Category Archives: The Port for Thought

The Nectar of the Gods: Frank Ward on investing in wine

Investing in wine: Financial gain or life-enhancement?

There are two chief motives for investing in wine. Monetary gain is one; buying young, high-quality wines and waiting for them to improve, for the delectation of you and your friends, is the  other.

A bottle of good wine is a time capsule. Without moving an inch it makes a journey through time and becomes utterly transformed in the process. The aggressive tannins and acids in infant wine soften and harmonize slowly, transmuting into perfumes and flavours of astonishing beauty. For those who really like wine, having a collection of high quality is an investment in life style above all else. Truly, wine is one of the few things in life to give you a vested interest in growing older.

If wine is not your cup of tea (so to speak) then you can invest coldly, solely with the aim of making a profit. But in this context wine is like art: those who build the best collections are those who are motivated by love rather than the wish to make money. Not that the latter is necessarily excluded: Nothing stops true oenophiles from profiting financially from their passion. Here’s how they might go about it. Instead of acquiring a few bottles or a single case of a given wine that looks destined for greatness, they buy two, even three cases, keeping one or two of those cases for themselves and selling the rest when they have reached a satisfactory price level. If you’re not a professional, the best way to follow this course is to buy wines in bond (when duty and VAT are suspended) from a reputable wine merchant (Farr Vintners,  Roberson, O.W. Loeb, etc.) and leave them to mature for a number of years. By buying in this way, you  not only escape  duty and VAT  in the short term, you can escape them altogether if you sell them (usually through your merchant or at auction) while still in bond.

Note that different merchants charge different amounts for storage in bond (usually  £6-9 per case p.a.). Wine prices can vary considerably, too, and it is not unusual to find a given wine selling for dozens or even hundreds of pounds (for the real rarities) less per case at one merchant compared with another. Browsing different price lists is recommended.

But nowadays buying even the greatest wines as an investment is a risky matter. In the past, merchants would offer their customers top wines, even first growths, at sums that from today’s perspective look almost derisory; and would store them free of charge until mature, sending out yearly reports commenting on their progress – or lack of it – towards full drinkability. Even a  couple of decades ago real bargains were still to be had. When 1990 Chateau Haut-Brion was offered en primeur in 1991, the price per dozen was around £450 in bond. Today, that  same wine costs around £4950, a more than tenfold increase. Things have changed since then, as wine has grown increasingly sought after. In recent times, for example, those who bought great vintages of Chateau Lafite (arguably the greatest claret of all) after it had attained its highest ever price, were mortified to see that price fall by around 40%.

This follows on from the fact that Bordeaux chateaux, and the Bordeaux traders who market the wines, increased en primeur prices exponentially after they noted a vast increase in international demand, not least from the newly rich in China. These record prices were accepted to begin with but resistance has built up. Nowadays you often get a better price for top claret if you wait a year or two after the en primeur campaign. Robert Parker, the most widely-read of all wine writers, and a formidable taster, provides strong  support for this contention. As a rider to his comments on the 2012 vintage, just published, he  remarks: “Concerns must be raised about the viability of buying Bordeaux as a wine future if prices do not drop and make such a proposition attractive to the wine trade as well as to the ultimate drinker of this product, the wine consumer!”

Burgundy, by contrast, has really taken off in the last few years. This is not surprising. Take a top Burgundy like Rousseau’s Chambertin. Only 5,000-6,000 bottles are produced yearly, as compared with 250,000-300,000 bottles of Lafite.  Some Burgundy domains make only 1,000 bottles or fewer of their most sublime wines. Given that at their best they are as great as wine can be, it’s not surprising that wealthy aficionados will pay almost any price for them. For this reason, the price of top Burgundies has shot up in recent years and the most prestigious are no longer very affordable. But other, less vaunted but still superb Burgundies are still to be had at moderate prices, if you go for less well-known  wine communes like Savigny, Aloxe-Corton,  Givry, Monthelie, Saint Aubin, Marsannay, Fixin, and Santenay. If you must have a Grand Cru – the highest quality level – it’s still possible to get examples of one of them, Corton  – from some growers a truly great wine – at a relatively reasonable price. By contrast, other Grands Crus like Chambertin, Clos Vougeot, Musigny, Bonnes Mares,etc. tend to cost the earth.

Many other regions of France produce superb wines, the best of which are sure to appreciate in monetary value as they grow increasingly delicious as the ageing process takes its course. Names to watch out for are Chateauneuf-du-Pape, Cote Rotie, Hermitage, Cornas – the latter still undervalued – Gigondas, and Vacqueyras (all from the Rhone); top Rieslings from Alsace; prestige cuvees of champagne; the best wines of Languedoc-Roussillon; and the ludicrously underestimated reds and whites of the Loire, inclusive of Chinon, Bourgeuil, Saumur-Champigny, Vouvray, et al.

It’s important to note that the name of the producer is crucial. Luckily, these days we have a number of excellent wine writers who can point you towards the very best chateaux, domains, and estates (not to mention the merchants who stock their wines). Among the most reliable and trustworthy are  Jancis Robinson, Andrew Jefford, and the veteran Hugh Johnson, whose  annual Pocket Wine Book is a mine of useful information. And it covers the entire world (which is beyond the remit of this short piece).

Better in my view, if monetary gain is your aim, to make a collection of less flashy but superb clarets that increase in value slowly but very surely, often taking a decade or two in the process. I’m thinking of chateaux like Domaine de Chevalier, Grand Puy Lacoste, Gruaud Larose, Armailhac, and Duhart Milon, (the latter two, which belong to Mouton Rothschild and Lafite respectively, are made by the same teams that make those two fabled first growths – an absolute guarantee of unsurpassed winemaking). The beauty of such an approach is that, were the wine market to collapse entirely (a highly unlikely scenario) you have the following consoling thought: while shares that have lost their value aren’t worth the paper they’re printed on, your wines will have retained their intrinsic value – and in fact while maturing will have improved beyond recognition as beverages – and you can at least  drink them up in your slough of despond. Indeed, wines of this calibre are so life-enhancing that, as you imbibe them, that slough of despond will be sloughed off in no time at all.

Finally, always put quality first if you’re going to drink the wine yourself. In Burgundy they have a saying: “Never let a wine unworthy of you pass your lips”. And remember the wise words of Arnold Bennett: “Some people’s notion of economy is to pay heavily for the privilege of depriving themselves of something”: A salutary reminder that while time is irreplaceable money can be replenished even if it takes effort or ingenuity. If you’re not a pauper, time and quality of life, say I, are always more precious than money. Not least as expressed in a delectable bottle of wine shared with friends.

More on this subject: Ward on wine & vodka!