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How to Invest in Wines: What should you know in 2023?
January 13, 2021
Best wines to invest in 2023?
Interestingly, fine art, classic cars, handmade watches, and chronographs, especially of Swiss origin are the things that most likely come to mind when thinking about buying prestige items at auction. Of course, these are truly wonderful creations that can command incredibly high sale prices and transform your investment portfolio.
But there is one investment alternative that is almost criminally overlooked, and that is fine wine. In fact, the best wines to invest in 2023 may bring you a much better ROI margin than many more volatile luxury assets.
Often sorted into the ‘alternative’ category when it comes to investing in desirable objects, along with rare coins, stamps, and other curiosities, wine has in 2023 become increasingly popular for collectors and investors.
In fact, the popularity of wine investment started as early as 2018, when the record for the most expensive single bottle of wine was surpassed 5 times.
Investment Wines After COVID-19
Fine wine investments in 2023 are rebounding as the pandemic fades into the past.
During the pandemic, fine and vintage wine prices started to decrease because demand was down. People were more frugal with their money, and investing, especially in less traditional assets like wine, was down. Additionally, restaurants and event centers that purchased larger amounts of fine wines struggled during 2020 and early 2021, with some 60% closing their doors during that time.
You can’t keep a good wine down, though. As the world reopens, people return to restaurants and clamor for the things they missed. Of course, increased demand leads to higher investment prices and a greater challenge to find the fine wines you desire.
In a post-pandemic world, beyond 2023, it’s crucial to select and invest in the wines you want as quickly as possible. Acting fast makes it more likely to get them at an ideal price and ultimately secure the best wine investment returns.
Bordeaux wines remain the best wine investments as of 2023. It’s also one of the top luxury investments across the board. Skip the handbags and watches and purchase some casks of Bordeaux if you want to make true gains on fine wine.
You don’t even need to worry about storing bottles of fine wine because in a modern world (2023) you can purchase wine bonds. The wine remains at a bonded warehouse where you don’t have to deal with customs or related Duty or VAT costs.
Impact of the Ukraine War on Investment Wines
Just as wine drinkers saw hope of a return to normalcy, Russia invaded Ukraine and upended a massive section of the wine industry. Several wine labels come from Eastern and Central European countries, including some notable brands from Ukraine.
The Russian invasion impacted all neighboring countries because of a shortage of required materials and shipment disruptions. Since the Russian onslaught targeted a major port on the Black Sea and made it all but impossible for shippers to pick up or drop off cargo. The trade disruption reverberated through several countries as Ukraine failed to deliver necessary materials, including glass and grain.
Closed ports mean additional travel time to reach an open one, and with higher fuel costs it’s driving up prices on all goods. The impact on the supply chain translates to inflated prices per bottle.
Some shortages can be attributed to repurposing materials for weapons, primarily glass. Edible materials were necessary for feeding the people and filling in for the lost supplies as Ukranians evacuated their homes, farms, and factories. Additionally, the Ukranians had to stop working on wine production to fight for their homes.
Vineyards in neighboring countries also halted or slowed production to support Ukranian refugees. For example, Château Purcari is a Moldovian winery in the southeast part of the nation. Located on the Ukranian border, this award-winning winery with hundreds of international accommodations, set aside the business to support Ukraine.
Thankfully, Château Purcari has not experienced any physical damage or other effects due to the war. However, the winery opened its doors to thousands of Ukrainian refugees providing shelter, food, water, blankets, and more.
Aside from supporting Ukranian refugees, bordering vineyards lost out on tourism funding they relied on to support their wine-making. Just as people started to travel in a post-pandemic world, Russia essentially cut off tourism in Eastern Europe.
Digging deeper, fine wine sales to these countries impacts the global market. Though there’s less competition with Russian wine connoisseurs, other countries are weighing in on both sides of the conflict. The geopolticial ramifications are complicated and making it even more challenging to obtain some wines.
As with the COVID-19 pandemic, the impact of the Russian-Ukranian on fine wine investment prices should settle out. It’s also possible to select wines from other parts of the world to bypass the Eastern European difficulties until things calm down.
Investment Wines during COVID-19
As the world learned to navigate the COVID-19 pandemic, the fine wine market was unfortunately not immune to economic fluctuations. Many elements contribute to the lower consumption of the world’s best wine selections, including lower tourism and fine dining, decreased income, and availability.
So, what does all this mean for fine wine investment options in 2023 and beyond?
In the simplest sense, the more expensive and sparkling wine products were the items to take the biggest hit in light of the pandemic. With the cancellation of public venues and high-class events, many popular beverage options sat in storage rather than out on tables for the public. Fairtrade and tariffs on imported wines were also significant contributing factors to wine investment decline worldwide.
When comparing the current data of the recent economic downturn from the COVID-19 pandemic to the financial crisis of 2008 and 2009, there are many parallel patterns. Because of these similarities, investing in wine can be a terrific choice in 2022 as the market rebounds over the next few years.
How does all this make wine collecting for investment a good choice in 2023?
Well, besides adding to your collection of good investment wines, there are options for blue-chip wine stocks and funds. This way, you can give your investment portfolio the diversity you want without worrying about purchasing, shipping, and storing your wine investment.
Collecting fine wines can be an expensive and consuming investment if you want to store them in your home. Alternatively, investors have a choice to keep them elsewhere at a professional facility, so your investment is secure until you decide to sell it later.
When learning how to invest in wine, consider the growth potential in the market. It is less volatile than other commodities like gold or real estate on large-scale markets. In addition, lower consumption and production limits during the current pandemic create a scarcity that helps drive up the value of fine wine investment opportunities as the market recovers beyond 2023.
These features make the best wines to invest in 2023 an excellent option for many serious investors.
Curious and unique fact, Bordeaux wines are a more favorable investment than luxury handbags and watches. Bordeaux investment wines contain some of the top performers in the market, including popular ones such as Pomerol’s Vieux Chateau Certan 2011 placing 7th, and St Emilion’s Cheval Blanc 1998 placing 8th among the top 500 fine wine investments as of 2023.
Which route is best when establishing how to invest in wine for the upcoming 2023 year? Although Bordeaux is a natural contender, many major champagne harvests were harsh, with devastating weather conditions contributing to a decline in grapes before harvest began.
Considering these extreme elements, the regional trade body, Comité Champagne, helps implement a reserve stock system to counterbalance fruitful harvest years with those not as productive. This way, the demand, and prices can remain slightly more static.
So, although the supply and demand for champagne are not similar in 2023 to previous years, many hope that the prices will not fluctuate too significantly.
As the world begins to rebound from the pandemic and consumers start celebrating in public once again, champagne investment prices can rise dramatically. This potential market growth makes champagne an excellent contender in the wine market for new and seasoned investors.
So, is wine a good investment even with the economic challenges around the world currently? Naturally, in 2023, wine and wine stocks continue to hold value and interest for investors worldwide as a luxury commodity.
What are the best investment wines 2023 will bring?
Considering the current standings, even with the changes in consumption patterns, many of the best wines to invest in 2023 could carry discounted rates to attract new buyers. One interesting element in the wine market over the past two years shows the sales of bag-in-box wine grow exponentially more than in previous years.
Consumers purchasing between two and ten liters of box wine products boosted volume consumption by 10% and increased the overall value by 8%.
The Most Expensive Wine in The World Sold during the COVID-19 pandemic (2019-2021) is….
The “Kingdoms” DOMAINE DE LA ROMANÉE-CONTI, N°1 METHUSELAH ASSORTMENT 1985 – CHP 900,000
Looking back, the most expensive bottle of wine sold at auction in 2020 was to a Swiss buyer for CHP 900,000. This “Kingdoms” by Baghera/wines star lot was the only one of its kind throughout the world and included a set of six large-format Methuselah (6L) bottles from Domaine de la Romanée-Conti.
These Domaines Prieuré-Roch wines were the focus of competitive bidding by the growing interest among the great enthusiasts and investors of Côte-de-Nuits terroirs. This niche product fetched more than double its estimated conservative value because of the high-quality and historical character of rare spirits and Chartreuse liqueurs.
Most expensive wines ever sold at auction as of 2023
Notable auctioneers such as Sotheby’s and Christie’s have their own dedicated branch for the subject, offering rare and desirable lots for sale with expert authentication. The numbers being reached before the gavel falls have shot up in recent years.
Below are but a few examples of bottles or cases sold at auction, notable for their price and/or their heritage.
DRC 1945 Burgundy – £424,000
The 2018 Sotheby’s Wine auction saw the world record for a single bottle of wine being broken repeatedly, with this particular investment wine ultimately taking the top spot.
Domaine de la Romanee-Conti, a French estate with over seven centuries of experience, holds the reputation amongst collectors as being the best source of the world’s best wine as of 2023, and this bottle of 1945 vintage may very well be just that.
If you wish to pour yourself a glass of heritage and history, you may need some substantial capital to do so, as there are now only 600 bottles of this lot in existence.
image source: https://www.independent.co.uk/news/world/europe/wine-world-most-expensive-bottle-burgundy-1945-sothebys-auction-a8583326.html
1907 Heidsieck & Co Monopole Champagne ‘Diamant Bleu’ – c£200,000
This bottle is an example of how a wine’s story can also add to its investment allure.
Recovered from the seafloor over five decades after the ship it was on board was sunk by a German U-Boat, this champagne sold at 228,000 euros at a Moscow auction.
Hopefully, the taste of this rare wine hasn’t been tainted by unwanted notes of saltwater.
Chateau Margaux 1787 – c£180,000
Coming from a renowned French vineyard and being over two centuries old, it is no surprise that this bottle of Chateau Margaux commanded 191,000 euros at auction.
But it transpires that age and quality are not the only reasons this wine bottle was so highly sought after by investors. It had in fact been owned by Thomas Jefferson, third president of the fledgeling United States, which elevated it beyond a ‘regular’ bottle of 1787 Chateau Margaux.
Unfortunately, the bottle was dropped not long after it was bought at auction.
Six bottle case of DRC Romanée-Conti 1996 – $134,750
Cases are also an option for the prospective wine investor.
If you’re a wine enthusiast, and the idea of buying and reselling without tasting the sublimity of what you’ve purchased feels almost sacrilegious, then a case might be the best investment solution. Here, you can buy 6 bottles in a single fell swoop, savor and enjoy one and sell the 5 individually. It might not be the most efficient strategy from a wine investment perspective, but sometimes you’ve simply got to treat yourself.
Of course, much like the other areas of investment, there are many strata when it comes to buying and selling wine. Six-figure single bottles are the upper echelon, and there are still plenty of desirable yet moderately priced wines that can still be a valuable addition to your investment portfolio.
Some Chateau Lafite-Rothschilds can be had for as low as £2,000 and there are plenty of online auctions that can help give you an insight into the market itself. Equally, you might think you have to wait decades to make any return on your wine investment – in fact, experts have advised that between 5-10 years is the optimum length of time for reselling.
Wine prices at auction have increased roughly threefold over the last decade, and this upward trend is likely to continue as more people are drawn in by the relative security of this investment market and the inherent charm that comes with trading objects with a great deal of history. A good wine can help elevate a meal to new heights, but a truly great wine could benefit you and your investment portfolio hugely.
Investing in wines…A £20M COLLECTION case study
An overseas businessman has been given a loan against his collection of investment fine wines, valued at £20m. The businessman, who chose to remain unnamed, sought the capital in order to invest in new business interests.
The £20m loan was brokered by Octavian Vaults, a company specializing in the storage of fine wine. Their well-guarded vaults are located 100 feet below the Wiltshire hills and are made from solid Bath stone.
According to Octavian’s website, this allows the temperature and light to be kept at an optimum level. One of their cellars was used during the second world war to store ammunition and was likely built to be deep underground so as to avoid enemy shelling.
Octavian’s private vault is home to bottles of fine wine belonging to 10,000 private collectors and investors.
Rumored to be among them are West End and Broadway composer Lord Lloyd Webber, and former Manchester United manager Sir Alex Ferguson, who was known to enjoy drinking fine wine with his opposite number after matches during his time at the north-west football club.
In order to provide the capital – which Octavian could not provide alone – they worked alongside Emigrant Bank Fine Art Finance, to whom they had to provide certification that the investment wine was genuine. They also had to provide proof that the wine would be kept in satisfactory condition.
It’s thought that the loan provided was equivalent to most of the wine’s investment value.
What are the advantages of investing in fine wine in 2023?
It may be puzzling to those who aren’t particularly interested in wine as to why anyone would pay so much for a glass container of fermented grapes, but there are plenty of level-headed reasons as to why it could be a safe and considered investment decision.
For one thing, much like the other previously mentioned alternative investments, the fine wine market is resilient to economic storms thanks to the niche nature of the pastime combined with the passion of dedicated collectors.
Collecting fine wine is a fairly practical and low-maintenance pastime as well. Hanging fine art requires wall-space and special lighting to minimize fading; watches need cleaning and routine services; classic cars need automotive pampering and a garage that isn’t filled with old paint-cans and spiderwebs.
But even with the best investment wines, all you need is somewhere dry and cool to store it safely (a cellar is the most obvious choice) and then you simply leave it to accumulate value, worry-free.
The inherent rarity that comes with a vintage case or bottle is one of the strongest aspects of what makes fine wine investment desirable both to a buyer and a seller.
If you had £200,000 to invest in something, and you bought, say, a Ferrari 488 or a McLaren 720S, then you’ve got yourself a fantastic supercar, but you’ve also bought something that will one day be superseded by a newer, more advanced model.
But a 1937 magnum of Bordeaux that is one of a thousand simply remains what it is, and won’t be relegated to obscurity by a newer, better 1937 magnum.
What do the Best wines to invest in 2023 have in common?
Place of origin
As you will probably know, there are wines with protected places of origin, the most famously sparkling white wine from the Champagne region of France.
In the same vein, the estate or vineyard where the grapes were grown and subsequently fermented and bottled is key when it comes to the best wine investment opportunities in 2023.
Prestigious wineries and chateaus have accrued reputation and thus desirability over time, such as Musigny, Romanee-Conti, Chambertin, etc. Researching the history and appeal of a winemaker is an advisable step before confirming your decisions on the best wines to invest in 2023, and beyond.
Everyone knows the phrase ‘aged like a fine wine’ and naturally, it applies to wine investment.
Many of the most valuable single bottles ever sold at auction were first pressed and bottled pre-1900, with some being as old as 1789. Of course, age alone does not generate worth, but it is a key factor in determining the best wines to invest in 2023.
Proof of origin and the history of the bottle/case. Auctioneers will of course make sure that all fine wine has the proper certification and proof of authenticity, but this is still something to bear in mind when buying or selling wine as investment. Fakery and deception are the nemeses of any collector, and keeping your guard up is key.
A closer look at the factors that determine
the best wine investments in 2023
Here are a number of factors to look out for when you’re trying to assess the value of your wine investment in 2023. It can take years of studying and expertise to put a precise figure on a bottle, but by following this checklist you’ll certainly be able to figure out if your bottle is fine wine or a dud.
The first – and easiest – thing to do when assessing the best wines to invest in 2023 is, is to look at the region in which the wine was produced. Was it harvested in a well-established wine region or a less developed wine region?
Wine from a country such as France, Italy, or Spain is far more likely to be valuable than a wine from the USA, or European countries with less of a long-standing wine tradition, like Germany.
You then need to look closer and figure out which region within the country of origin your investment wine was harvested in. Certain regions are well known as producers of premier wine, and this will affect the investment value of your bottle.
However, don’t make the mistake of assuming that your bottle of investment wine is valuable just because it’s French, Italian, or Spanish; wine harvested in one of the premier wine-growing regions in California could well be more valuable than a lesser French wine.
Terroir is a word that is overused by wine connoisseurs and investors, and one that often confuses those not in the know.
So what does it mean?
Terroir is the French word for ‘land,’ and it refers to three main factors; climate, soil, and terrain. These three factors affect the way grapes grow, and can therefore have an impact on the overall flavor of the end product.
Climates being cool or warm can affect the sugar levels of grapes, with a hotter climate linked to high sugar content. There are hundreds of soil types that can affect the flavor of a wine, and while it may take some research, this is worth learning about if you are serious about investing in wine.
Finally, the terrain can have an impact; grapes grown at different altitudes, and at differing distances from a body of water can both have an impact on how your investment wine tastes.
Another factor people may be referring to when they use the word terroir is the winemaking tradition of the region.
So how can this be used to value a bottle of wine, and determine the best wine to invest in 2023?
Wines from certain terroirs around the world are more valuable than others, so do some research on the wine’s terroir and see if it’s particularly notable. If it is, your wine could be quite valuable.
Age is an important factor when assessing a bottle of wine for investment purposes.
Best wines to invest in 2023 do not have to be old to be valuable, and a bottle being old does not automatically make it good in its own right, but it’s certainly a handy indicator of value. Investment wine that is decades old may well be highly valuable, it’s just that you have to take other factors into account.
Additionally, you need to consider the time taken to make the wine, not just the year of the harvest that’s printed on the label. Investment wine that has been aged for 6 years in the barrel is likely to be far more valuable than one that’s been aged for a few months. Do some research on your particular bottle, and you should be able to find out how long it was aged.
In the past, you’ve probably heard a wine connoisseur refer to a wine as being from a ‘good year’.
What does this mean exactly?
What they’re referring to is the year the grapes were harvested. As with any agriculture, the yield of a harvest can fluctuate. There can be bad years, with not enough sun or moisture, and the grapes can turn out badly as a result. And then there are good years, where all of the factors affecting harvest come together to result in perfect grapes, and a great tasting wine.
Of course, this wildly differs by region; a good year in Bordeaux may have been a terrible year in Tuscany.
Do your research and figure out if your investment wine was part of a good harvest. If it was, you’re more likely to get a good price for it.
From Vin De Table (table wine) at the lowest of the rungs of classification right through to Vin de Pays and Appellation d’Origine Vin Délimité de Qualité Supérieure (AOVDQS) there are many varieties within these prevalent classifications. These distinctions carry great reverence and influence popularity due to their superiority.
Worldwide these investment wines are seeing new areas of demand in the global market and are adjusting accordingly. These new pools of wealth are exactly that, impressively lucrative, dynamic, and contemporary demographics of a new rich.
Forbes Magazine cites the dynamic shifts in the ever-changing distribution of wealth and the prevalence of high-net-worth individuals worldwide as being more concentrated in China than in previous years. In fact:
‘There are 63,500 ultra-high net worth individuals with assets of more than 100 million yuan’ Forbes.com
The world’s most expensive fine wines from Bordeaux, Burgundy, Rhône, Champagne, and Spain have seen phenomenal growth in sales in Hong-Kong, the gateway to China and to new Asian markets, as a result of this re-distribution of wealth.
Many thought-leaders have put the maturity of this market into question, its sensibilities and tastes are not yet mapped, however, there is a clear spike in demand.
Berry Brothers and Rudd – revered British fine wine and spirit merchants – have said that although the UK continues to ‘dominate’, China is displaying huge growth as stated below:
‘China is becoming an increasingly important player in the fine wine market, and for Bordeaux in particular Chinese wine lovers are the 2nd biggest buyers of top Claret by volume behind Germany, and the 3rd biggest by value, behind Hong Kong and the UK.
The pace of growth of Bordeaux imports in China, however, far outstrips that of every other country.’ Berry Brothers and Rudd – Fine Wine Report
Although China is the 2nd biggest buyer of top claret it sits in 11th and 20th place in terms of overall export value for fine wines investment generally, and when we look at sheer volume consumed China generally leaps up to 14th ahead of Hong Kong in 16th.
Some of the biggest names in the industry commented on the future of the wine market in Hong- Kong and had very high hopes. Eddison Leung said that:
‘Hong-Kong is the window to China… [and] to an audience of sophisticated consumers who are well educated in this regard and have purchasing power. The average purchase prize is between 60 and 120 euros.’ Eddison Leung in – ‘Hong Kong’s fine wine scene.
The fine wine report states conclusively that ‘It is clear that Burgundy is looking to target China as a major market for the future.’ And for good reason, as the distribution of wealth changes with the dynamism of 21st-century economics, there will surely be new surges in demand for luxury products – including fine wine – overseas.
Just one of these factors positively applying to your bottle in isolation is unlikely to make your wine valuable as an investment (though I’m sure it will taste good). However, if two or more of these factors apply to your bottle, you could well have a valuable piece on your hands, and most likely one of the best wines to invest in 2023.
All in all, if possible, I would recommend taking your investment wine to a wine valuations specialist before making any hasty decisions on buying or selling
The risks of investing in fine wine
Faux Fine Wine
There are always risks in investing large sums of capital in liquid assets, from the scams of the early 2000’s to modern sophisticated counterfeiters.
It is not difficult to see why – during the massive fine wine investment boom of the early 2000’s – that the draw to wine counterfeiters was so high. Landbank fraud was on the rise, the metropolitan police reported in this period. In a telegraph article from 2011, it was said that
“Fine wine investment fraud is the latest in a long list of scams and frauds costing UK consumers over £38bn a year, according to the National Fraud Authority.”Matthew Wall |Saturday 25th June 2011
Top Ten Wine Frauds in History
1. The Jefferson Bottles (1985 – present)
In April 1985, German music promoter and wine collector Hardy Rodenstock claimed he knew of an 18th-century home in Paris that exposed a hidden cellar during demolition that contained close to 100 bottles of wine – Over 20 of these engraved with the initials ‘Th.J’.
Later that year, Christie’s-in-London auctioned an old bottle engraved with the scribbled notation ‘1987, Lafite, Th.J’ claiming it belonged to a collection of old French wines owned by the third U.S president, Thomas Jefferson.
Kickstarting a buzz in the rarified wine world, collectors from all over the world rushed to obtain one or more of the remaining engraved Th.J. bottles. At the end of the 1980s, Bill Koch paid 500,000 dollars for four bottles.
Decades later and fast forward to 2005, The Boston Museum of Fine Arts prepared an exhibit displaying Koch’s eclectic collection of rare wines and asked for the provenances of the Jefferson bottle.
Koch hired a former FBI agent who sent an investigator to Jefferson’s estate to research the connection between himself and the discovered bottles. As a meticulous record keeper, it was concluded to be doubtful Jefferson ever ordered or owned the vintage wine as no records revealed any evidence.
2. Brunello di Montalcino – 2008
Brunello is the name of a particular strain of Sangiovese and by law, Brunello di Montalcino should be 100% Sangiovese grapes grown in the Montalcino area and aged a minimum of 5 years before it’s released for sale.
As discovered in the 2008 wine scandal coined ‘Brunellogate’, producers of the bottles were liberally adultering their supposedly 100% Sangiovese wines with more inferior grapes of other varieties such as locally grown Merlot and wine from a southern Italian region, Puglia. Adding grapes from other regions stretched out the wine, making it darker in colour, bigger in body, richer in tasting and more appealing to international palates.
3. Red Bicyclette – 2010
Supposedly a Pinot Noir from the Languedoc region, Red Bicyclette was distributed by E&J Gallo in the US, selling around 18 million bottles. When the French authorities investigated it was discovered that only a fraction of the wine was a Pinot Noir and the main bulk was created from Merlot and Syrah.
Fines were given totalling about 180,000 euros and sentencing was limited to financial considerations due to the fact no injury or personal harm was caused.
4. Georges Duboeuf– 2005
In a trial that rocked the French wine world, wine icon George Deboeuf was fined 30,000 euros for fraud concerning the origin and quality of wines after it was uncovered about 300,000 bottles of wine produced by his estate were illegally blended with lower-grade wine rather than a single source.
Deboeuf denied any responsibility, blamed it on human error and stated that less than 200,000 litres out of the 270 million litres he produced overall were affected and none of these had been sold to consumers around the world.
5. Austria and antifreeze– 1985
In 1985 the antifreeze scandal came began to circulate after it was discovered that during production several Austrian wineries added diethylene glycol into their wines to make them sweeter and more full-bodied.
An investigation was launched after one of the producers accounted for unusually large quantities of diethylene glycol on his tax return and German labs confirmed its usage.
Several winemakers were arrested and millions of bottles were destroyed. The scandal had a detrimental effect on the wine industry throughout Austria, with exports only returning to pre-1985 levels in 2001, nearly two decades later.
6. Italian methanol scandal – 1986
In 1986 one year after the antifreeze scandal, a fraudulent Italian winemaker mixed lethal levels of methanol into his wine. 23 people lost their lives as a result and over 90 people were taken to hospital after being poisoned. Giovanni Cirvegna and his son Daniele were charged with multiple accounts of manslaughter.
The scandal rocked the Italian wine industry and led the government to tighten up its acts and enforce stricter control measures over wine production.
7. Dishonest blending practices in Bordeaux – 19th century
Wines from Bordeaux would often be blended with stronger ones from the Rhone, Spain or the Languedoc region to improve both colour and strength. Across several centuries it was common for winemakers to use a blend of wines from the ‘high country’ and it was the additions of wines from outside of the region that sent Bordeaux’s wine popularity soaring.
In 1905 reports of dark and heady wine in barrels from North Africa and the Midi were being shipped to the UK, bearing the names of their respective chateaux and stating to be 100% Bordeaux. This shared a likeness to the mixing of North African reds to bulk out concentration, colour and alcohol content.
8. Champagne investment scam– 1997
During the late 1990s the night before the Millennium, a call went out stating there isn’t enough Champagne left in the world to celebrate what was expected to be the ‘biggest party for a thousand years’.
To the rescue came Lee Rosser, Craig dean and Julian Blee, three men from a Paris-based wine investment business who persuaded people to purchase the vintage wine from 1996 and 1997, Champagne Lantz, for £30 per bottle.
Sales amounted to over £4.5 million, promising their clients they could secure their purchased bottles of champagne in a bond before selling them at pre-arranged auctions before the Millennium, achieving a yearly increase of 35% on the original investment.
The downfall was that the auctions did not exist, and it was both a ruse and a sales tactic to increase sales. Not only had no auctions been arranged, but the bottles of champagne were also worth significantly less than claimed, leaving no profits to be made at all.
9. Rhône producer accused by daughter– 2010
One of Châteauneuf-du-Pape’s largest producers, Guy Arnaud, split his 51-hectare estate into thirds, with three equal shares divided between his three daughters. Each daughter expected to receive 17ha, valued at £500,000 per hectare when he passed. Two out of the three daughters agreed with the deal but the third daughter, Carole Perveyrie-Arnaud, requested her plot immediately, suing Arnaud for €200,000.
When the land was not given to her before her father’s death she acted out of anger and frustration claiming that her father was breaking appellation laws and using a blend of wines from other origins.
No evidence was found to support this claim and the case was later dropped.
10. Fake Mont Tauch in China– 2007 – 2010
Between the years 2007 and 2010 it is estimated that around 400,000 bottles of what appeared to be Mont Tauch Fitou were imported and sold at surprisingly low prices that weren’t in line with its usual retail value.
This news reached Mont Tauch’s sales team and the team were alerted due to being the sole distributor of the brand across Asia. After analysis by Mont Tauch, it was confirmed the wine was probably lower quality wine purchased in bulk from South America in well-forged packaging that tasted ‘radically inferior’.
Although trademarked, the bottles and labels were good forgeries.
Source: The Drinks Business
Macroeconomic Alarm Bells
Starting with the landscape year 2011, the return on fine wines, such as Château Lafite, Château Mouton Rothschild, and Château Margaux, had far exceeded other fine wines on the stock markets, thanks to the rising demand from increasingly affluent emerging economies such as China during the 90’s.
Ask any luxury retailer where their biggest customer base comes from and it will always be China, from luxury British goods to investment wines. It is no lie that Chinese and far Eastern Markets have a tendency to romanticize the UK’s monarchy and this trend seems to extend to the luxury goods sector as well. These countries represent new money in the luxury sector, the investment in fine and rare wines is no different.
Although China’s addiction to luxury goods is commonplace, rife, and omnipresent there are definitely macroeconomic signs throughout Asia and in China. The volatility of the Chinese stock market is occurring at a staggering degree, and recent efforts by the Chinese government led to a widespread understanding that this problem was under control.
For example, in 2015, on July 27th, the Shanghai Index dropped by 8.5 percent, the largest since February the same year. Avery Booker a partner at China Luxury Advisors said at the time:
“The stock market fluctuations are unlikely to have a significant impact on luxury consumption” , “Chinese consumers generally see the Chinese stock market as a casino, and don’t adjust their purchases of consumer goods based on its ups and downs.”
This quote seems to present an emphatically resolute conclusion, which Chinese consumers are unaffected, or will find other solutions, such as British real estate, in order to contain and protect their wealth from wild and unexpected market fluctuations.
“For the ultra-affluent Chinese consumer, these market gyrations combined with the geopolitical uncertainties have accelerated the push to extricate their currency from the Chinese economy,” Wealth-X’s Mr. Friedman said. “This will mostly manifest itself in luxury residential real estate but that impulse will spill over into other luxury purchases as well.”
Although stock market changes may have only had a slight psychological impact on luxury purchases for the Chinese.
When we look historically at this market, we may say it is one that is infantile, immature even. Online rumors have spread that talk of ultra-high net worth Chinese men mixing Coca-Cola with their wine as they disliked them so much, whether this is true or not is another question but it does bring the maturity of the market to the fore.
Fine Wine and Bribery
Luxury is about aspirations and the dream armada of consumable items. This is including fine wine and spirits for these newly rich, elites and government forces of the Far East. The corrupt landscape of these political arenas has been widely known for a long time. In a news article Good Cat Cigarettes – retailing at an equivalent of $889 in China – were amongst other luxury items that were suspected of being used to bribe officials on a large scale, as early as 2012!
Then in 2013 this all came to a grinding hault as new Chinese President Xi Jinping sharply cracked down on gifting as part of his broader anti-corruption drive, and wine (and spirits) sales began to fall.
“A market force no one seemed to have predicted had pierced the bubble. Gifts were an ostentatious aspect of the corruption Xi sought to root out — if someone did you a political favour, or bent a rule, a gift was given and received. Many believe that the wines given were often never even consumed, and that fact didn’t really seem to matter. With no more gifts, the market began to slow. As demand currently remains soft, prices sit near five-year lows, with many of the finest wines still off nearly 40% from their gifting-induced peaks in 2011” VinePair.Com
In August 2015, the Bordeaux region reported a drop of 13% in sales and a 9% decline in exports to China, it’s hard to see how these were not directly related.
The global luxury conglomerate LVMH reported a slowing of sales across the board whilst wine and spirits weighed the most on the company’s balance sheet.
China has been said to have an insatiable thirst for fine wine investment, yet the decline in the market induced by a ‘market force nobody could predict’ represents the challenges facing luxury brands. These brands are having to retain a market share in an immature and volatile stock market. The world of gentleman investing in 6 casks of Merlot, drinking 2, and selling 4 to buy another 6 younger wines has long since disappeared, and there are new forces at work here.
Emerging Fine wine geographical areas…
California Is Where The “Interesting” Fine Wine Is At
The Golden State of California produces approximately 90% of the wine made in the whole of the USA and is home to some of the most loved wines in the world as well as introducing some of the best wines to invest in 2023. A combination of tight supply and low production levels means the top vintages of distinguished labels can achieve Burgundian values.
Like burgundy, fine wine investment in 2023 is made up of low production levels and tight supply, with each vintage aimed at continuing to satisfy a loyal US market, as well as a flourishing market overseas for wine collectors and wine investors to achieve high returns from their fine wine investment.
A global marketplace for the wine trade, Liv-ex, stated on its California 50 index, that the average price performance of US investment wines experienced a 34% uplift in the year to 31st March 2022 which was above the general market trend of 23.2%, and the amount of Californian wines traded on the Liv-ex has increased by almost 480% over the last five years achieving record figures of 504 by the end of 2021, illustrating the perfect market for some of the best wines to invest in 2023.
High-quality Californian wines and heightened demand have led to rising prices and booming figures that show both impressive and steady wine investment returns. This showcases the importance of the right time and product for fine wine investment in 2023 to add to the growing portfolio of collectors across the world.
Speaking during Pol Roger’s showing of the wines from California’s Robert Sinskey’s Vineyards and many others, James Simpson stated as early as 2016 that California is the place for fine wine investment.
Indeed, in 2016, having just added Robert Sinskey Vineyards, and Staglin Family Vineyard (both based in California), to their portfolio, Simpson pointed very early that trends in the UK were pointing toward Californian wines. According to him, Californian wines are crucial to the continued success of Pol Roger UK.
Pol Roger is a notable producer of champagne, producing at least 110,000 cases annually. Dating all the way back to the 1860’s, Great Britain has always been the premier export market for Champagne Pol Roger.
In a statement, he said, “We think that California is the next big thing in terms of fine wine and the exchange rate is good and the UK wine trade is looking for something posh to sell, and we’re not excited about Australia, South America or South Africa.”
He noted that these additions to their portfolio were not necessarily needed but rather the companies wanted “international respectability”. He said that Staglin is likely to “open the doors” in “uber posh American restaurants.”
Although not revealing anything, Simpson also said that Pol Roger UK was looking at the time to take on another name from California. Whilst he adamantly said that California is the place to be for fine wines, as he thinks, “[…] California is more interesting than anywhere else in the New World,” he also mentioned Oregon as a place of interest for Pinot Noir.
As the world’s fourth largest exporter of wine, Chilean wine has seen something of a revolution over the past two decades, and the country is quickly growing in reputation for its quality world-class reds, from Cabernet Sauvignon, Merlot and Syrah.
In recent years, through mapping and analysis of the soils before planting, the quality and value of Chilean wines have risen and the country has developed a specialty in the production of high-quality noble and fine wines, leading to larger wine investment returns.
The Chilean wine industry has ambitious objectives, mainly to increase its export of wines with a higher case price.
With a rich wine history, Argentina is most known for producing some of the world’s best Malbecs and it is the meticulous approach of its winemakers and growing confidence in their craft that has propelled Argentinian wine into the world of fine wine at an impressive rate, leading to some of the most lucrative fine wine investment in 2023.
Argentinian wine has seen a shift over the past decade in both its quality and style as its producers focus on its freshness, fruit expression and length, translating into some of the most distinctive and best wines to invest in 2023.
Valuation of your fine wine investments
If you’re looking to pawn fine wines, get in touch with us today. Our Blenheim Street shop is based in the heart of Mayfair. Appointments can be made, but are not 100% necessary; we’re always happy to take walk-ins.
We look forward to seeing you – and your fine wines – very soon. Some of the wine we loan against includes Chateau Petrus, Chateau Margaux, Chateau Lafite and Chateau Mouton to name just a few.
We hope you enjoyed our article on the best wines to invest in in 2023 and encourage you to read further on our comprehensive blog!
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The broadening fine wine investment market reflects demand as investors seek to diversify fine wine collections to optimise growth as trends shift focus by region, vintage and brand. Critics’ scores and drinking windows are an important consideration ensuring a quality portfolio positioned for changes in supply and demand. Where previous years have seen the Power 100 dominated by the Bordeaux First Growths and more latterly Burgundy, 2020 witnessed the broadest Top 5 composition with a marked absence of Bordeaux.
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