Ever thought about investing in fine wine but didn’t know where to start?
Part 3 in our 3 part series – we have teamed up with Robert Bentley of Foremost Wines to give you the complete low down on whether you should invest in fine wine and how to build your collection.
Read Part 1 Setting your wine strategy
Read Part 2 Five key questions to ask when investing in wine
Part 3: Do It Yourself Guide to Building a Fine
This is the final post in my wine investment trilogy. The first concentrated on setting a strategy based on the amount you are able to comfortably invest considered against ones own interest or passion for wine (What’s your fine wine investment strategy?). The second set out the five key rules of fine wine investing (Five key questions to ask when investing in fine wine?). This article sets out how to develop your wine buying strategy as an “Opportunist” – passionate about wine but lacking the funds to buy premier league wines in significant numbers.
I do not have the financial funds to buy expensive fine wine when ready to drink. Therefore, my buying style is “Opportunistic.” I represent the Arthur Daley or Del Boy part of the wine investment spectrum. At the far end are the Donald Trumps who have the financial clout to buy practically any top class wine. Therefore, I find the time to exploit price opportunities. I store or cellar as best I can in order to reap the rewards of careful planning, frugal buying and sometimes selling on a half dozen or so bottles to recoup a small gain. Thus, my investment strategy has been to set a budget knowing I will generate very little return – if at all.
An “Opportunist” considers seven questions when building a small but fine wine collection;
1How do I calculate my annual rate of consumption?
Consider two groups: what you require for everyday use and memorable occasions requiring fine wine. Everyday wine requirement is self-explanatory but my fine wine is only drunk at special dinner parties. Each year, I buy 3 mixed cases of reds, sweet whites and ports. This roughly fulfils my annual requirement for holding 4 select dinners, each with 8 to 10 guests. However, my selection may require 10 to 20 years of aging. Thus, my stock pile of over 30 cases just about meets my current fine wine needs.
2Do I have the fortitude to be Patient?
The answer must be YES! The wait is long but the rewards are mouth-watering. Fine wine needs time to appreciate in price and drinkability. Don’t forget, buying early avoids the financial pain of paying inflated future prices.
3How should I store my wine?
Early in my fine wine buying, I stored cases on their sides in a cupboard – not ideal. By the time my cellar had grown to approximately 10 cases, I was fortunate to move into a house with a cellar. There was some temperature variation during the year but not enough to concern me. Several years later, to accommodate a growing family, I moved to a bigger house without a cellar so I bought large “wine caves” each capable of storing 180+ x75 cl bottles. My occasional wines (drinking in 6 to 36 months) are kept in a cupboard under the stairs. Wines made to be drunk young are racked in the utility room and consumed within 6 months. If all or the majority of your premier league fine wine is to be sold sometime into the far future, then it may be best to use a reputable storage agent – see Jancis Robertson‘s blog on (Where to store wine?).
4What does opportunistic buying entail?
There are several approaches to consider. Regularly monitor provincial wine auction lists. Fine wine prices will not necessarily be cheaper than the established London houses. However, I sometimes pick up “one-off” lots of reds that interest me. Questionable storage may affect quality but as long as the price is low I may take a small gamble and buy. When I am on holiday in Europe, buying ex-cellar or from other outlets, normally provides the best quality/price value. However, research prices prior to purchase. Many a time I have tasted at a grower only to find their ex-cellar price to be more expensive than local or UK suppliers. The internet is a good place to check prices. If you buy, factor-in delivery, VAT and money exchange costs into the total price. Plus, ask how the wine has been stored?
5How do I know if I am buying good wine?
Always try before you buy. Attend tastings provided by wine merchants or wine clubs. Holiday trips to France, Spain and Italy supply great wines. However, I always do my pricing and quality homework before each visit. I taste … if I like… I buy. Experience dictates how I segment my purchases – everyday or fine wine. However, very often it is impracticable to taste for all sorts of reasons. Following wine critique recommendations may be sound. Belonging to a wine club is a good idea. For example Foremost Wine Club carries a wide range of premium and everyday wines. They also provide a ‘Wine Ferret’ service which helps club members source their favourite or hard to find wines from around the world.
6What is the optimum number of bottles of fine wine to purchase?
Timing when a wine will reach its peak can be problematical. Good wine guides, expert advice, personal experience help to estimate the right time to drink. It can be a little hit or miss so I try to buy a minimum of 3 to 4 bottles of fine wine from the same vintage/grower. For me there is the fascination of seeing how the wine evolves over the years. Tracking progress, educates and builds confidence which helps when assessing the future peak drinking time of the remaining cellared bottles.
7How do I build my wine knowledge?
Wine qualifications, expert guidance and books are of course great ways to increase your wine wisdom. Yet, when all the text books and guidance is absorbed, tasting favoured and new wines is the only way to learn. Over time, you build a mental taste picture. Sampling many wines will build your confidence. As time progresses, you will gradually reduce the number of wine selection errors. Rely on independent wine merchants or wine clubs to improve your knowledge. Foremost Wine Club provides regular blogs, events and links to wine websites.
I hope you’ve found this trilogy of wine investment posts interesting and useful. Above all, remember like all investment, valuations can go down as well as up so financial returns may be slight. For me, the promise of drinking fine wine, accompanied with great food and shared with old friends is all the rate of return I need!
If you invest in wine to make sure you update your insurance cover or take out home insurance with collectibles cover. Find out more here.