Wine Investment... what is better?

WINE TALK
41

I am afraid that the only appropriate answer is threefold to the OP

  1. Most of us here are passionate about collecting/drinking/sharing the hobby that is wine. You will NOT get a friendly reception to a question that is “How do I make big bucks collecting and selling wine?” This will strike many of us as being akin to rolling into a tasking room in wine country and saying “How 'bout some free pours of juice so I can get loaded and score with the cute girl behind the counter?”

  2. Trying to make money buying and selling wine for a profit? You are about 15 years late to the party. There is no easy way to cash in at the current time. There have been too many books, articles, stories written about this topic that have led many would be profiteers down the rabbit hole. Hopefully these types of buyers have gotten burned soundly and will move on. Chinese buyers pushed the last big wave of speculation, who knows if they will be back?

  3. Take into account the hostile/snarky responses here reflect the personalities of the posters. Some responses will try to be helpful to get you accurate information about the topic. There is a lot of comparison in wine investing to gambling, with the same risks. If you just want a safe way to make money, put it into triple tax free muni bonds, not the wine market. Most of us here will spend many multiples of $$$ drinking and sharing wine as opposed to ANY degree of profit that may come from being in the right place at the right time with a bottle of wine.

Hope this advice will save you a lot of time and money. If you get interested in something MORE than just the profit side of wine, stick around and you will learn a LOT about this passion…

42

Mods, can you please delete all the posts in this thread excpt for the OP and the only appropriate answer which is quoted above?

Thank you,
~ Snarky Berserker

43

If one can not handle disagreement without becoming disagreeable, one should not be on the internet.

44

at least he added his last name.

45

Andrew Lloyd Weber once asked a friend why people took such an instant dislike to him.

His friend replied, “Saves time, Andrew.”

46

Do you tell this to our politicians?

47

Investing in wine is a great idea if you only look at the original purchase price and the final sale price. Factor in years of storage and suddenly the investment looks a lot less attractive. Absent evidence of that storage and your investment will be tough to shift. It’s akin to investing $1000 in a fund with great returns and then discovering it takes $50 a month in fees.

Of course I would be lying if I said I had never bought cheap wine purely with the intention of selling it for a profit. But on the other hand I always know I can drink my investment if it goes south.

48

“Keyboard Gangsters”???

What a douchebag.

Imagine going on a mountain climbing forum and asking “which is better for a first time, beginner climber; Everest or K2?”

Should the forum members say “Probably Everest” or would it be okay to suggest that both were a bad idea???

Telling him that investing in wine is a bad idea is a valid answer. Tough bleep that he didn’t want to hear it.

49

Why you crush a young man’s dream of getting rich? [cry.gif]

50

I think there were some wine index funds one could buy, never followed them but wondering how they are doing.
Agree with pretty much all the actual advice here.
For myself (and my very modest cellar) it’s all about the flavour "return"as wines evolve and mature, not cash.

Perhaps we do need to be a little more considerate when responding to new people. They don’t know us and we certainly don’t know them or how thin skinned they may be.

51

Many you actually have had thoughtful answers to my question and I genuinely appreciate it. Others have chosen to take a different approach, which of course you are entitled to do. Perhaps a little more color as to why I asked the question I asked might help.

I am a collector of sports cards because I enjoy sports and the cards remind me of good times and memories. My portfolio is large and I was looking to diversify into another collecting ventures. I thought wine, since I enjoy it, might be a good place to invest some of my time and resources, since I enjoy it. While I would buy to consume, I would also buy to collect and enjoy my collection in my wine room that is somewhat sparsely populated at the moment.

As many of you know, collecting wine has become / can become quite expensive. Therefore, before I went about acquiring / building my collection, I was curious to see what the best approach was. Should I pick my favorite wine like I pick my favorite baseball player? Or should I pick my favorite team like in football? Are there advantages or disadvantages to either strategy?

More or less, while I will buy wine to consume, I also considered buying wine to collect. If down the road I make money as a result of my collection, great, if not, so be it. However, I thought it was appropriate to at least ask if there was an advantage to starting a collection one way versus another… that’s all.

In sports card collecting/investing, premiums are associated with being able to put a whole set of cards together from a specific year or specific team or specific company. I was most curious if wine collecting was similar? I am not looking to broker or trade or make money buying and selling wine. Instead, I was considering diversifying some of my time and resources into wine collecting. If my wife or kids make money some day as a result of my choices today as to how I build my collection, great. I just wanted to do this right the first time and not have to pay auction houses or private brokers 15-25% to sell wine that I mistakingly bought because I had a poor plan upfront.

Perhaps I should have phrased my question differently, but at the end of the day, whether I am a collector, an investor or a consumer, I still want to make smart choices how I spend my money… that’s all… and that’s why I asked.

Justin

52

Nobody was mean spirited until he called them out for their honesty. Newbies don’t ask hypothetical questions like that. He had an agenda and the responses did not meeet his expectations so he bailed but first fired off a few dry-by shots at the crowd. People who have history of bad experiences in forums and such have short fuses. You see it all the time where people have a victim hangup and when things don’t go their way they lose it. His fuse blew awful quickly.

53

It took me a couple years to get the balls to post here. [snort.gif]

54

Justin, I used to dabble in sports memorabilia, which as you probably know, comes with its own headaches in reselling, e.g. grading or finding someone who is interested in that signed jersey. I’ve never sold wine, but based on what I’ve gathered from others’ experience on this board, it may be difficult to turn a profit unless you’re immediately flipping popular highly scored wines that are in short supply. I suspect some folks buy these wines, flip a couple, and use the profits to reinvest in the next vintage. But those wines may not be what you actually enjoy.

I’d spend a few years exploring a wide variety of wines until you dial into what you really like with the understanding that what you eventually love may not necessarily be wines which can be sold for profit. If you drink well and your wine can hold its value or even appreciate a bit, great, but I wouldn’t recommend investing as a primary driver. My two cents…good luck and please stick around!

55

Here’s the crux: “Collecting” isn’t “investing”. That’s fine! If you enjoy wine and want to collect stuff that is of interest to you, please go right head. You’ll find a lot of like minded individuals here. There is no “wrong way” to start a collection (unless you only buy Sangiovese). I would argue “investing in wine”, meaning purchasing of wine with the explicit expectation of price appreciation and subsequent resale, is an entirely different activity. I happen to think it’s one that should generally be avoided, but more importantly I don’t think it mixes well with collecting at all.

56

I’m curious about their returns, too. I think most of them buy directly from producers at the price that wholesalers/importers pay, so some of their profit is based simply on that. I don’t believe they’re buying in the secondary market!

57

Not excusing the snarky comments, but if you had led off with this post, the responses would have been more measured. The advice however would be likely the same.

58

59

Wow, what on earth is wrong with the original comments? Unlikely they would have been more measured, this is the culture.

60

Good evening Justin,

Back in college in the late 90s, I funded my wine habit by buying well stored wines off restaurant lists and sending them off to auction. Back then, market prices were rising very quickly and- unlike today- there really wasn’t any kind of organized highly liquid marketplace.

Those days are long gone. I have studied wine investment myself- not to engage in any particular strategies, but because I am a finance guy and find such things fascinating- and even back then it was not a good long term investment strategy. During the real booms in wine prices, you would have been far better off in the financial markets for the most part.

It is easy to look back and point to specific examples of a wine being an incredible investment- but who could have predicted in the mid 90s that Roumier Musigny would become a $5,000 bottle of wine? It was appreciated by insiders, but it did not get huge scores from the WA- which was THE critical publication that drove values for “blue chip” wines at the time (and still is to a large measure.) Also, Lafite and Mouton tended to lag behind Margaux and Latour in terms of auction appreciation- until the late 2000s when demand from Asia for those wines put them very firmly at or above the performance of other first growths. This could not have been predicted either.

The only reliable money-making investment strategy in wine is arbitrage. And most of that comes in receiving an allocation of a very rare wine that is so in-demand you can sell it within a year in the secondary market for far more than you paid for it.

Two problems with that now,

  1. Many producers have upped their prices to narrow that spread. When I was offered 2013 Romanee-Conti from a long-time source who takes standard markups on the wine, the price was $6,000 a bottle. And the offer was 1 bottle, not a 3 pack like I used to get in 2006 and prior. Looking at winesearcher you might think there is some good profit there- but not really. First off, at that price level the number of potential customers shrinks dramatically. Second, a broker selling a wine like that for $10K probably paid $7K or so for the bottle, and these days a number of brokers are actually selling bottles like that on spec- meaning they have a source but will not buy the bottle until a customer pays for it. (No joke- this happened to me 3 years ago when helping someone find a broker for a 400 bottle DRC collection- two major WS listers said they would offer to sell the wines for 90 days and would buy whatever they sold and collected on from customers.)

  2. Access is a real problem now. In order to even be able to get something like Romanee-Conti or Roumier Musigny, you typically have to be a very very good customer. The $1-2K you will make flipping a bottle pales in comparison to the overall spending required to even get that bottle or two in the first place.

For my part, I see investment in wine as coming with the territory. I had some fun with it early on when the pickings were easy and I was bringing supply to market that would not otherwise have come to market- but to play that game by merely churning in a highly organized and liquid marketplace is very dangerous, and I have never even considered doing that.