Can California's top wines be an investment?

Just wondering what people’s opinions are on whether California’s current crop of mailing list wines with high resale value (e.g. Screaming Eagle, Schrader, SQN, etc.) will hold or increase their current value in next 10-20 years? In other words, can California wines be the same type of investment as the top Bordeaux and Burgundy?

I see so many recent vintages of top wines selling at auction for 2-3X over mailing list cost. I wonder what those same wines would sell for in the future. Any opinions from those who valuate cellars or sell at auction?

Two things. One of the big fuels for that market was RMP’s and Laube’s scoring which are going away in one case and probably going to go away at some point in the other. The other thing is that the last run up was clearly influenced by the financial bubble. We probably haven’t seen the complete shake out from that but we are probably quite a ways from another one. There might be some sort of investment wines in the future but we do not know how they will get to be that way yet.

That and a big house.

20 years?!?

Do you read the “newspapers”?

[Or whatever we’re supposed to call the “news” that we read on the internet?]

If I were looking for 20-year-window advice on investment strategies, then I’d be paying close attention to TV shows like Pawn Stars - or, even more realistically, The Walking Dead.

Of the 6-billion people on the planet, I doubt that there are any of us who have yet imagined what even the next twenty MONTHS will look like [in actuality, as they unfold].

Historically California wines have not appreciated the way Bordeaux and the top Burgundy producers’ wines have.

We do not recommend California wines for investment purposes.

Quick answer: no. Not for long term. 3-5 years? maybe.
You still must choose wisely.

For example, just out of curiosity, I checked on Shafer Hillside Select, and you can find vintages from the 90s at prices maybe two-thirds of recent vintages. That’s a 50% appreciation over ~15 years – not great, particularly when you consider the transaction costs (initial tax, auction fees, etc.)

Or the original purchase price. Much easier to see a 50% appreciation on a $50 bottle of wine that is selling in its current vintage at $200. Will that $200 bottle of wine show a 50% uptick? I say no.

george

Storage costs more than ate up the rest.

[scratch.gif]

The sky is falling! The sky is falling! The sky is falling!

I’ve got a pretty good idea of what the next 20 months will look like, but I’m afraid that it won’t comport with your alarmist worldview. Investing in the TWD looks like it was pretty smart though, as that show is pretty good and quite popular.

Seriously though, its an honest question. I suppose the real question is whether even the top European wines offer any investment value anymore. Top Chateaus in BDX have jacked their prices to the max, eliminating most of the value there. The top burgs still offer some if you can get it early enough in the distribution chain, but good luck with that. The top California wines may continue to offer some short term reward if the scores match, but the longevity of those wines is, for the most part, still very much in question. So it seems like betting 20 years on a “cult” wine will be questionable. Wines with better track records, things like Spotteswoode or Heitz Martha might be less sexy in the short run but might fare better in the long. Rhys could turn out to be a good investment, particularly in the early vintages and particularly if it manages to continue to garner so much praise as time goes on, but the relatively high price point compared to the domestic competition may hinder those returns.

PS - that was my first “smiley” but the tone of the above reply just cracked my sh*t up.

Duh. Good point – I should have been comparing original prices.

Never mind!

Still, the point stands. This data is admittedly ancient, but for a group of mine in San Francisco about 20 years ago, we tracked the appreciation using original prices because we had a formula for reimbursing members for older bottles they contributed. I’d collected wine store newletters for years, so I was able to compare original to current prices as of the early 1990s. On average, the annualized increase was in the mid-single digits over ~7-10 years, as I recall – very, very little.

Best case scenario. Flip so you can buy next vintage and flip again. Invest the profits somewhere else. The biggest profits are made early (but not too early). Maximize by churning.

Or just buy wines to drink.

If current trends persist, then in twenty years, you might be able to use a nice case of wine to bribe your way through a roadblock set up by your [semi-] local marauding gang of thieves, rapists, and murderers.

But a case of Sierra Carche would probably be about as effective as a case of Lafite Rothschild.

And a case of Las Rocas would probably be about as effective as a case of Sierra Carche.

And a case of Charles Shaw would probably be about as effective as a case of Las Rocas.

If you really care about the future, 20 years hence, then you need to be thinking about how you are going to answer the question which the bad guys are going to ask you at that roadblock: “Remind us again why we shouldn’t just shoot you and take your wine for ourselves?”

[Hint: I would not count on having any success with a snarky answer like: “Uhh, because you’re low on bullets?!?”]

I love it!

So for that case of Hillside Select one should really rather invest in 10k rounds of .223?

Or hell, skip the 09 and 10 1st growths and easily amass 100k rounds!

Investment was probably the wrong word to use, especially with all you financial-types on the the board. newhere

John’s example of Shafer HSS is close to what I was questioning in the original post. For many top end Bordeaux in better vintages there will be an increase in value of the bottles over original purchase price, and it seems that this value increase takes a while to plateau (i.e. well stored bottles will carry more value 30 years from vintage date versus 5 years out). California wines tend to see a rapid price increase after scores come out, but I’m curious whether those prices will hold, increase over time, or decrease over time. The “cult wine” status that drives these high prices of California wines is a relatively new phenomenon, so it will be interesting to see if in the long-term future the scores and (previous?) cult status of a winery are still able to maintain or increase value for well stored bottles.

And for the record, I’m not trying to make a decision on whether to drop a whole lot of cash on cult wines in order to pay for my son’s college tuition in 20 years. I keep my money in a shoe box underneath my bed, it’s safe from market fluctuations and zombies there. [snort.gif]

Ah, I see… So the tinfoil hat smiley is what I should have been looking for, my mistake.

Lay off the Cormack McCarthy and have a drink, its Friday!

I tell you what, let’s make a bet about a complete state of post-apocalyptic anarchy vs. an absencer thereof, here within these United States, 20 years hence. What do you say? (Wait, how old are you?) I’d like to make it interesting, say, one bottle of Sierra Carche, but then I don’t have any Sierra Carche. So we’ll have to weight this thing. I can put up a case of canned meat - of your choice - because that should be important in your distopian future, and you can put up a commiserately priced bottle of wine, something that can handle the age. Deal?

Don’t you know the first rule of wine board talk? Never, never talk about wine as an investment. You are only supposed to care about the purity of the pleasure it offers to you and ignore all other considerations. Once you admit to looking at any wine in regards to money, you are likely to be labeled with the lowest of all wine monikers: Flipper!!

Chris

When that marauding platoon of Chinese Red Army irregulars shows up at your door, and demands all of your daughters as child-brides, then you MIGHT have some luck trying to bribe their C.O.* with DRC, Le Montrachet, Le Musigny [de Vogue, Roumier, or Musigny], Le Chambertin [Rousseau], Ausone, Lafleur, Petrus, Haut Brion, or the equivalent.

But I don’t know that I’d get all clever and try to bribe them with second labels like Carruades or Duvault-Blochet - that might offend their sensibilities, which could make them all the more likely to shoot their future father-in-law.





*If they even have a C.O.

Since when did flipper become worse than score chaser? Or are they one in the same?

Ah, yes. Wine as pure pleasure. Considering all of the discussion about auction houses (selling and buying), counterfeiting, and wine insurance, I don’t think my question is exactly out of bounds.

Luckily (or not depending on how you look at it), this discussion barely applies to me. I only own a small number of bottles in this category. Though if all of those bottles would somehow end up being worth $10 tomorrow, it would be a lot easier for me to open them.