Like any investment wine carries risks, as we are often told with regard to investment portfolios on the stock market, the value of your stock can go up but it can also fall. However, as has been proved over many centuries wine investment has generally had very high yields and of course the worst case scenario is you are left with some utterly delicious wine to drink, not so with stocks and shares!
We believe that before entering into the wine investment market it is important to decide just what you are trying to achieve. If it is simply for financial gain then to make a meaningful return you are likely to have to invest in the well known and well followed Château's of Bordeaux and Burgundy, this is indeed where we see the highest gains in value. On the other hand everybody else including now the far eastern markets, are keen to follow the very same Chateau for the very same reason and whilst this has resulted in some truly remarkable increases in value and most recently the extraordinary released prices on the 2009 Bordeaux vintage, this begs the question just how far can this boom continue? Are we in danger of a crash in the values of fine wine when people decide to return to the stock market?
The other market for wine investment is the more general one of buying forward for ones own drinking pleasure, even in 2009 there were some truly fantastic value Bordeauxlaise wines which will reward the investor with many happy Sunday lunchtimes.
We would always recommend a balanced investment portfolio as in reality certainly the first and second growths in Bordeaux and the greatest Château of Burgundy are over subscribed by many times and most merchants will reward their long standing customers with the highest allocation. It is also important to be wary of brokers who do not have their own allocation but merely go shopping once you have placed your order.
The other region that in recent years is beginning to show better than average returns is that of the Rhône, with Château de Beaucastel and Château Vieux Telegraphe in particular showing good gains.
Time is also a factor to take into consideration, with the higher and medium end value wines whilst quite remarkable returns can be achieved this does not happen instantaneously other than in freak vintages such as 2009, where we saw 20-30% being realised only a few weeks after release. We would suggest to our clients that they should allow ten years before being able to truly realise the investment potential, whilst of course the investment for drinking wine has a lot shorter time scale in terms of enjoyment.
Should you wish to discuss your current portfolio or potentially starting an investment in wine, we would be delighted to advise you further, please do not hesitate to contact our team.
John Charles Townend