|
Starting a Cellar
Beware: Serious investing in wine is not for the fainthearted
 In global terms wine is a huge subject, with some 80 countries now having commercial vineyards.
France's Bordeaux region alone has over 4,000 chateaux, each one usually making 4 or more wines. California has 1,050 wineries, each one often making 10 or more wines. That makes a
total of 26,500 wines for just two regions, and for about 25% of the wines you may need to know the vintages for the last 30 years.
Now Have Fun
We will now try to guide you through this risky exercise in which you can have a lot of
fun. We cannot guarantee results but can offer you the benefit of our experience.
Here are the Temptations
The current world record price for a single bottle is £106,000 for a magnum of Chateau Lafite 1787 purchased in 1987 by the late Malcolm Forbes of Forbes magazine. It was
inscribed with the name of Thomas Jefferson who had originally purchased it when he was the first US Ambassador to France. Defying the rule, which says all valuable
wines should be kept under lock and key in a suitable cellar, Malcolm Forbes lent the bottle to the owner of a New York city wine store and, of course, the inevitable
happened. Deciding to show the magnum to a customer, the manager carried it across the floor, tripped and smashed it to smithereens. From every corner of the
store, members of staff rushed out with coffee spoons, eagerly hoping for at least a taste of a great wine. Sadly, the contents were oxidised. Malcolm Forbes, one of the
world's greatest authorities on finance, had not invested in the world's most valuable wine but in a fragile item of Americana.
The good news is that, generally speaking, the best Bordeaux chateaux have risen 1,000 per cent since their purchase 20 years ago. The following chateaux: Petrus, le
Pin, Cheval Blanc, Ausone, Latour, Lafite-Rothschild, Margaux and Haut-Brion have been amongst the most profitable. The bad news is that they are quite difficult to find.
Many fine wine specialists will only sell you the greatest Bordeaux if you buy several cases of other, lesser wines. Even then, some estates produce relatively small
volumes and, if every multi-millionaire wishes to purchase them, inevitably the price gets driven up.
It is important to check that the wines being offered are in their original cases and in
good condition. If you are buying less than a case at a time then ensure that you actually see the bottles. Or to put it another way, only purchase whole original cases
over the Internet if you are quite certain you can trust the merchant.
 |
The WOW Investment Plan
This is intended to create a lot of fun, a reasonable profit and residual stock for your cellar.
Using units of £1,000, invested as and when you wish or can afford, develop a 10 year cellar plan. The following are the intended targets:-
(a). One-third of your purchases should be short-term buys for fairly immediate consumption. You have to enjoy your wine!
(b). One-third should be sold after 10 years to collect an estimated £2,000 per unit.
(c). One-third should be kept for longer ageing.
The likelihood is that you will fail gloriously in the attempt but it will be a wonderful
exercise. As long as you are patient, you will make a decent profit margin.
The greatest rewards come to those who discover wines whose reputations develop
substantially during the 10-year period. Take, for instance, Leonetti Cabernet Sauvignon Walla Walla, Washington 1989. In 1992, after being given a glass of this
world class red, I managed to find just one bottle - after searching 3 Seattle shops, where it cost me £18.00. But now it would sell for over £75.00 - a return of 300% plus,
because since 1992 it has won various awards. The owner and winemaker, Gary Figgins, is an extremely serious professional and it is well worth considering the purchase of any wine he makes.
Washington State offers great potential, much more than Napa or Sonoma, the prime reason being the cost and availability of suitable real estate for vineyards. America
removed 98% of its vines during Prohibition (1920 - 1933) and the revival of its wine industry didn't begin in earnest until the mid-sixties, with Robert Mondavi and Sterling
Vineyards. Then in the '70's glamorous figures like Francis Ford Coppola took a serious interest and in the '80's a wide array of financial investors joined the scene. As
a result prime vineyard sites have rocketed in price. An example would be Duckhorn's purchase, earlier this year, of Napa Valley Merlot vineyards at a reported £62,500.00
an acre. By contrast, in Washington State, there was no previous wine industry and ample desert or semi-desert land that could be purchased cheaply and irrigated.
Whilst prices have risen, there are still many openings for extending vineyard land at reasonable cost. Therefore Wine on the Web recommends searching Washington State for wine investment.
Readers can purchase literature covering the state and start developing specialist knowledge. A quick visit to Amazon.com should help. The one drawback to
contemplating Washington wines is the lack of any long track records, since most of the wineries were founded in the last 25 years. The real task is to unearth the next
star winery before it becomes common knowledge. This applies in general as well as to Washington State.
The word 'futures' is widely used for wines purchased within a year or two of production
, and which will require cellaring for some time before they will be ready for consumption. Investors purchase these usually for mid to long-term profit. Very few
Washington wineries describe any of their wines as futures and generally inquiries should be made concerning their Reserve Cabernet and Merlot.
Examination of price increases in top Napa Valley wines during the last decade has shown some good but unexpected results. Robert Mondavi Cabernet Sauvignon
Reserve 1990, originally £34 a bottle, now sells at around £50, while Dominus Estate Napa Nook Vineyard Cabernet Sauvignon 1991 cost £40 and now sells at around £103
. The point is, at the beginning of the '90's, millions of people knew the name Robert Mondavi but few had heard of Dominus Estate. In general terms, it is our opinion that
Napa prices are high enough, while the unique vineyard conditions of Washington, with its many cooler climates, offer considerable potential for investment.
Serious consideration should also be given to certain areas of the Southern Hemisphere. For instance, in Australia, Penfolds has developed an outstanding
reputation for long lasting red wines, under head winemaker John Duval and his team. Penfolds Grange has clearly become the red wine star of that continent, if not the
whole Southern Hemisphere, but as a result its price has risen dramatically. So we recommend considering two other great reds produced by the group involved. They are
Penfold's Bin 707 Cabernet Sauvignon and Wynn's Michael Coonawarra Shiraz. Another Coonawarra neighbour of theirs to watch is Parker Estate First Growth
Cabernet Sauvignon. This wine, which was first made in the 1988 vintage, is producing some stunning wines with excellent structure and is generally underpriced.
The most challenging piece of detective work is needed when approaching Chile and Argentina. Both countries are shipping increasing volumes of popularly priced, - and
now a few higher priced, - wines. Nobody should presume that they can only produce mid-range wines. In both countries there is a growing number of new generation star
winemakers searching for the right results. Dependant on soil, climate and selection of the correct vine clones, and investment in modern winemaking technology, some
will succeed. Be assured that in 10 years time there will be at least 6 or 7 world class wines coming from South America, and they may not necessarily come from the
names most widely seen now. Search the Internet regularly, many wine professionals are too busy to do so, and you may stumble across an outstanding future value.
So what to do in the meantime to start building up stocks? Here are 6 mid-priced wines (all prices are approximate), which some may consider a little expensive, but
they are not highly priced for the purpose. They should be purchased with a view to offering guests some attractive wines of character and quality, but which will also continue to improve.
White
France: Chablis Laroche Premier Cru Les Vaillons, Vieilles Vignes 1996 £24
France: Trimbach Alsace Riesling, Cuvée Frédéric Emile '95 or '96 £17 - £20
California: Cakebread Cellars Chardonnay 1996 £19
Red
France: Chateau de Beaucastel Chateauneuf-du-Pape 1996 £24
France: Chateau Gloria Haut-Medoc 1995 £18
California: Domaine Carneros by Taittinger, Carneros Pinot Noir 1996 £16
|
Last updated on July 23, 2008