‘Wine has proven to be a very good investment over the last many decades,’ says Nick Martin, Founder and Executive Director of online wine investment platform, Wine Owners (which manages wine collections worth £750 million). And, essentially, it’s a simple case of supply and demand.
‘Wine is produced in limited quantities, so supply is progressively consumed over time,’ explains Martin. ‘if you look at Bordeaux first growths, the value of wine has increased as approaches to viticulture and winemaking have improved. As a result, there are far fewer cases of first growths made today, than 20 years ago.’
So supply is limited and getting more so, but what about demand? According to Martin, the market is globalizing. ‘Now everybody who aspires to a certain lifestyle and is a wealthy individual irrespective of which part of the world they are in are more likely to have an interest in fine wine,’ he says. And Simon “St. Emilion” Staples, Sales Director at Berry Bros. (who currently store £950 million worth of wine collections) agrees, ‘when I started [over 20 years ago] there were six countries in the world that had fine wine, but now we’re at 150 countries.’ Staples spent four years in Tokyo cultivating that market, so he should know.
And what about return on investment? Well, according to Staples, prices have gone up as much as 25-30 per cent in the last 12-18 months. He can’t explain this specific surge, but has a more general explanation for market changes: ‘if the world’s feeling good, people are enjoying themselves, people will buy more expensive wine, and then the prices go up.’ Makes sense to us.
So, do you have to be a wine aficionado to get into it? ‘It helps if you’re interested in wine to begin with,’ says Staples, ‘but I’ve known a lot of people going into it from a hard investment point of view and ending up really getting into the whole thing.’
But if you don’t enjoy wine, then you are missing out on one of the best, and most unique, parts of this investment opportunity, according to Martin. ‘The great news is that wine investment is not just about appreciation. If you’re feeling moderately wealthy today and a bit wealthier tomorrow, because your wine has appreciated – you can choose to sell the wine, keep the wine, or you may choose to drink the wine. And this third dimension is always worth bearing in mind’. Multiple utility is a good thing.
Now, on to the part you’ve all been waiting for, their top buying tips. At the general level, Martin, suggests the following: make sure your portfolio is sensibly diversified; invest in wine you like; and buy the best you can (or storage costs can easily eat into you capital growth). And which wines should you buy? Well in terms of Bordeaux, Martin suggests 1st or classified growths from 2015 and 2016. ‘The best vintages of Bordeaux that have ever been were: 2005, 2010, 2015, 2016, 2016,’ tips Staples, who suggests buying quantities of those, but not the most expensive. So 2015 and 2016 are good bets, then.
And Burgundy? Staples suggests purchasing Grand and Premier Crus from 2009, 2010, 2015 and 2016, ‘there is enormous demand for these wines; I’ve never seen this much for anything else.’ 2017 was also a great vintage for Burgundy, according to Staples, who’s already planning how much of the vintage he can afford to add to his personal collection, when it’s marketed in 2019.
France aside, Northern Italian wines are very much in vogue right now and both Martin and Staples suggest purchasing wines from Barolo and Barbaresco, with Staples specifying Barolos from 2010, 2011, 2012 and 2014 as good investments. Although, Staples won’t actually drink anything Italian, himself: ‘It’s all the emperors news clothes for me. But it’s really in vogue and I can’t see that abating for the next five years or so.’ Each to their own…
And finally, Staples suggests looking over the water to California, which apparently produces to the best Cabernet Sauvignon outside France, at Monte Bello - Ridge, in the northern mountains of Santa Cruz.
So, if you are a vinophile or merely just a sensible investor, wine is a much more interesting (and delicious) venture than many others – just be sure to listen carefully to the experts, if only so that you can boast the most fantastic cellar in town. Cheers to that.