Even in changing economic times, Christie’s master of wine, Charles Curtis, contends that fine and rare wines are solid investments. Here, he offers advice on finding good opportunities in the market.
Q. Are rare wines still a good investment—even in the economic downturn?
A. Fine and rare wines are often seen as a great hedge against market volatility, and this is truer today than ever before. (Technically, fine wine is high-quality wine that appreciates in value over time as it improves in flavor, and rare wine is fine wine that is more than fifty years old.)
Q. Why do fine wines hold their value?
A. The two reasons that fine and rare wines are appealing investments are that the average rate of return has been very consistent over time and that it has outperformed most major market indices. In addition, volatility in the market for fine wine does not have a strong correlation with other markets, so it works well for portfolio diversification. Some investors would add a third reason—one can always reap the benefits by drinking them. This is only partly tongue-in-cheek, since many investors operate on the principle of “buy three cases, drink one free,” selling some wine to finance what one has consumed.
Q. Do you foresee rare wines holding, increasing, or declining in value over the next 12 months?
A. The market for wines seemed to reach bottom in January of 2009, and the trend has been upward since this time. I expect this to continue, barring unforeseen circumstances, over the next 12 months.
Q. Certainly some rare wines have declined in value in the economic downturn, thus presenting a great opportunity for some high-end buyers. Where is the great value right now?
A. Prices in wine are strongest for wines that are in short supply. This means that pre-1961 Bordeaux and Burgundy have held their value well. Conversely, wines in very plentiful supply, particularly Bordeaux from vintages after 1990, have seen a sharper correction. These wines are a great value, particularly the 1995, 1996, and 2000 vintages, and they will appreciate sharply with time.
Q. What are the most desirable collectible wines?
- The most collectible wines include Bordeaux first growths and their peers, including Latour, Lafite-Rothschild, Margaux, Mouton Rothschild, Haut-Brion, Petrus, Ausone, Cheval Blanc, Lafleur, and Le Pin.
- In addition, top red Burgundy is also highly sought after, including the wines of the Domaine de la Romanée-Conti, Domaine Leroy, Comte Georges de Vogüé, Domaine Georges Roumier, Domaine Armand Rousseau, and others.
- Beyond Europe, Screaming Eagle from California and Penfolds Grange are very desirable.
- Champagne is a niche collectible, but the limited availability of the top wines ensures that they hold their value well.
Q. Who are the most active buyers? Private collectors, retailers, the trade?
A. Trade buying has spiked since our March sale and is now very active. Retail purchases have also been strong, and buying from private clients is now picking up from clients in all major centers—U.S., U.K., Europe, and Asia, with a bit of interest from South America. Hong Kong has been particularly strong.
Q. Any other advice for wine collectors? Any tips on this changing market?
A. Now is a great time to be buying wine. Fine wine today is less expensive than it will be for years to come, particularly Bordeaux from strong recent vintages and classic California wines. You will see the best appreciation of your investment (in both vinous and financial terms) if you stretch a bit at this point and buy the best you feel you can afford, since the potential appreciation of a mediocre vintage or a secondary producer will always be less than that of the top wines.
Finally, don’t forget to protect your investment by storing your wine properly.