October 17, 2008
With the economic bubbles bursting left and right, my mind, of course, goes straight to Champagne.
While you might be thinking this may not be the best time to be spending money on luxury goods, I have another angle to offer. A very wise man once suggested to me that once you make your first big chunk of money, which I am still waiting for, skip investing in the stock market and real estate and instead invest in the finest wines in the world. His thought was that if I ever needed the money, the wine will have appreciated. If I don’t need the money, I would have a whole bunch of really exceptional and well-aged wine to drink.
The world’s finest wines, from places like Bordeaux, Burgundy, Napa and Porto, have consistently outperformed most stock markets over the last 20 years, according to wine lovers.
One significant contributor to the consistently appreciating value of wine is the relative scarcity of aged wine. Ninety-five percent of all wine is consumed within 48 hours of purchase and another 4 percent within the first week. These numbers apply not only to mediocre wines that are intended to be consumed young but also applies to the finest wines as most people lack the patience to wait until their wines are fully mature.
Beyond the already scarce supply for many of these wines new buyers have also entered the market. China and India have both grown considerably as consumers of ultra-premium wines and have played a huge role in the auction markets.
There has been a lot of stirring in the wine world about the prices of the 2005 Bordeaux wines. Some of the top wines cost up to $5,000 upon release. There has been quite a bit of speculation that the wines would never sell for more than that. On the contrary, many of the top 2005 wines have already increased in value by 75 percent.
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Wine investing can be relatively tricky, but here are a few tips that can help you along the way.
The first thing to remember is that not all wine ages well and therefore will not attractive to buyers in an auction. The wines that do well are not little secret houses that nobody knows about. They are, instead, the First Growths of Bordeaux and the famous Grand Cru of Burgundy such as La Romanée-Conti.
It is also extremely important that you know your suppliers and trust that they take considerable care in ensuring that their supply chain is temperature-controlled and as shock free as possible. Another tip: research the market for a wine before making any purchases. Prices from store to store vary.
Finally, there is the matter of storage. You will need a space that is temperature controlled and humidity controlled for what you are selling is a wine that is aged in the best possible conditions.
Remember, if worse comes to worse, you will have a lot of great wine to drink.