Anyone here invest in wine? Experiences?
Discussion
I’ve started putting together a cellar with Berry Bros and Rudd, but more for a personal collection rather than as an investment. Wine as an investment hasn’t been performing great the last couple of years, barring certain exceptions so go into it with your eyes open in that regard. Mine has dropped maybe 3% in value, over the 2.5yrs I’ve had it. It is fun navigating the BBR BBX lists though if you know what you are looking at/for, they have pretty much everything barring some rare stuff.
I have some wine, more than I can ever drink. Some therefore probably classes as being held for investment.
The market is in the doldrums right now due to global events, so arguably a good time to buy, but some realities:
1) Storage costs are non-trivial. BBR notably just massively increased theirs (to the extent that I shall probably move the wines I have stored with them);
2) If you don’t store “in bond” you won’t realise full value on sale;
3) The costs to sell are non-trivial;
4) There is massive oversupply/surplus inventory, especially with respect to some producing regions;
5) There are sharks out there as well as good people: be wary of anyone basing their business primarily on wine investment;
6) Even if you are working with the good people, the best wines/deals get “allocated” to good customers.
7) There’s a whole series of debates around demographic effects, climate change, etc.
8) What is popular now may not be in 10 years time.
The best reason to buy wine for the longer term is to get access to producers or bottlings that you want to hold in the future and either won’t be able to buy then and/or want known provenance.
Oh, and if you start drinking it it’ll get expensive (and hard to go back).
The market is in the doldrums right now due to global events, so arguably a good time to buy, but some realities:
1) Storage costs are non-trivial. BBR notably just massively increased theirs (to the extent that I shall probably move the wines I have stored with them);
2) If you don’t store “in bond” you won’t realise full value on sale;
3) The costs to sell are non-trivial;
4) There is massive oversupply/surplus inventory, especially with respect to some producing regions;
5) There are sharks out there as well as good people: be wary of anyone basing their business primarily on wine investment;
6) Even if you are working with the good people, the best wines/deals get “allocated” to good customers.
7) There’s a whole series of debates around demographic effects, climate change, etc.
8) What is popular now may not be in 10 years time.
The best reason to buy wine for the longer term is to get access to producers or bottlings that you want to hold in the future and either won’t be able to buy then and/or want known provenance.
Oh, and if you start drinking it it’ll get expensive (and hard to go back).
Wine investing has always struck me as one of those areas where the romance of the idea overwhelms the reality of the economics. The underlying market is remarkably illiquid, transaction costs are huge once you include merchant margins, auction commissions, storage, insurance and spreads. And genuine price transparency is far weaker than people imagine. A great many quoted “market prices” are really just dealer aspirations rather than executable two-way liquidity, and the moment you actually try to sell size, reality tends to intrude. Access is also highly relationship-driven and often overtly favouritist. The best allocations rarely go to the “investor” turning up with a spreadsheet and a brokerage mindset; they go to longstanding customers with deep buying histories and social relationships. Everyone else is often left buying second-hand, late, or at inflated prices. There is also a huge survivorship bias in the stories people tell about the asset class. You hear about the Lafite or DRC that went up 10x, but not about the vast quantity of perfectly decent wine that quietly sat in bonded storage for years compounding fees whilst doing very little. And unlike equities or productive assets, wine generates no underlying cash flow at all. The entire thesis ultimately relies on finding someone else willing to pay more in future for a slowly disappearing luxury consumable. Add in provenance risk, counterfeiting, changing tastes, storage dependency and occasional “mark-to-myth” pricing, and it starts to look much less like investing and much more like an expensive hobby wearing an investment costume. Frankly, for most people, the best return from fine wine is probably drinking it with friends rather than trying to build a portfolio model around it.
There isn't particularly mega money in it even as a reasonably sized internationally marketed premium producer of the stuff, so piling in to buy the product further down the chain is generally even less of a path to riches.
If the gains were predictably worthwhile you wouldn't be able to get a look in in the first place.
If the gains were predictably worthwhile you wouldn't be able to get a look in in the first place.
LooneyTunes said:
I have some wine, more than I can ever drink. Some therefore probably classes as being held for investment.
The market is in the doldrums right now due to global events, so arguably a good time to buy, but some realities:
1) Storage costs are non-trivial. BBR notably just massively increased theirs (to the extent that I shall probably move the wines I have stored with them);
2) If you don t store in bond you won t realise full value on sale;
3) The costs to sell are non-trivial;
4) There is massive oversupply/surplus inventory, especially with respect to some producing regions;
5) There are sharks out there as well as good people: be wary of anyone basing their business primarily on wine investment;
6) Even if you are working with the good people, the best wines/deals get allocated to good customers.
7) There s a whole series of debates around demographic effects, climate change, etc.
8) What is popular now may not be in 10 years time.
The best reason to buy wine for the longer term is to get access to producers or bottlings that you want to hold in the future and either won t be able to buy then and/or want known provenance.
Oh, and if you start drinking it it ll get expensive (and hard to go back).
Great summary - now is a decent entry point, I think my cellar in storage is £5k down from this time a year ago. Fortunately I don t need to sell anything and plenty of the wines will still be drinkable in 20 years.The market is in the doldrums right now due to global events, so arguably a good time to buy, but some realities:
1) Storage costs are non-trivial. BBR notably just massively increased theirs (to the extent that I shall probably move the wines I have stored with them);
2) If you don t store in bond you won t realise full value on sale;
3) The costs to sell are non-trivial;
4) There is massive oversupply/surplus inventory, especially with respect to some producing regions;
5) There are sharks out there as well as good people: be wary of anyone basing their business primarily on wine investment;
6) Even if you are working with the good people, the best wines/deals get allocated to good customers.
7) There s a whole series of debates around demographic effects, climate change, etc.
8) What is popular now may not be in 10 years time.
The best reason to buy wine for the longer term is to get access to producers or bottlings that you want to hold in the future and either won t be able to buy then and/or want known provenance.
Oh, and if you start drinking it it ll get expensive (and hard to go back).
If you ‘invest’ £100 a month, think of it as a means of saving E75 per month with the opportunity to try some decent wines on the way!
I “ invested “ about £5k back in 2011 in iirc 6 cases kept in bonded warehouse just to see.
About 5 years later I decided I had made a mistake so cashed in and got about 60% back.
5 years later the same company told me I owed them 10 years in storage fees as turned out they had never sold one case !
Long story short and after an interesting dialogue with their CEO the case was sold and with compensation added ( in the form of a nice drinking case of Burgundy ) turns out I had doubled my money on the original case and overall just about broken even - opportunity cost aside.
About 5 years later I decided I had made a mistake so cashed in and got about 60% back.
5 years later the same company told me I owed them 10 years in storage fees as turned out they had never sold one case !
Long story short and after an interesting dialogue with their CEO the case was sold and with compensation added ( in the form of a nice drinking case of Burgundy ) turns out I had doubled my money on the original case and overall just about broken even - opportunity cost aside.
WindyCommon said:
Wine investing has always struck me as one of those areas where the romance of the idea overwhelms the reality of the economics. The underlying market is remarkably illiquid, transaction costs are huge once you include merchant margins, auction commissions, storage, insurance and spreads. And genuine price transparency is far weaker than people imagine. A great many quoted market prices are really just dealer aspirations rather than executable two-way liquidity, and the moment you actually try to sell size, reality tends to intrude. Access is also highly relationship-driven and often overtly favouritist. The best allocations rarely go to the investor turning up with a spreadsheet and a brokerage mindset; they go to longstanding customers with deep buying histories and social relationships. Everyone else is often left buying second-hand, late, or at inflated prices. There is also a huge survivorship bias in the stories people tell about the asset class. You hear about the Lafite or DRC that went up 10x, but not about the vast quantity of perfectly decent wine that quietly sat in bonded storage for years compounding fees whilst doing very little. And unlike equities or productive assets, wine generates no underlying cash flow at all. The entire thesis ultimately relies on finding someone else willing to pay more in future for a slowly disappearing luxury consumable. Add in provenance risk, counterfeiting, changing tastes, storage dependency and occasional mark-to-myth pricing, and it starts to look much less like investing and much more like an expensive hobby wearing an investment costume. Frankly, for most people, the best return from fine wine is probably drinking it with friends rather than trying to build a portfolio model around it.
WindyCommon conveyed my thoughts, more eloquently than I would have.In addition, unlike other investments, a fundamental point of wine is that it has to be consumed at some point by somebody, at which point the value is zero. For every extra £10/£100/£1000/£10k/£100k a bottle is 'worth', the market of consumers decreases. Whilst one may imagine owning the particular vintage that Musk chooses to drink with Bezos, the reality is that monetising 'valuable' wine is virtually impossible.
I looked at buying portolios of 11 cases, waiting for 10% net growth, selling 10 to pay for the 11th, which I could enjoy for 'free' with friends and family. The many obstacles to achieving that (low) ambition put me off.
I decided its much better to invest in shares / bonds / other income-producing asset-class and spend the dividends/interest on fine wine to enjoy!
Wine is not an investment. As others have said the frictional costs are massive…in the mid 2000’s some people got very lucky when prices went mad after the 2005 vintage IIRC. Then there were more “vintages of the century” in 2009 and 10…..
I bought wine and stored it for anywhere between 2 and 20 years because it means I get to drink good wine that is almost impossible to buy by the bottle at anything like a sensible price. I’m in my late 50’s now so i don’t need to buy any more and I dont drink as much any more.
A lot of wine merchants are “spivs in suits”…sorry if that offends anyone. They spin stories (write their own tasting notes/research) to sell their inventory and it’s a totally unregulated. That business practice was closed down in the financial markets many years ago for obvious reasons….
I bought wine and stored it for anywhere between 2 and 20 years because it means I get to drink good wine that is almost impossible to buy by the bottle at anything like a sensible price. I’m in my late 50’s now so i don’t need to buy any more and I dont drink as much any more.
A lot of wine merchants are “spivs in suits”…sorry if that offends anyone. They spin stories (write their own tasting notes/research) to sell their inventory and it’s a totally unregulated. That business practice was closed down in the financial markets many years ago for obvious reasons….
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