Wine collecting & investment guidlines

£10,000 wisely invested in a wine portfolio back in 1974 would currently be worth somewhere in the region of £1.4 million (Financial Times Wine Investment Special, June 2005).

Good Wine Investments: Examples

• 1961 Chateau Latour (100 points by R. Parker) cost just £25 a case when released - today, a case could sell for between £20,000 and £35,000 depending on its provenance.  That’s a 140000% increase! (Yes, it is a one hundred forty thousand percent increase) 

• 15 years ago the 1990 Cheval Blanc (98 points by R. Parker) was released for under £400 a case - today the wine’s current market price is £4,450.  That’s a 1112% increase.

The Wine Market: Overview

99% of the world's wine production is not investment grade wine
Poor quality, over-abundance and early-drinking are factors that make these wines non-investment grade (most of the wines you find in supermarkets and wine shops fall into this category)

Two tier market

• Oversupply of low-end wines
  
  
• Inherent shortage in the top segment because of strict zoning laws for the top vineyards

BDXV Wine Investment Packages focus exclusively on the top segment that is known as “fine wines”

The Fine Wine Market: Key Facts

Demand/supply imbalance supports prices

• Ever growing demand. There are an ever-increasing number of high net worth collectors who want to own these wines - mainly from America, London, Japan, Singapore and Hong Kong as well as from newer players such as China and Russia.
  
  
• Extremely limited supply. There is a very limited supply of about 20 Bordeaux chateaux producing only a combined 345,000 cases (12 bottles per case) of asset-class wine each year.  The BDXV 1st growth chateaux only produce about 100,000 cases collectively.  The production capacity of these chateaux is fixed due to strict zoning laws enacted in 1855 which do not allow the chateaux to increase their vineyard size for the 1st growth wines.

Fine wines improve as they age
Fine Bordeaux wine is an improving asset in that it becomes more attractive and valuable as it matures. Fine Wines from good vintages generally reach an initial maturity stage after 5 to 10 years and will remain stable or improve further for up to an additional 30 years or more before starting to decline.

Older vintages become rarer with time
As these wines age, they also begin to be consumed, which increases both the scarcity factor and demand, fueling higher and higher prices.

Investing in Fine Wines: Guidelines

• For Bordeaux wines, buy only exceptional vintages like 1982, 1986, 1990, 1996, 2000, 2003 and 2005.

• Buy only wines that have received 96 points (on a 100 point scale) or more by Robert Parker.  Robert Parker is without a doubt the foremost independent authority on Bordeaux wines.

• Stay away from hyped boutique wines that are the fad today but may be gone tomorrow.  Stay away from New World wines (America, Australia etc.) as these wines have a much shorter ageing potential (15 to 20 years compared to Bordeaux 30 to 100+ years) and their vineyard areas are not strictly limited like Bordeaux 1st growths.

• Ensure that your wines are stored in a temperature and humidity controlled warehouse and fully insured. For investment wines, it is best if the wines are store in Bordeaux, France as this will give them the highest resale value. Wine stored outside Bordeaux (e.g. London) will be worth much less than wines professionally stored in Bordeaux.

• Insist that your wines are stored in your name, with full replacement insurance in your name (not merchant’s name) and insist that you are given the appropriate insurance certificates to prove this, preferably from a large insurance company like AXA.

• Buy only wines that have not been traded or shipped in the past so that you can be sure of the quality of your investment. Wines are fragile commodities so it is very important to know their travel history.