Since commencing this column I have been inundated with a range of queries over various wines or countries as well as demands for advice on matters as diverse as how to decant and pour, through to wine values and storage. The vast majority of questions have fallen into the latter category and as a result I was encouraged to give an outline of investment and the ensuing questions as to the long-term storage of any given collection in this weeks article.
Quite simply, investment in wine is the ongoing acquisition of bottles for eventual financial gain. The concept of such gain falls into two categories, firstly that such an acquisition is a means of eventually making money or alternatively an astute method of financing future consumption. Quite often I have tentatively advised on a combination of the two.
My former life as a professional artist was often challenged by people seeking to understand a parallel concept within the heady world of the international art market. Such a market then and today is ironically governed by the same principal bodies, Sotheby’s and Christies those global bench-markers of world auction prices.
A constant question then was why can an artist such as Van Gogh or Soutine, whose tumultuous lives were dogged by their own flirtation with what we today may well regard as abject poverty, could result in auction prices for their individual works often exceeding the gross domestic product of a dozen third world countries.
The rationale which drove Van Gogh to paint and the reasons his work turned effectively into real-estate within a hundred years are clearly mutually exclusive. However, the threads of logic are similar within the oft linked worlds of wine and art.
The principal reasons for the establishment of a trading market in wines stem partly for their quality, partly as a result of their rarity and increasingly because of their fashionability.
Wine investment began in Bordeaux many hundreds of years ago and continues apace to this day. At the time of the Roman Empire, Pliny the younger refers to the practice of buying bunches of grapes on the vine prior to picking and wine production. This practice continues today and is known as buying sur souches. This was doubtless the foundation of the enormous commercial trade emanating from Bordeaux and continues today in many forms, En Primeur being the most well known where wine will be purchased in barrel two years prior to bottling.
A key influence on this market today is the American wine critic Robert Parker whose newsletter The Wine Advocate is slavishly followed by many an investor. His star rose rapidly after his predictions for 1982 Clarets became some of the most expensive and sought after reds available in the world, making the first of many fortunes for the canny investor. Subsequent to his deliberations fine wine effectively turned into a commodity. His scoring method of marks out of 100 can and often does make or break the market value of wines, now no longer confined to France.
His views on Penfolds Grange, Henschke’s Hill of Grace or Jim Barry’s Armagh from Australia, again influenced the new world’s entrance into this heady world of investment. Italian wines too followed suit with cash now being paid for the so-called Super Tuscans such as Sassicaia, Tignanello or Ornellaia fetching case prices that could easily fund most students first motor car. The simple rule of thumb here for those whose wish is to continue to beat the FTSE 100 and have the spare cash to do so, is firstly buy from a globally recognised Château or winery, buy only in the best declared vintages and ensure that storage exceeds the average air-conditioning of the newly released Range Rover. One must also be prepared for such capital outlay to lay dormant for ten years plus.
But other veins need airing, one such being the thoughtfully delivered lines of Baron Elie de Rothschild. “The crisis is perfectly rational. It was even foreseeable. The day I saw in Time Magazine a photograph of a bank vault with a bottle of Lafite in it, I assembled my staff and told them the crisis has begun. Indeed from the moment you start to think of wine as an investment and not as something to be drunk, that’s the end.”
This view probably mirrors my own when looking at a painting in the Tate, sipping a glass at my local hostelry, or at the dinner table. Wines that can offer so much joy need not be hobbled by the notion that at auction they would set you back the equivalent of £400 + per glass and that a joyous lunch with your bank manager would culminate in the instant closure of your carefully tended bank account.
I have long since looked at the second tier of wine cellaring and investment as a route to such joy. This position still requires careful selection of vintages and regions and can often result in modest profits if they be needed, over shorter periods of time. The new breed of wine makers from France, Italy and Spain, born out of a need to provide a more egalitarian style of wine, a referral to the traditional adherence of natural fruit and terroir as well as some serious assistance via E.C. funding are creating wines, principally reds, that benefit from ageing over a period of 2 to 5 years, yet can be purchased today for a seriously modest outlay. As an example we have been helping customers to create cellars, store sensitively and pick wisely, perhaps no more than six bottles 12 times per year for an outlay of no more than £50 per month. If you are able to resist temptation for a year or so, unlike one member of our family seeking to taste the slow gin 24 hours after manufacture, you will be rewarded 10 times over with your wines offering their nature-given expression and the bottles showing enormous value against the steady price increase of supermarket brands, often bottled hours before they hit the shelf and so ‘fruit-forward’ that they provide little more than Ribena with an accompanying headache.