As an alternative investment, wine is quite literally a "liquid asset" but investors need to do their research before pouring money in.
This advice comes from the head of Langton’s Fine Wine Auctions, Tamara Grischy. According to Ms Grischy, the first step in accessing this alternate asset class is the same as any other investment decision; do your research.
“Do your homework, read lots, get advice, be mindful of the costs involved,” Ms Grischy said.
“[Investing in wine] is about knowing provenance, history, cost, selling at the right time.”
Speaking to Nest Egg, she said those who love wine have a head start, explaining: “The fact that you're already a wine lover and have a passion about wine is always a good start.
“To know your topic and love your topic is probably the first point of unravelling the complexities of wine. Wine in general, as an investment class, can have some really great wins and growth if you stick to those blue chip brands from great vintages.”
Where to start
She suggests Penfolds Grange as a good start when it comes to fine Australian wines due to its strong track record and history of strong growth in value.
“You would always look for something that is very stable and steady and something that is generally consistent with the vintage quality and Penfolds across the board is a good brand to start because they've got a portfolio that has entry level, reasonable priced wines to the top level of the very expensive,” she said.
“You've got your Penfolds Grange which generally we can see — depending on the vintage quality — a 10 per cent growth in price per year in our market where you are buying back vintages.”
She also proposed consulting guides like The Langton's Classification, which is a form guide to Australian wines, or seeking advice from a wine broker for those with less understanding.
When to buy
It’s important to celebrate birthdays in wine, Ms Grischy said, explaining that wines with a “birth year” or vintage ending with an eight, (1998, 1988, 1978) can expect to have a spike in price this year as the decades are marked.
She pointed again to the 1978 Grange, which is going for about $600 on the secondary, or auction market. More recently however, the price is hitting $1,000 as a celebration of its birth year.
“If you're looking at seriously investing, focus on buying the next birth year so start looking at the 99 ended vintages because you always will get a spike in price.”
Who to buy from
As a secondary market, Langton's auctions are appealing to private sellers and buyers. So, people who have bought too much, or whose tastes have changed, or perhaps just need some cash, she said.
“It is quite… literally a liquid asset, you can turn it around and get cash straight away,” Ms Grischy said.
The majority of buyers at secondary markets are buying for enjoyment, she added. However, investors can get a good buy if they “buy smartly and know and understand, read lots, learn lots, focus on good outstanding vintages and wine brands that have track records, that have been around for a long time, you can find some growth in prices”.
However, she also suggests buyers sign up to winery mailing lists and buy direct to avoid fees that come with buying through secondary markets.
Continuing, Ms Grischy warned that there are a number of fake copies of fine wines on the market, so savvy investors need to seek advice and buy only from secure and trustworthy vendors.
How to store
Provenance is critical in wine, so the history of the wine and the way it has been stored is key in preserving value.
Ms Grischy said: “If you're [investing in wine] you need to store the wine properly because provenance and storage and history of where that wine has lived for its life is becoming more, and more, and more important.
“[If] you don't have a vintech fridge and you don't have somewhere to store it and you look for commercial storage then you've got to consider the costs of storing the wine, paying the insurance. There are costs that can be hidden that you don't consider when you're looking at investing in wine.”
Or… just drink it
Ms Grischy concluded: “We always say wine is never a failed investment because you can always drink it and enjoy it, which in the end is the whole point.”
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