Whether you’re planning a small investment or want to create a whole cellar of expensive wines, the choice of vineyard and provenance are highly important. Not all wines are good for investment. Indeed, around 90% of the bottles you see on shelves in supermarkets and other retail outlets, even those sold by vineyards, are designed to be drunk within 1 to 5 years.
Fine, collectable wines are a different beast altogether. The good news is that investing in wine is still a good proposition for those looking to create a portfolio with plenty of diversity. The reason is that it operates independently of the stock market – the price of a fine wine will continue to improve even if there’s a stock market crash.
According to The Telegraph recently, the top ten wine investments have increased in value by an average of 15% over the last five years. The biggest performer, Petit Mouton 2011, has increased by a staggering 165%. It’s no wonder then that so many regular investors decide to introduce it into their portfolio. As with any investment, you ideally want to buy as low as possible so that you have a chance of maximising your profits.
So which are the best choices if you are thinking about investment in wine?
The biggest regions for investing in wine are the Bordeaux and Burgundy. The top vineyards in these areas make a limited number of fine wines that are aimed at the collector. Because there’s only a limited amount, as the supply dwindles, the price goes up. The price also rises as the wine begins to age. The best performers historically have been the top 30 or so Bordeaux chateaux and this is still the best place to start if you are starting to build a cellar. According the Liv-ex Fine Wine 100 Index, some of the top wines for investment in the current market are:
With a history stretching back to 1782, this vineyard has produced a number of high quality investment wines over the years. Currently, the 2009 and 2010 vintages are the best performing. The wine reaches maturity between 4 and 25 years and is a staple in the investment world.
Chateau Rosseau Chambertin
Possibly the most prestigious Burgundy chateau with plenty of history behind it too, there are a number of Grand Cru plots. The 2012 and 2013 offerings are among the best performing wines in recent years. The neighbouring Clos de Beze also consistently produces quality wines.
Chateau Cheval Blanc
One of the few white wines from Bordeaux also figures in the list of top performers for Liv-ex. This delightful vineyard in the heart of Saint-Emilion dates as far back as the 15th Century. In 2012, it became only the fourth wine to achieve Premier Grand Cru Classé status.
Château de Beaucastel
Located in the south of the Rhone Valley, the Chateauneuf Du Pape features in the Liv-Ex top ten for 2012, a wine which is made from a mix of 13 different grapes.
Château Cos d'Estournel
Another Bordeaux wine, this time from Saint-Estèphe, it’s known for producing consistent quality and has no less than four vintages in the current top ten. While France and Bordeaux still seems to maintain a hold on wine investment and probably will do well into the near future, other countries are beginning to make their mark. Masseto, Tignanello and Ornellaia from Italy as well as Penfolds from Australia and Screaming Eagle from the USA are in the top 100.
Choosing the right wine for investment does take a lot of homework. You also need to make sure you have the right facilities to care for the wine and ensure its integrity. If you love wine and the tradition that comes with it, however, this is still a great way to build an alternative investment portfolio.
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