How many of you consider wine an investment?

Unless you can take an arbitrage strategy and buy/flip for a large gain over a short time frame, I think wine is a poor investment.

With the arbitrage strategy, the key is finding seriously underpriced wines as viewed from today's market conditions, and selling them quickly so market conditions don't have a chance to change.

I actually thought about this at one point and did some research.. pretty much EVERY serious investor, financial planner, or what have you says that wine is a horrible investment.

I would not invest in wine. Between inproper storage, cork issues and the occasional microbe it is a crap shoot. Wine should be fun. If you fell into some money and want to spend it on wine treat yourself and your family to a nice wine every week; I am sure the memories would be worth a lot more than the potential monetary gain. Teach your kids history through wine. That is how I learned. If you do not have children teach your friends. It is much easier to appreciate the world events of 1969 while sipping that vintage.

I agree!

quote:

Originally posted by Healdsburg Gal:
I would not invest in wine. Between inproper storage, cork issues and the occasional microbe it is a crap shoot. Wine should be fun. If you fell into some money and want to spend it on wine treat yourself and your family to a nice wine every week; I am sure the memories would be worth a lot more than the potential monetary gain. Teach your kids history through wine. That is how I learned. If you do not have children teach your friends. It is much easier to appreciate the world events of 1969 while sipping that vintage.

Thx for the advice all. I'd suspected as much, otherwise there'd be more discussion about wine investing on these boards. Now, gotta talk my friend into rolling his 20K in fishing lures into mutual funds.

I consider wine as an investment in my future enjoyment, not for profit. Besides I want to drink all my good stuff.

Its been easily my best investment so far. Just buy the best wines in the best vintages and you will do well....All my 97 Cult wine has gone up over 300% along with my 2000 Bordeaux first Growths.

quote:

Originally posted by TERPS:
Its been easily my best investment so far. Just buy the best wines in the best vintages and you will do well....All my 97 Cult wine has gone up over 300% along with my 2000 Bordeaux first Growths.

But, have you actually sold them? Or, is it on paper?

No, I hope to open and enjoy all of them eventually.

I bought Bordeaux 05 vintages as an investment sort of...

I hope to auction off half cases so that I can pay for the remaining bottles and thus I have free Bordeaux to drink....

I cellar wine for investment purposes.

Investment for future enjoyment.

I have not and do not use wine as an investment. If I did, I would only buy First Growth Bordeaux for that purpose, as there is a global market for it. California Cabernets are gaining, but I think the First Growths have stood the test of time.

There is a lot of speculation that wine is in a pricing bubble now and it cannot hold. There are wine investment firms that are buying heavily into investment grade wines with an eye to future turnover and profits. They are agravating(sp) the problem.

On the other side of the coin, you have the new markets just opening up, like the asian thing we keep hearing about.

Wine has always been a risky investment. We hear about the occasional big score in wine, but it seems more of chance or luck than plan.

Good luck if you go for it. Personally, I think I would check into energy as an investment. The demand is solid and is bound to continue to inflate. It is not being hoarded like wine is now or silver when the Hunts tried for it. You may hoard it, but you have to sell to realize a profit. Energy is being consumed, not hoarded. We are not going to wake up one day and find ourselves awash is excess energy. You may cross some turbulent times, but you cannot help but win if you can ride out the turbulence and pick the right time to sell. It may seem high now, but the ride is not over yet.

just my .02

Wine as a long term investment is too risky for my tastes.

I will engage in a little day trading now and then.

quote:

Originally posted by vintage:
Good luck if you go for it. Personally, I think I would check into energy as an investment. The demand is solid and is bound to continue to inflate. It is not being hoarded like wine is now or silver when the Hunts tried for it. You may hoard it, but you have to sell to realize a profit. Energy is being consumed, not hoarded. We are not going to wake up one day and find ourselves awash is excess energy. You may cross some turbulent times, but you cannot help but win if you can ride out the turbulence and pick the right time to sell. It may seem high now, but the ride is not over yet.

just my .02

Vintage, yes, agree wholeheartedly. I've got a bit wrapped up in Sempra (So. Cal utility), and it's done very well.

As far as the wine, I may end up buying a case or two of Bordeaux futures, storing it at the local climate controlled place, and seeing what's what in a few years. At worst, I'll throw a nice party in a decade or two. I think it's right to be very cautious about these sorts of investments. I'm not 20 anymore.

Cheers, and happy Mother's Day!

Unfortunately with Cellartracker I know the retail value of my wine. However, I also know that if I sell it, I will be lucky to recoup 50%+.

I consider it an expensive hobby but not an investment.

Through the years I have bought many first growth, burgs, and cal cabs for nothing but pure investment. I find it a no brainer. With bordeaux its been easy. The 1990, some '96 and 2000 have paid out great. '97 and '99 burgs sold well and I don't have to tell you about '95 and '97 cal cabs.

It's quite easy with the '05 bordeaux vintage. Buy as much as you can with the higher end and things will be fine. Just look at the price increase over the last few months. If I sell now what I bought early in '05 futures I already have a great profit. You just need to have great storage and people to back you up.

That being said, don't do it

I don't purchase wine for investment because I have no intention of selling it to make a profit. It's there for me (and family and freinds) to enjoy.

The part of purchasing and holding that may be considered an investment by some is that purchasing now will cost less than purchasing later.

I consider equities and property an investment. I know some people "invest" in wine and some do so quite successfully. For me wine is a pleasure.

GC

http://www.champagnedirect.ie

investment....no
liquid asset...yes

quote:

We are not going to wake up one day and find ourselves awash is excess energy.

Ah, but when I work out the bugs in my cold fusion generator which I am building in my garage, then we will be...



I view my wine like a 401K. Something I am putting away now to enjoy during my retirement.

I never used to consider wine as an investment, a liquid asset...yes, but originally only to drink. However, when the value of the wine appreciates well above what I would be willing to pay for it, I'm not so keen on drinking it anymore. Kind of like if you had bought '03 Latour around $300, but now you can sell it for close to $800.......makes you think twice about cellaring it.

quote:

Originally posted by Foghorn:
However, when the value of the wine appreciates well above what I would be willing to pay for it, I'm not so keen on drinking it anymore. Kind of like if you had bought '03 Latour around $300, but now you can sell it for close to $800

I've never understood this reasoning, although I've heard it often from folks who I respect. This is PRECISELY why I buy wines on release and cellar them. So that I can afford to drink properly aged wine that I probably couldn't afford or couldn't justify buying at retail later on! If you liked the wine at $300, and would have been willing to drink it if it remained at $300, why in God's name would you think twice about drinking it later as it increased in value? That kind of appreciation means you made a damn good decision to buy the wine in the first place.

PH

I wouldn't consider it an investment, but I have flipped a few bottles. Generally, I will hold a couple bottles of what I flip so that I am essentially drinking those bottles for "free"....

An investment implies that the purchase is with the intent of resale some day. Every wine I purchase is with the intent of eventual consumption. Perhaps if I had started collecting bordeaux wines in the sixties I might feel otherwise.

Dick

quote:

Originally posted by PurpleHaze:

quote:

Originally posted by Foghorn:
However, when the value of the wine appreciates well above what I would be willing to pay for it, I'm not so keen on drinking it anymore. Kind of like if you had bought '03 Latour around $300, but now you can sell it for close to $800

I've never understood this reasoning, although I've heard it often from folks who I respect. This is PRECISELY why I buy wines on release and cellar them. So that I can afford to drink properly aged wine that I probably couldn't afford or couldn't justify buying at retail later on! If you liked the wine at $300, and would have been willing to drink it if it remained at $300, why in God's name would you think twice about drinking it later as it increased in value? That kind of appreciation means you made a damn good decision to buy the wine in the first place.

PH

I think it is because the opportunity cost of drinking the wine increases as the value increases.

To take it to its extreme result, suppose the $300 bottle of Latour somehow increases in value to $50,000. Would you still drink the wine, content with the knowledge that you are guzzling a wine which you could never now afford? Or would you sell the wine, pocketing a tremendous appreciation in value?

I don't, but make me an offer that I can't refuse.

quote:

Originally posted by Rothko:
To take it to its extreme result, suppose the $300 bottle of Latour somehow increases in value to $50,000. Would you still drink the wine, content with the knowledge that you are guzzling a wine which you could never now afford? Or would you sell the wine, pocketing a tremendous appreciation in value?

If my $300 bottle increased in value 165 times, I'd sell it. This isn't a realistic analogy though. If I bought 1982 Mouton on release for $50, and I could sell it for $1000, I would keep it and drink it unless I ran into economic difficulties.

PH

PH: But the point of my example was that there was a price point at which you (and virtually everyone else) would sell the wine. In other words, all we are really talking about therefore is a sliding scale. You might not sell the $50 Mouton for $1000, but there are many people who would. But you would certainly sell the Mouton for $50,000. So somewhere in between there is a line which you would cross from "Hold" to "Sell". Everyone has a different price point, depending on their finances, love of wine, etc... But in the end, we all make economic decisions.

Personally, I would have a hard time deciding whether to drink or sell that 82 Mouton for $1000. But what if you had a case of it, that you bought for $600? Would you sell some of it? Would you drink them all?

Rothko hit the nail squarely on the head....."opportunity cost". PH, I understand what you're saying, but as Rothko pointed out, we all have different price points. Quite frankly, I have NEVER tasted a wine that was worth $300/bottle to me. I even have a hard time putting a worth of $100 on a bottle at times, and I don't care what my financial situation is. I could be Warren Buffet and that $300/bottle still wouldn't be worth it to me.

Last year I bought Scarecrow, and at $100/bottle I was willing to see what they might be like. As soon as they hit the stratosphere and were going for $500+, I suddenly had no desire at all to try one.

quote:

Originally posted by Rothko:
PH: But the point of my example was that there was a price point at which you (and virtually everyone else) would sell the wine.

I jump into the ring for 60 seconds with Mike Tyson for $10 million dollars, but it isn't a realistic scenario either.

Personally, I would have a hard time deciding whether to drink or sell that 82 Mouton for $1000. But what if you had a case of it, that you bought for $600? Would you sell some of it? Would you drink them all?

All thngs remaining equal, I'd drink every damn bottle!!

I've never sold a bottle of wine that I've purchased, and I have a few that have appreciated many times what I paid for them. I just haven't had the kind of value increase in any of my collection that's given me pause about pulling out the corkscrew.

I think examples like Foghorn's (the $300 to $800 price move) are the ones that I have the biggest problem understanding. If you can conceive purchasing a $300 first growth for consumption, I don't think drinking it when it's tripled in value is that big of a deal.

PH

In Britain the tradition used to be that you bought en primeur and then sold half your stock 10-20 years later when the wine was ready, so that you could use the proceeds to buy that year's vintage en primeur. This is not flipping or even investing- it is creating the self sustaining system that is a well run cellar. For some inexplicable reason I don't seem to be sitting on top of that cellar right now, but I can still dream of returning to the old ways! The only thing to be said for wine as an investment is that if all else fails you can always drink it.

What has bothered me about wine as an investment is the drinkability of it. Wine is one of the few investments I can think of which only has value as long as it is unused. Use (drink) wine, and it becomes worth nothing. I guess that wine is similar to a commodity like frozen orange juice concentrate (anyone see Trading Places recently?) or pork bellies, but no one buys those commodities for long-term storage. Even art can be used (displayed) and it won't diminish in value because of the use.

Wine has an age after which it actually loses value, and then picks up value again. Few people will buy a 1955 bordeaux these days, because it is past its prime. In 200 years, that 1955 bordeaux might be worth a lot of money, much like a 1788 bottle of intact bordeaux might be worth today.

That 1955 Rothko painting however, is going to keep going up in price.

I don't know about arbing wine (4 cases of calcab = 1 case of bdx?), but by definition it has to be an investment, and a relatively good (if not safe) one. Since the product is perishable at an unquantifiable rate, the burden of risk is on the buyer, not the seller.

quote:

Originally posted by PurpleHaze:
If you can conceive purchasing a $300 first growth for consumption, I don't think drinking it when it's tripled in value is that big of a deal.

Look at it this way. The 'consumption value' is $300. But you just drank an additional $500 along with that consumption value, which is way more than I'm willing to pay.

I buy wine at a certain price that I am willing to pay for it TO DRINK, the 'consumption value'. If the wine value suddenly exceeds that price, I'd rather have the cash in hand, which is more than I would be willing to buy that wine at. So, actually I do look at wine the same way I look at investments. Every stock I own I review frequently. I ask myself, "would I be willing to pay the current market price for this stock today?" If the answer is "no", then I usually sell it. Same for wine.

Not me. I bought 2000 Cos D'Estournel around $70. It's $120 now from reputable sources.

By the time I'll be ready to drink it, it'll be $200+ or so. I woudn't pay $200 to buy a bottle of it in 10 years (except at a restaurant,) but I'll drink my perfectly stored bottles of Cos a decade from now with my friends and smile. No worries.

I guess it's all a question of where we draw the line.

PH

I'm more of a buy and hold investor myself. My stocks appreciating to more than I paid is the whole idea, for me. Not so much so for my wines. However, my wines still appreciate over time as does my appreciation for them.

I would be too tempted to consume my wine 'investment'. So, I just collect what I think I would enjoy later. There are wine funds you can invest in(International Wine Investment fund). Check out premier cru UK...

Funny how so many people think Bordeaux is so expensive, that the Bordelais are ripping us all off. But we still think of the wine as a good investment? Even 2005?

Maybe they're not charging enough.

I agree with some of the opinions above regarding the fact that wine is, indeed, a 'commodity'. However, as with many things (art in particular) if you buy what you like, and not buy 'to invest', you'll generally enjoy seeing your favorite purchases increase in value nicely. However, as a conneseur, you most likely don't care about the increase in value, as the biggest reason to 'cellar' is to take advantage of purchasing great wine at 'release' prices, to enjoy later when ready for consumption.

Reasons to 'sell some': Wine is a 'cash' holding in the sense that it is not 'tracked' or regulated by the government. Profits are not taxed, as it is considered a 'consummable'.
Reasons not to 'sell some': You originally purchased the wine you have because it's damn good wine at a damn good price. Meant to be enjoyed.

Each of us purchase wine for many reasons. Often because it's one of the most sociable grand consummables one can make. What's better than sharing a great wine with appreciative friends (similar to smoking a grand cigar with a friend). Occasionally we may all come to a point at one time or another, that we sell a great wine that has appreciated beyond that personal 'sell' point we do indeed ALL have. Meanwhile it's just so fun to collect and so great to consume. It's the ONE commondity that is truly a 'no lose' purchase.