asset at a much better price than most people out there. If you decide to sell it, because of the ‘deal’ you got you might make a profit. This is one of the big issues with investing in wine. On paper your collection might have appreciated in value, but how many buyers are willing to take it off your hands at your asking price? Your chances to sell at a profit might be better in a larger, more educated wine market.

With any investment – be careful. Knowing what wine producers to buy and when to buy is very important. Experts suggest that for every given region there are only a dozen or so producers whose wines will consistently appreciate in value. Research, research and more research.

Hold or Drink

A discussion that I have with fellow wine enthusiasts is whether they should buy to hold or to drink. Locally the vast majority buy to drink, but there are a few out there who buy to hold for special occasions. I have bought a few wines that were made in my children’s birth years, hopefully in order to enjoy sipping with them at some time in the future.

The primary determinant of a great vintage is the weather in that specific wine-growing region. You might hear experts talk about which was better than which, but remember that the world of wine is very subjective, and while there might be a unanimous voice heralding the 2005 Bordeaux, you might have tasted and loved the 2004. The next thing is learning about specific producers and their wines in order to make the right purchases.

Storage

The conditions for long-term (over a few years) wine storage are of utmost importance. Four factors contribute to the ideal environment: temperature, humidity, light and vibration. Wines need to be stored in a location that is consistently cool, approximately 50 degrees Fahrenheit, mid to high humidity, dark with no vibration. There are a number of organisations that provide wine storage services in all the major wine-consuming countries. I currently store my wines in South Florida. Costs vary, and they can start from as low as US$1.00 per case per month.

The world of wine is a fascinating one and not necessarily as impenetrable as people think; do begin your own journey today!

Christopher Reckord – Information Technology Entrepreneur & Wine Enthusiast. Send your questions and comments to creckord@gmail.com. You can also follow me on