AS DISCUSSED in my last post, wine is no longer just a beverage and has emerged as a full-fledged investment commodity. It is clear, however, that not every wine will increase in value, and wines that increase do so at different rates. Are there patterns and trends?
The short answer is yes—and no. From 2011 to 2012, for instance, Bordeaux auction prices took a major correction after the 2010–2011 peak driven by demand in Asia. Since then prices have stabilized, and Bordeaux once again looks like it might be a good investment opportunity. Burgundy has shown the greatest and steadiest growth among the major wine categories, and the absence of dramatic short term fluctuations certainly suggests a reliable and stable commodity. California cult wines, however, while increasing in auction price 10.6% over the past five years, have done so with frequent fluctuations, including an 11.9% drop from Q1 to Q4 2011, and changes of –6.8%, +8.8% and –6% within the period from Q1 2015 to Q3 2016. Moreover, there is little consistency within the category, with different wineries’ offerings increasing and decreasing dramatically in value within the same time frame.
These are the primary collectible regions. As for some of the others, such as Port, the Rhone and Italy, Port seems to have the steadiest long term increases, while the Rhone and Italy show more modest growth and appear subject to periodic fluctuations. It becomes evident, then, that there is no hard and fast rule. What further complicates the landscape is the relative youth of wine as a collectible commodity, the emergence of Asia as a new yet powerful market, and the possibility for change in quality and fashionability of a given winery. In addition, the strategy of limiting investments to established blue chip wines is not necessarily a guarantee of stability, as can be seen from the Bordeaux bubble mentioned earlier.
Ultimately, investing in wine is a unique enterprise. Fine wine’s dual status as investment property and luxury beverage renders it subject to different influences and forces than any other commodity, and this is most definitely reflected in the changing values of wine.