Member Inquiry: Investing in Wine

“Paul, I read now and then about wines that sell at auctions for wild prices, like $25 ,000 .
a) What kind of wines are worth that much?
b) Can I start a collection for investment purpos­es using WOMC wines, and sell them later for a big return?”
A.R., El Cajon

Thanks for asking about this. I’ve been meaning to comment on it. Wine as an investment is a broad topic and a loaded powder keg these days! Overall, fine wines traditionally have been, and will continue to be, excellent in­vestment instruments, but with two main provisions.

First off, you’ve got to select the right wines! At around $100 a bottle (for recent vintages), a great Bordeaux like Chateau Margaux or Chateau Lafite-Rothschild, when it gets old, can fetch a very high price. This is especially true when there are only a few precious bottles left of the wine in question. Like a rare postage stamp, the price will shoot up directly in pro­portion to the scarcity of the item. Yet, while no one in his right mind would mail a letter with a rare mint stamp, it certainly wouldn’t be an insane act to drink one of these wines. Expensive, yes; crazy, no. It would be great! But wines that go for $25,000 are usually 100 to 150 years old. Are your heirs prepared to wait?

We’re often dismayed at what people buy as “investment wines”. At the Napa Valley Wine Auction last June, a twenty-five bottle “vertical” (one bottle each of the 1966 to 1990 vintages) of Robert Mon­davi Reserve Cabernet Sauvignons went for $40,000, a treasure-trove. (These wines originally sold in the range of $12 to $45 each.)

Conversely, Wines & Spirits Magazine (August 1991 issue) re­ported about unscrupulous wine “brokers” who sold their clients 1982 Robert Mondavi Chardonnay a few years ago. They gave these clients the mistaken impression that they would be able to turn around a year or two later, and sell the Chardonnay for a handsome profit. This didn’t occur. Many of the clients are now stuck with hundreds of cases of nine-year-old Chardonnay which most people consider too old to drink!

So, the second big point in amassing wines for investment purposes is: do you have a viable means of liquidating your invest­ment? If you are not legally li­censed to sell alcoholic beverages, most likely you do not.

Two better reasons for collect­ing wines are: 1) You find a wine you really love and put some away. You can enjoy a bottle whenever the mood hits; and 2) Some excellent wines will show dramatic improvement with aging. Many of our Regular Series and all of our Limited Series selections, for instance, qualify. Buy them now while they’re less expensive and enjoy them all the more in a few years when they’re aged, and possibly more valuable.

P.K.

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