I thought there would be a fair amount of animosity when I read the original post this morning. Getting on the Berserker board and looking for investment advice is just asking for trouble, and there are plenty of people on this board, who not only would never sell a bottle, but consider people who invest as devils, a major factor why wine prices, particularly Burgundy are as high as they are.
My problem is not the wine investment per se, but doing it without research. It is a very specialized activity, with plenty of pitfalls and hidden costs, so it is risky if you know what you are doing, and a recipe for disaster if you don’t. Most of the associated costs have been mentioned, storage, taxes, the cost of buying and selling, but insurance is another cost, and you have to figure 1% a year for that, when you have no track record.
Even if you are knowledgeable, you also have to be incredibly lucky, very connected, have a lot of money, and quick to take a large position when something is underpriced. Buying a bottle here or there maximizes your costs, and makes profits even less likely.
It’s not taboo, but if someone with zero knowledge joins the board just to ask how they can make money with speculation, contributing to the ever escalating increase in certain wine prices, then some animosity towards that should be expected. In general, I feel that this is a wine board to share our appreciation of wine, not someone’s bottom line. Having said that, everything can be discussed with the right attitude…
the issue with wine investment is accessibility and then sales channels. In theory it sounds pretty simple to flip some wine and that’s how the wine investment firms market it but a lot of them are just buying/selling on live-ex.
clearly “wine investment” is something that works cause a lot of wine brokers are essentially doing the same thing outside of the 3 tier system. But the biggest delta between the normal person that wants to get into this and brokers is where to sell without losing your profit.
Say you found these three wines
The wines:
• Dom. Bouchard Pere Et Fils Chevalier-Montrachet Grand Cru La Cabotte Magnum 2020 - cost $1251
To try to answer this further - this forum is generally a place for people who love to drink wine. GENERALLY. I’m sure there are lurkers here who watch discussion to get tips on buying, or even investing, opportunities. Nearly all the discussion here is about the experience of drinking wine. There is a fair amount of discussion of pricing and economics, but that’s mostly in the form of complaining about rising prices. There is a lot of complaining! But mostly there’s discussion of drinking wine - tasting notes, vintage comparisons, how wine pairs with food, etc. etc.
A lot of the tension here is due to the massively wide cost of wine and ability of people to afford those costs. Some people can afford to splurge on a $50 bottle occasionally, or maybe never. Some routinely drink bottles that cost in the $thousands. Some bottles are easy to get, others very difficult. Some of these $1000 bottles used to cost $50, and people are sad about it. Why did the price go up? A million reasons, and some of them relate to investors driving up prices by increasing demand or scarcity.
So there is sensitivity here to seeing wine purely as an investment vehicle. Even though we talk about pricing, and share deals all the time. And we discuss stuff like “holy crap that $50 bottle I bought is now worth $1000, should I drink it???”
I think any thread that exclusively focused on wine investment would draw a lot of anger. It’s tangential to what Wine Berserkers is all about. Maybe we could have a separate forum so people could discuss it separately. Instead of Wine Talk, it could be “Wine Investment.”
FWIW, I agree with the chorus that casual wine investment is not going to end well. Just think of it this way - there are serious professionals who you are essentially competing with to get access to the best prices for the most in demand wine with the lowest risk. Plus there are people like us here on WB who will fight you every way possible to get that good deal instead of you because we want to drink the stuff and love saving some cash.
The market he is in actually has opportunities to buy DRC and such at close to ex-Domaine pricing. The problem is that the OP was late, the people who got the DRCs camped outside the stores for almost a month, in the winter.
This morning I was with my doctor, and he asked me about wine as an investment. He told me half a dozen doctors in the practice were looking at wine as a way of diversifying their portfolio, concerned by the stock market, inflation etc, and it seemed wine was a really good alternative. All along, I have been wondering how much of the rise in prices is speculation driven, and I am not just speaking about large funds, but small groups pooling resources and buying wine.
It’s a good question. Prices move as a function of one-way flows (see crypto). In wine, the expected one-way flows are drinking and the other is hoarding (or as we call it, collecting). Both drinking now and holding to drink later are not speculative activities and, if there is more demand that supply, prices will adjust appropriately. There shouldn’t be much over buying in this instance. Speculative buying, where the buyer has no intent to drink but simply sell in the future at a higher price, represents over buying (so it is an artificial price pressure) but it also represents future overselling (an expected price drop due to more bottles coming to market as a function of needing to sell to make a return). On average, this shouldn’t represent much of an increase, except if it affects the price everyone else pays and drinks at. The price doesn’t correct if people buy assuming it’s an option: I will buy more expensive wine than I would otherwise drink and either sell if the price goes up or wait/drink if the price move never materializes. If there is a story to tell about rising prices, it is not really speculators (people who are buying on margin / need to make a relatively short term return) but hoarders buying essentially options and that premium flowing back to market pricing.
I mean my view on the entire situation is that wine is an asset class like anything else, and along with other collectibles is certainly a valid place to put money in addition to traditional investments such as stocks, bonds, precious metals, or real estate. I’m more of the last example Alex quoted in that I am not buying wine to speculate on price increases, but if prices increase to the point where the value exceeds my desire to drink it, then selling is an option. This is what happened to my Bizot and Arnold-Lachaux. It could be that I made an error and sold too early and prices will continue to increase, but such is life.
I am not sure about this. I think once the price of a heavily allocated wine goes up, I have yet to see any downward pressure as speculators try to sell. Well at least not yet. It seems once the collector has become accustomed to the new pricing, the market is set.
I can’t quite understand this. There has to be a very limited number of people who drink Romanee Conti and its five figure price tag regularly. I know people who love wine and could afford to do that, but wouldn’t on principle.
So out there, one would think there is a large amount of DRC, Leroy, and Ligier Belair floating around with no end user in sight. And yet, prices seem quite stable.
I think you are absolutely out of your depth. Given premox, white Burgundy is probably the riskiest wine in the world to invest in. Why not just take your money and set it on fire.
Mark, this is confirmation bias though. You wouldn’t drink wine like that, so you socialize with like minded people. Whereas I know people who are perfectly happy to open bottles of La Romanee because they’re going to a nice dinner on a Thursday.
Of course, there are not a lot of people like that, but there’s also not a lot of La Romanee.
