In the 1988 comedy Dirty Rotten Scoundrels, Michael Caine tells Steve Martin: “You can’t drink them, Freddy. They’re far too valuable.” Martin: “So you sell them?” Caine: “I’d never sell them, they mean too much to me.” For any wine investor, these are the keywords. Borrowing an epithet from stock markets, the ‘buy-and-hold’ strategy works best when taking such exotic investment routes.
Globally, wine investing has been going on for years. In India, high-networth individuals
(HNIs) are just beginning to get high on wine investing. Sommelier Magandeep Singh, author of The Indian Spirit: The Untold Story of Drinking in India, says: “Most of these wines are produced in limited numbers, only a few thousand cases every year, others even fewer. Also, these wines are not meant to be consumed at a young age, unlike most wines that are meant to be consumed within a few years of being bottled.” The value of a fine wine starts reflecting only after a few years, at least 7-10 years. Investing in wine is a long-term deal, the longer you wait, the higher the chances for the price to go up. According to industry experts, investment in fine wine can fetch an investor a minimum return of 10 to 15 per cent a year by conservative estimates. An aggressive investor willing to take risks could expect a lot more. It’s quite commonly seen that prices go up more than 100 per cent in the long run of fine vintage wines.
Pricing of premium wines
The price of these premium wines
ranges in hundreds of thousands of rupees. When the wine starts getting close to its peak drinking age, its demand peaks, too, and so does its price. But there’s a catch: The price of wine does not depend only on how old the wine is but also on the year it was made, and how the preceding years have performed since then. For instance, if you buy 2015 wine and the years 2016, 2017 and 2018 consecutively saw good or better quality wine being produced by the same vineyard, the price of the 2015 wine will depreciate in the years to come. But due to weather conditions, if wine in the following years from the same vineyard was not as good, the price of the 2015 wine would keep going up because the demand for that wine would exceed the supply.
Generally, it is recommended to hold on to your wine investments for at least 10 years, but you can also invest for a shorter term. "You can sell you wine whenever you like, but in modern market conditions, it is common to realise impressive short-term gains. As a rule of thumb, though, it is recommended that you hold your investments for three to five years at least," says Nikhil Agarwal, managing director of fine wine investment
consultancy All Things Nice.
How to invest?
In India, mostly HNIs and a niche segment of connoisseurs keep a lookout for vintage liquor to collect or invest in. If you are also considering making the jump into fine wine investment, there are specialist brokerage firms and companies that let you invest in wine. Some of the popular ones are the Bordeaux Traders in Mumbai, and All Things Nice, a wine and spirits consultancy in partnership with Amphora Portfolio Management providing wine portfolio management services in India. “Aspiring investors are advised to consult the fine wines listed on Liv-ex, a UK wine trading exchange that started in 2012, and then enlist the help of a brokerage firm,” says Alok Chandra, a wine consultant in India.
The approach to investing
Wine is a segment whose investment prospects are still understood only partially. It should not be the first thing to invest in when you start investing. An investor has to be very prudent while investing in this segment. Singh adds: “Some people believe that wine is a safer investment, but that's not true; it is the same as investing in stocks, shares and paintings. If anything, wine investments are riskier.”
Choosing the right wine
Wine experts advise investors to opt for different vintage wines from different regions. Wines from the 'Cru Classe' classifications in Bordeaux are preferred by most collectors and investors instead of the first growths like Lafite, Haut-Brion, Mouton, and Margaux. "Also, the approach of investing in wine should not be direct, unless you are a big collector of wine. The resale value, in that case, is not always rewarding," adds Singh. Fetching some of the highest custom duties and excise taxes in the world, these wines are not brought to India. They are stocked at international bonded warehouses and are bought and sold internationally on behalf of investors at best prices.
Experts suggest that before investing you should make a distinction between collecting a fine wine and putting your money in it. Investments are made to turn a profit, but if you are collecting, you might get sentimentally attached and not sell it at the right time.
All so hunky dory, really?
Other than just consulting a brokerage firm, an investor should have a thorough understanding of the category before deciding to invest in fine wines. Hence, it is necessary to understand the market properly and consult professional experts before putting in your money.
Current top wines for collectors and investors — Price of these wines range between minimum Rs 40,000-Rs 812,000
1. Dom Pérignon
2. Château Lafite Rothschild
4. Château Latour
5. First Growths Château Margaux
6. Château Haut-Brion
7. Penfolds Grange
8. Château Mouton-Rothschild
10. Château Montrose
11. Dominus Estate
12. Domaine De La Romanée-Conti Romanée-Conti Grand Cru
Source: Wine experts in India