IS THERE A WINE COLLECTION? That is often a question worth asking.

More than ever high net worth individuals own wine collections, with a recent survey by Barclays finding that roughly 25% of such people own significant wine collections. For example, our practice recently appraised a cellar in a disputed divorce with an appraised value of over $3 million. This was an extensive cellar of over 1,200 cases, but with prices of aged wines often topping $200 per bottle it does not take much for a cellar to become an important asset. 

In the context of insurance, divorce, estate and other situations, therefore, the existence and significance of a wine collection should be examined, much as one would for art, jewelry and other collectibles. Whether in the context of risk management or pursuant to an unfortunate event, all potentially valuable assets need to be accounted for, wine among them.

Establishing the existence of a wine collection, however, does not end the analysis. There are several different standards by which wine can be appraised, and the disparity in valuation can be significant. For example, some people would argue that a collection’s value is its full retail price, also known as Retail Replacement Value. This is the highest amount required to replace the wine with its precise equivalent and includes, as is relevant, all taxes, premiums, commissions, etc. Others, however, might assert that the Marketable Cash Value should prevail. This is the probable proceeds of a sale - perhaps forced sale - less the expenses incurred in selling the wine and could be as little as 15-20% of the Retail Replacement Value. 

Accurately valuing a wine collection requires full knowledge of and familiarity with the wines in the collection and the various standards for appraising them. Feel free to email me at nkaplan@corkcounsel.com for more information.

What’s the Value of Your Collection? Tips for Hiring an Appraiser

FLUCTUATIONS IN THE VALUE of your collection can affect your decisions regarding insurance, estate planning and more. Are values climbing, falling or steady?

Resources available through online auction databases can help you research and track the value of your collection and the current market conditions. But what if you need a more precise valuation?

For this, you must hire an appraiser, and it is a good idea to consider an appraisal every five years or so.

When hiring an appraiser, consider these tips:

  • Seek out a recommendation from a knowledgeable and trusted source, such as your local insurance agent, a museum professional, fine art dealer or another collector.
  • Contact any of the three professional appraisal organizations for access to a certified appraiser:
    • Appraisers Association of America (AAA)
    • American Society of Appraisers (ASA)
    • International Society of Appraisers (ISA)
  • Evaluate your collection and its specific needs, especially if your collection consists of various types of objects. You may require appraisers with differing areas of expertise.
  • Review the level of experience for each appraiser you are considering. You should ask for a professional resume that shows education, qualifications and previous experience.
  • Ask if the appraisal you will receive is compliant with the Uniform Standards of Professional Appraisal Practice (USPAP).
  • Request a sample appraisal to review from any appraiser you are using for the first time.
  • Require the appraiser to explain the fee structure.
  • Fees should not be based on commission or directly tied in any other way to the value of the appraised item.

Protect your collection by having it professionally appraised and insured. To make sure your collection is adequately insured, contact your local insurance agent.

Matthew Cluxton is the Personal Lines Product Manager for Valuable Articles for the Cincinnati Insurance Companies.

So What is This Master of Wine Thing?

THERE ARE NUMEROUS references in this web site to the Master of Wine, or MW. Just what is this anyway, and why do I keep on mentioning it?

To begin with we’ll turn to no less an authority than Wikipedia, in this case citing Jancis Robinson’s Oxford Companion to Wine. “The MW qualification is generally regarded in the wine industry as one of the highest standards of professional knowledge.” Basically, by the time you earn your MW you possess unfathomable knowledge about the wine regions of the world, the process of growing grapes and making wine, and the commercial aspects of the wine industry.

So how does one earn this title? According to Janet Fletcher, writing for the San Francisco Chronicle, it “requires vast amounts of study time, frightening sums of money and the stomach for repeated failure.” More specifically, prospective students must first obtain a Diploma level qualification from the Wine and Spirits Education Trust, a rather difficult process in itself which usually takes at least three years. If the candidate’s application to the Institute of Masters of Wine is accepted then he or she can embark on the three stage MW program. Stage 1 is a year of study and papers culminating in a three-part written exam. Stage 2 consists of a year of increasingly intense study, which culminates in a four-day, two-part exam. The first part is theory based—five three-hour essays on viticulture, vinification and the business of wine, while the second part is a practical exam consisting of three 12-wine blind tastings, each lasting two and a quarter hours, in which wines must be assessed for variety, origin, winemaking, quality and style. These are notoriously difficult exams. Most candidates fail and must sit for them again, which requires another year’s study. Finally, should the candidate pass both the theory and practical components, and here I stress the word “should” as most candidates never pass both, stage 3 is a research paper of between 6,000 and 10,000 words. The whole qualification cannot take less than three years to complete in full but in reality takes quite a bit more.

And that is why there are only 356 Masters of Wine in the world. The MW degree is a rare designation that indicates that its holder possesses an unrivaled level of expertise in the wine industry. Impressive to say the least, and a worthy credential after what is usually a decade of arduous study.