I had heard of people collecting wines before this class, and that some wines age well and others don’t. But I didn’t know that some bottles were, more or less, classified as “collectible,” which means they are treated less as a consumable and more as an investment. What turns a bottle of wine into a collectible?
There are three P’s you should be paying attention to with collectible wines: production, producer, and provenance. First, check production volumes. Know what the yearly supply of wine is for top estates— the rarer a vintage, the more it can command higher prices down the line. Second, if the producer is reputable you can expect it to be more desirable. However, reputations can change over the years, so you could also bet big on an ‘emerging’ producer. Finally, the provenance of the wine, or how it has been produced and stored over the years. Climate control is absolutely crucial to making sure your wine has aged properly. There are, of course, many other factors that can affect the desirability of a wine, such as appellation and reputation of vintage (“great year”). As you can see in the Liv-ex graph below, Burgundy has become extremely popular in the past decade, reflected by skyrocketing in the prices. Other regions, like Rhone, have been a little behind.
In the early 2000s, Liv-ex was established as a central online marketplace for trading fine wines. Wine traders can use this platform to check prices, discover investment opportunities, and trade with each other. All trades on the platform are bound using contracts, and prevent frauds from entering the marketplace.
There are certain levels of predictability in the fine wines market: a well-kept Rothschild will bring steady long-term returns. But I am curious to know how newer wines make a name for themselves as a good wine to invest in.
Have any of you invested in collectible wines? What is the approach you take towards building a wine collection?
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