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Fine Wine Investment: 4 Fundamental Rules to Success

Jan 1, 2020 1:39:25 PM / by Charles Agutter

There are many, often confusing ways to invest in complex financial assets in today’s markets, but there are only four fundamental ways to invest successfully in wine.

When looking to secure your own share of the fine wine market, a savvy investor will keep to the following core concepts close at hand, and in mind:

(1) Stay focused and buy the best of the best 'brands';

(2) Buy those wines in quantity and in original packaging whenever possible;

(3) Don’t be afraid to pay up for the scarcest brands; and

(4) Store those wines properly in optimal temperature and humidity-controlled conditions. Now, let's dive in.

Rule #1: 

Buy the Best of the Best, the Most Highly Sought After and Elite Producers. In the wine auction world, the market speaks loudly about which wines are the most desirable, the most prestigious, and the most sought after amongst collectors. These are the wines to buy for investment purposes as they have proven their value over decades and have shown that they are “must haves” in cellars around the world. The wines that get bid up and go up in price the most often are the wines for which people will continue to be willing to pay more.

 

Rule #2: 

Buy These Wines in Quantity and in Original Packaging Whenever Possible. Full, original cases generally bring the highest prices over time. Buyers are willing to pay a premium to have a wine in original packaging as time goes on; it creates more confidence in the quality of the collection. This is not to say that loose bottles are not investment worthy as well, but original cases are always the best play. Also, the more you are able to buy of any given wine, the more you will be able to sell over time as the market continues to appreciate. Everyone likes to sell a few shares here and there, so to speak, and wine is no different. If you only have a small quantity of something, it can be agonizing to decide when to sell, and hey, you may want to “declare some dividends” by drinking some goodies from time to time! It is always smart to have some “loose” bottles, (bottles not in cases), for this very purpose. Do your best to keep a full case full, whether a three-pack, six pack or twelve bottle case.

 

Rule #3:

Don’t Be Afraid to Pay Up for the Scarcest Brands. The rarer a wine, the more people are willing to pay “whatever it takes,” especially as these wines become older. The older a wine gets, the less bottles there are, as wine naturally and organically gets consumed in many people’s collections. Furthermore, many of the world's greatest wines are made in smaller quantities – 100, 200, 500, 1000 cases. These are painfully small amounts considering the worldwide demand for fine wine. Yet, these are the very wines most likely to go up in price and experience surges when the market is very strong - like it is now!

Rule #4:

Store Your Wines in Ideal Conditions. Good enough is the enemy of great when it comes to maintaining the highest possible value and condition long term for a wine collection. The ideal temperature conditions to age these great wines and optimize their market value is no more than 55 degrees Fahrenheit. Some say the greatest cellars have been kept in the 40s – logic being that the lower the temperature, the more any given wine’s development will be slowed, and that can be a great thing for wines that get very old. About 70% humidity is also ideal - many feel humidity is the secret to aging wine. Investing in temperature and humidity control is a small price to pay compared to the value of what a fine wine collection can be worth.

These are the four most important rules of investing successfully for the long term in the world’s greatest wines. One more thing – don't forget that the best wine investments are long term plays. You can sometimes make a quick flip for a nice profit, but a penitent man will profit the most.

Topics: Fine Wine Investing

Charles Agutter

Written by Charles Agutter

UKV International

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