Cincinnati Financial : Buying wine for fun—or profit?

Wine is no longer simply something you drink; wine has become a serious investment commodity, increasingly so in the past decade. More than ever, wine has the capacity to appreciate in value to the point where the current value of certain wines can far exceed their original purchase prices.

Not every wine, however, increases in value. Some believe that as fine wines age, they become more valuable, but that is not always the case. For instance, the 1999 Chateau Mouton Rothschild, a First Growth Bordeaux, cost $140 upon release and currently sells at auction for around $374. By contrast, the 1999 Chateau St. Jean Cinq Cepages, a Bordeaux blend from California, sold for $80 upon release and currently sells at auction for $33. Both have matured well and are drinking better than upon release, yet one has appreciated while the other has decreased in value.

So why did one wine more than double in worth and the other lose half its value? Basically, a small number of wines in the world are deemed collectible, and they are the ones most likely to increase in value. Most are classified Bordeaux, but can include top Burgundies and Champagnes. Some select wines from other parts of Italy and from California can appreciate as well. These are often from wineries with long histories and track records for quality, and always of relatively limited production.

But mostly wines appreciate because they have a history of appreciating. It is somewhat circular, but the past success of these wines at auction breeds future success.

When assembling a wine collection, should you buy from or shun this select group of investment grade wines? It depends largely on your intentions. If your collection is meant solely for personal consumption, you can enjoy countless excellent wines, such as the St. Jean Cinq Cepages, that will provide years of drinking pleasure, but represent a questionable investment. Of course, this lack of collectability can make them relatively good values. If, however, you might be interested in selling your collection at some point, you might want to protect yourself by focusing on the wines with a history of appreciation. Just don't expect to find bargains. A certified wine appraiser can help you make an educated choice.

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This blog post is part of a continuing series offering advice on assembling and caring for a wine collection in your home. Additional information is available atthe author's website. See yourlocal, independent insurance agent for advice on coverage to protect wine and other items of value.

© Copyright 2017 Neil Kaplan; used by permission.