The sampling of young American wines is probably not representative. There is sense in the market place that they may not age as well as their European counterparts, so it doesn’t matter as much if you buy fifths or magnums. There are exceptions of course, for instance, there is a premium for large format Ridge, which does have a history of longevity. As with anything else, quality and rarity will dictate the market.
There is still a strong and vocal section of this board who feel buying wine for investment is anathema. While I sympathize and understand that there is purity in never selling a bottle of wine, wine is a commodity, and Investors are a significant part of the market. They take delivery, pay the costs of storage, insurance, opportunity cost, and release it as they see fit. They need to show that it has been perfectly stored, so periodically they bring back to market immaculate product. As has been said, it is a risky thing, and for the most part costs exceed returns. Not lately though, particularly for Burgundy, but at some stage, even the wealthiest of consumers will balk at paying four figures for a slightly better than average bottle, and even here we will see some correction.
If you’ve beaten the S&P with your wine investments, you’re either 1) Buying highly allocated wines that can immediately be flipped for significant profits (essentially no risk) or 2) Lucky.
yes, but in the case of (1) in your example, then happy days.
For me personally, if you want to readily trade wine, bottles is probably better (more standing offers, easier to sell, etc). If you want to wait until high end wines are in their prime, then magnums are the way to go.
Notice how all the businesses selling wine as an investment are selling young wine. If it were such a good investment why is your business model not to hold it all yourself and sell it in 20 years?
To be fair, wine merchants dont want to deploy the capital. Why would they? They’re in the retail business, not the investment business. Their job is to take the 10% commissions on individual transactions, not making profit on long term held wine.
Governments already had to introduce the idea of delayed payment on duty/VAT on wine to help them with their cashflows
In my experience many people who work for wine merchants do invest in wine personally.
Your poll sub heading says (20 yrs), which I don’t consider long term. I mean does 2000 or 2001 get any special age or rarity factor at an auction today?
If buying to sell at 20 years - bottle
If buying to sell at 40 years - mag.
Not only must mags hammer for more $$/oz than do 750s, but the ROI needs to be greater, too. Don’t lose sight of that.
As others have said, I’m not sure investing in wine is a good idea. I agree magnums for Champagne is the best idea. For still wines, my gut tells me 750s would be better — but that’s just my gut, and is based on no data whatsoever; salt grains, and all that.
My investments grew 21% this past year. My wine cellar value probably only 2-3%. While there are wines that appreciate in value, it’s not a good investment as there are so many things that could go wrong. Maybe, maybe you find the next “hot producer” but the idea of making money on wines 20 years later is a very low probability to me.
Just to get a rough idea of what 20 years does in value I typed in 2000 into wined.com. The 2000 Mouton Rothschild is selling for $1600/bottle. That’s about 3x the release price. If you invest $400 and it’s assumed to double every 7 years that same $400 is worth $800 at 7 years, $1600 at 14 years, & $3,200 in 21 years. Are there wines that performed better? Sure…but the odds are slim. Buy wine to drink…
Happy days indeed, but you’re still going to make more on your investment (9/10 times) by just immediately flipping the wine for profit and then investing the cash as opposed to holding onto the wine for future sale.
Magnums, certainly as a rarity. Years ago I attended several consecutive Hospices of Sonoma auction on behalf of Vinfolio. My reason for being there was to acquire a number of different lots for our clients. Typically they were 10 cases, split into an ‘a’ and ‘b’ lot. When I was the successful bidder the winery would come over and present me with a magnum of one of their wines. After being high bid on both lots of KB. I glanced at the back labels and saw that these were numbered 'x of 20 magnums ’ produced. These were commercially available wines and it didn’t take long for me to realize I had ‘potentially’ 60 magnums of something that wasn’t available elsewhere, then I got to throw away the catalog and custom blend whatever I wanted with Michael Browne. There are probably good arguments for 3 liter bottles of first growth or burg to hold for decades. The bigger the bottles, the more care they require. I had a customer buy some mags and drive them home on a summer day in the cab of his truck and the corks pushed within an hour.
The thought of making a “long term investment” in wine makes me shiver. That said, I believe that for red Bordeaux, magnums will offer a better return over the long term. And by long term, I mean 50+ years; certainly more than 20. I don’t think most 2000 or 2005 Bordeaux command much of a premium right now in magnum format, but the 1961’s certainly do!
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