Cellar Dweller: Investing In Wine
By Allison Tait, ninemsn Money
We've all heard the stories about the bottles of wine that fetch thousands of dollars at auction and everyone knows someone with an old bottle of plonk under the bed that they're certain will make them rich one day. But is investing in wine really a good idea?
Making money out of wine. It's a tempting thought, particularly when you compare it with (pardon the pun) drier forms of investment such as shares or property. But, as with other more glamorous investments such as art, jewellery or vintage handbags (no, really), it pays to do your homework.
On the surface, it seems easy. You buy some wine, pop it in the cellar and then, down the track, sell it off at ridiculous prices (bottle of 1951 Penfolds Grange at $50,000 2004, anyone?). The trouble is that wine, by its very nature, is a complex subject.
"People who are into wine shouldn't invest in wine," says wine writer Ben Canaider, author of How to drink absolutely everything (Random House). "The wines are invariably awful because they're badly kept."
Lesson one for any potential wine investor is the value of a quality cellar. "A cellar has to be 14 degrees celsius or below and constant," says Canaider. "It has to be around 65 percent relative humidity - and it has to have a lock that you can't open after 8pm. Otherwise it's a complete waste of time."
Paying to cellar your wines professionally is one alternative, but it doesn't come cheap. At cellarit.com, for instance, prices range from $1.60 a dozen for 200 or more dozen, plus charges for handling (in and out), insurance and storage boxes.
Canaider cheerfully admits that he doesn't have a cellar at all. "The best wine is like the next bus," he says. "Still coming."
The secondary wine market in Australia - based on the re-sale of wine previously purchased from retail, winery, trade and so on - is not as developed as it is internationally. But Langton's Fine Wine Auction and Exchange (www.langtons.com.au) is at the forefront of the market in this country. In 1991, Langton's released its first Classification of Distinguished Australian Wine, which is updated very five years and is widely regarded as the best guide to buying Australian wine for investment.
"Investing in wine is high risk," says Stuart Barclay, chief buyer for Cellarmasters, with a background in fine wine internationally. "If a wine is not on the Langton's list it's even higher risk."
According to Andrew Caillard master of wines, Langton's customers represent the top one per cent of the wine market, and they spend, on average, $76-$85 a bottle.
"I wouldn't suggest anyone try to make a quick buck in wine," says Barclay, adding that you can get started with about $1000 and then build from there. The key, though, is research.
"You need to identify what you want to buy," he says. "There are two types of people who spend money on wine: the first only wants to invest money and isn't interested in product. A serious wine enthusiast will put down money every year for his or her cellar. That's a classic wine investor or wine buyer."
According to Barclay, the second type has a better chance of a return. "Internationally, you might hit the jackpot one year in three," he says. "The serious investor will buy every year and ride the peaks and troughs. If he gets a win, he might sell a few cases of that vintage and use the money to refinance the cellar. Where people fall over is when they invest a lot of money in one vintage."
So, if you're not put off yet, where should you start? As with all investments, it begins with research. "Read the international wine magazines, visit the online wine sites - find out what's being bought and sold," says Barclay.
One of Langton's Wine Investment maxims is this: don't leave it to others; understand the market.
Barclay reiterates: "Keep an eye on it yourself - from the market to the wine itself. Even if you choose to cellar with a professional wine storage company, make sure it's somewhere that you can see the wine if you choose to do so."
Canaider is blunt. "Don't do it," he says. "As the Australian wine market becomes more sophisticated there'll be a lot of people left with a lot of unsellable wine. You can't predict what the market will want in 10 years time. The key word in old wine is that it's old."
We've all heard the stories about the bottles of wine that fetch thousands of dollars at auction and everyone knows someone with an old bottle of plonk under the bed that they're certain will make them rich one day. But is investing in wine really a good idea?
Making money out of wine. It's a tempting thought, particularly when you compare it with (pardon the pun) drier forms of investment such as shares or property. But, as with other more glamorous investments such as art, jewellery or vintage handbags (no, really), it pays to do your homework.
On the surface, it seems easy. You buy some wine, pop it in the cellar and then, down the track, sell it off at ridiculous prices (bottle of 1951 Penfolds Grange at $50,000 2004, anyone?). The trouble is that wine, by its very nature, is a complex subject.
"People who are into wine shouldn't invest in wine," says wine writer Ben Canaider, author of How to drink absolutely everything (Random House). "The wines are invariably awful because they're badly kept."
Lesson one for any potential wine investor is the value of a quality cellar. "A cellar has to be 14 degrees celsius or below and constant," says Canaider. "It has to be around 65 percent relative humidity - and it has to have a lock that you can't open after 8pm. Otherwise it's a complete waste of time."
Paying to cellar your wines professionally is one alternative, but it doesn't come cheap. At cellarit.com, for instance, prices range from $1.60 a dozen for 200 or more dozen, plus charges for handling (in and out), insurance and storage boxes.
Canaider cheerfully admits that he doesn't have a cellar at all. "The best wine is like the next bus," he says. "Still coming."
The secondary wine market in Australia - based on the re-sale of wine previously purchased from retail, winery, trade and so on - is not as developed as it is internationally. But Langton's Fine Wine Auction and Exchange (www.langtons.com.au) is at the forefront of the market in this country. In 1991, Langton's released its first Classification of Distinguished Australian Wine, which is updated very five years and is widely regarded as the best guide to buying Australian wine for investment.
"Investing in wine is high risk," says Stuart Barclay, chief buyer for Cellarmasters, with a background in fine wine internationally. "If a wine is not on the Langton's list it's even higher risk."
According to Andrew Caillard master of wines, Langton's customers represent the top one per cent of the wine market, and they spend, on average, $76-$85 a bottle.
"I wouldn't suggest anyone try to make a quick buck in wine," says Barclay, adding that you can get started with about $1000 and then build from there. The key, though, is research.
"You need to identify what you want to buy," he says. "There are two types of people who spend money on wine: the first only wants to invest money and isn't interested in product. A serious wine enthusiast will put down money every year for his or her cellar. That's a classic wine investor or wine buyer."
According to Barclay, the second type has a better chance of a return. "Internationally, you might hit the jackpot one year in three," he says. "The serious investor will buy every year and ride the peaks and troughs. If he gets a win, he might sell a few cases of that vintage and use the money to refinance the cellar. Where people fall over is when they invest a lot of money in one vintage."
So, if you're not put off yet, where should you start? As with all investments, it begins with research. "Read the international wine magazines, visit the online wine sites - find out what's being bought and sold," says Barclay.
One of Langton's Wine Investment maxims is this: don't leave it to others; understand the market.
Barclay reiterates: "Keep an eye on it yourself - from the market to the wine itself. Even if you choose to cellar with a professional wine storage company, make sure it's somewhere that you can see the wine if you choose to do so."
Canaider is blunt. "Don't do it," he says. "As the Australian wine market becomes more sophisticated there'll be a lot of people left with a lot of unsellable wine. You can't predict what the market will want in 10 years time. The key word in old wine is that it's old."