Should I invest in wine?

For previous generations, fine wine buying was all about having a nice big cellar under your house and filling it with an annual order placed during a long and boozy lunch with your wine merchant! How times have changed. Even in relatively recent times, say twenty years ago, investing in wine meant buying two cases on their first release, sitting on them for ten years while the contents mellowed and became drinkable, followed by drinking one and selling the other…to fund the purchase of another two cases just released! It made perfect sense, and the canny connoisseur of the past ‘invested’ in a fair bit of classic claret, a little red Burgundy and perhaps salted away some vintage Port for the long-term.

In general terms, the wine investment market has revolved around Bordeaux, an area that produces just the right quantity of premium red wine (claret) that lives long and has a proven pedigree. Burgundy is much more problematic; the properties are a bit small, not providing enough cases per se to encourage decent trading however great and sought-after the wines. German Rieslings (hock and Mosel), although classy, age-worthy and with pedigrees going back centuries, have suffered a calamitous fall in popularity, while the new kids on the block from Chile, Australia, California even, simply haven’t been making the styles for long enough for traders to amass enough confidence in their length of life.

So where are we now? Times they have a’changed. The Bordeaux market, around which the current investment bubble has been created, is a simple one of supply and demand…with the extra factor of fashion being mixed into the brew. Fine wine, particularly a handful of the top estates and labels, have been fought over for years by collectors, and suddenly there has been more money – from Russian oligarchs and Chinese businessmen coming to the table. We are talking about a claret such as Château Lafite-Rothschild which the ‘expert tasters’ in the world wine trade have consistently marked in front of their rivals, increasing each vintage exponentially in price. It is true that quality has soared as technological advances in wine-making have taken much of the risk of a ‘poor’ example being made, while rising temperatures have ensured Bordeaux’s vines produce riper grapes more years than not, but it is pure speculation that has driven the price sky-high. The greatness of a château’s wine depends on its location, the terroir factor. Neighbouring properties, and wines judged on tasting to be just behind Ch Lafite have seen the worth of their wines climb, as the finite quantities available across all the area’s properties filter into the system. Prices rise across the board, in a self-fulfilling spiral upwards.
Can we all cash in, and where does the bubble leave the old ‘two case’ theory? Sadly, you now need a much larger chunk of cash just to keep up with the market, and some prices are breathtakingly high compared to even six years ago for the same wine.

Don’t despair however. You can still get on the ladder, and buying en primeur (i.e. on first release often before the wine is even bottled) from a Tanners Lying Abroad Offer gets you a lower price than when it hits our shelves a year or so later. Be careful if you are lured to the internet – many internet firms make promises they don’t always keep, as they can’t source the big names in the first place. At Tanners we have great connections with our suppliers, as well as the experience to winkle out some outstanding ‘unknown’ names and their lesser-known wines. These aren’t just from Bordeaux either; if it’s good drinking you’re after, then places like New Zealand and Portugal’s Douro Valley are making some superb stuff which will repay a little time to give you stunning drinking at a fraction of the cost. You can store your purchases with us too, so you don’t even need a cellar any more, and if the storage is ‘In Bond’ then there’s no excise duty or VAT to pay until you want your wine released for drinking.

To conclude, the en primeur market comprises plenty of labels that probably will rise in value in the current situation, but if you climb on board for investment purposes you’ll need to bring a bigger stake than in the past. The diversity of wines however, available to buy this way, has never been stronger. And finally, while we have no crystal ball to say how much money you might, or might not make… you can always uncork your asset and enjoy drinking it!

Click here to read more about En Primeur at Tanners and how you can store your wines with us...