Investing in Vines
Investing in Vines
Recently, I received an interesting email from a young woman in Australia who had read my column on wine storage.
She writes: “I am a second year university student, studying biomedical science at Monash University, Victoria – Australia. I am interested in storing wine as an investment and a hobby but don’t quite know how to start. I am worried that the wines I may buy will not be the type that age well. I live on a farm near the NSW border; I am surrounded by some great wineries. I was wondering whether storing wine will be not only an enjoyable but also a profitable venture for me?”
Wine storage is complicated, and if you want to do that as an investment then you need to invest in a temperature and humidity controlled environment. Whether that is a wine cellar you make at home, a wine refrigerator, or an off-site storage facility specifically for wine, proper storage is key.
The more complex red wines are the ones to store for investment, the heavier tannin wines like Merlot, Cabernet Sauvignon or Cabernet Franc age better than most because over time the tannins break down and soften the wine.
A blue chip investment would be wine from wineries like Opus and Silver Oak in Napa. Their bottles are pricey to begin with but age exceptionally well and are a high-end consumer favorite.
Pinot Noirs from Oregon and Washington would hold well too.
Buying wine futures is a way to collect for investment. Wine futures are the ability to purchase wines well before they are released to the public; many futures are based on vintages that are not even out of the barrels yet. Wine futures are new to many Americans, but they are an ancient practice in the wine trade from the Chateaux of Bordeaux and the wine brokerages in France.
Buying wine futures means you are paying in advance to lock in both price and availability of a given wine. Almost without fail, the price you pay for wines on a futures basis will be significantly lower than the general price of the wine upon its actual release. You will not actually be charged for a future until the wine broker or merchant can confirm its availability. When purchasing futures it is extremely important to know who you are doing business with and that they have a track record in actually producing the wine you have bought futures for.