By
CultX Team
Building a portfolio of all the best-known name brands might seem like an easy route to appreciation, but our experts advise looking at a bottle’s growth potential over its initial name recognition.
Vintage can be one of the best indicators of potential for appreciation. If the vintage is good, Kelly advises going for something with greater growth potential within a category. Super Tuscans, which are Bordeaux blends grown in Tuscany, “are very sought after because of their quality and competitive price,” she says.
Super Tuscans have the quality of a Bordeaux but for a much lower initial outlay. Investors can pick up bottles for comparatively less than a top tier Bordeaux, but may see a much greater rate of appreciation due to that low initial cost and consistent demand.
Fine wine has become increasingly popular among investors looking to hedge against inflation, and it’s no surprise - Aaron Rowlands, research editor at Cult Wine Investment shares, “Fine wine can offer a good option during inflationary times because there’s a supply and demand imbalance. It tends to outpace inflation.”
While that may seem a bold claim, the value of fine wine is primarily determined by factors that are unlikely to be affected by inflation.
“Tradition matters in wine. Sometimes it is just about buying the best names,” says Aaron. The quality of a wine and its brand are more or less set from the time it’s made. High-quality liquid will lend a bottle value on its own, as will the renown of its producer.
A fine wine made by a highly-regarded producer with the potential to continue improving with age will always be in demand. Aaron explains, “They have consistent global buyer demand from wine connoisseurs, collectors and investors. They’ll always be after these types of wines.”
Investing in a bottle of this calibre is generally considered a low-risk strategy for consistent appreciation. The bottle’s inherent value and inbuilt demand make it resistant to macroeconomic turbulence while offering some potential for growth.
If the wine later receives further accolades from critics or wins awards, or the producer becomes especially sought-after, the bottle has the chance of offering even greater returns.
High-quality wines from renowned producers tend to have enthusiastic and devoted markets, and that’s essential for liquidity. Liquidity refers to how easy or quickly an asset can be bought, sold, or traded. If you know that you’ll want to carry out transactions in particular time frames, you’ll want to choose wines that have that consistent demand for the best opportunities for liquidity.
Investors with low appetites for risk and particular temporal needs will likely want to familiarise themselves with wines that have historically been highly liquid. But investors with a greater appetite for risk and plenty of time may be interested in exploring wines with less performance history and more future potential.
With CultX, investors can get live data on the performance of the bottles in their portfolio and enjoy 24/7 access to a global market. CultX allows investors to choose when to buy, sell, and trade - and gives them all the resources they need to make the right decisions for their needs.
While investors will often try to find rare bottles that were produced in extremely limited quantities, these don’t always hold the most potential for growth. If a wine commands a high price upon release, it may appreciate but is less likely to do so at a very high rate.
When choosing a wine for investment, it is important to consider relative value. She points to the Tignanello by Marchesi Antionori, explaining that “the wine is a blend of Sangiovese and Bordeaux varieties, it was very reasonably priced within this Super Tuscan category. It was really widely available in the UK around 10 years ago and a lot of people remember drinking it with their pasta. Very few saw the investment potential back then. It’s an exceptional wine and has really picked up recently. The average price has increased from around €50 to €120 a bottle.”
The wine was once very easy to find and not yet seen as an investment, but after recent reappraisals and significant depletion of stocks, it’s become a very desirable find. It can be difficult to predict what’s going to attract future demand, but good quality wines often have real potential to appreciate.
Most wine portfolios have a strong foundation of classic Bordeaux and Burgundy wines, and even these well-established regions offer opportunities for growth.
Aaron also emphasises the importance of looking beyond Bordeaux and Burgundy to regions that have seen growth, like Italy. “Just a couple years ago, it had one of the highest growth rates of any fine wine region and is finally being noticed by people around the world. Once Europe, America, China and Asia discover a certain region, the prices can shoot up quite quickly. Piedmont, for example, is very established but is still a top growth region from our perspective.
”And it’s important not to restrict yourself to the old world. “California has super premium wines with super small quantities (with price tags to match) but its diversification is interesting as more producers get established,” he adds. “And Chile has few producers but they’re making some wines that rival the best in the world. So they’re getting noticed.”
Finding new sources for growth is not only essential to diversifying your portfolio, but could increase your chances for incredible returns.
“Really it’s an investment for the medium to long term – five to 10 years. As the price increases in wines from Burgundy and Champagne have proven in the past two years or so, you can realise big returns in short time frames. But fine wine’s real strength is stability and separation from the mainstream stock and bond markets, which comes down to an inverse supply chain, i.e. wines get better and more scarce with time because people start drinking it. It takes a few years for these benefits to really take shape.”
With £5,000 to invest, our experts share their strategies for getting the most out of your budget and choosing the bottles with real potential for long-term appreciation.
Kelly and Aaron agree that they’d put the majority of their £5,000 into Bordeaux and Burgundy. The two regions have well-established track records, so it’s easy to buy and sell those wines. “Of the two, Bordeaux is the most liquid, most established, so the returns are often less exciting but it’s incredibly stable.”
To investors just testing the market and looking for a fairly quick turnover, Kelly suggests something more liquid, such as a bread-and-butter Bordeaux like Pontet-Canet, Beychevelle or Lynch-Bages. “These are all left-bank, classic Medoc wines that have a global audience and are hugely popular in Asia and America,” Kelly says. “That kind of brand recognition creates market liquidity.”
On a recent trip to Bordeaux, she also tried Branaire-Ducru, which is currently selling at around £50 a bottle. “It may not be the most well-known name, but it’s great quality with a wide distribution network.”
Aaron recommends finding one Bordeaux First Growth (considered the best wine in Bordeaux with a price tag to match), such as the Chateau Haut Brion. Chateau Canon and Carruades de Lafite (which is a Second Growth of Chateau Lafite Rothschild) are also great wines to target.
“The top Burgundies have doubled, tripled in price recently. It’s astronomical,” Aaron says.
But that doesn’t mean it’s out of reach for investors. Aaron continues, “For around £6,000, you might be able to get a Grand Cru from Perrot-Minot for example, which is viewed as just as good as some of the big names for a fraction of a price. Or you could double up with a couple up-and-coming names such as Domaine Tortochot and a case of great wine from Charles Van Canneyt.”
For adventurous investors with a greater appetite for risk, Kelly recommends appellations such as Santenay, Fixin, and Marsannay. These offer price-quality ratio and, if some of the vineyards are upgraded to premier cru, potential for growth.
The key here is to go for more widely recognised names, such as Bizot, Denis Mortet, or Meo-Camuzet. “After all, we just witnessed Pouilly-Fuisse receiving a round of upgrades in 2020. Burgundy is a vibrant and exciting region, full of possibilities. And that’s one of the reasons why it captures the imagination of so many wine lovers,” Kelly says.
Aaron also mentions that he’d set aside a portion for a small case of Champagne, such as the Piper-Heidsieck Rare 2006. “The good thing about Champagne is people will buy a bottle for a special occasion, and it gets drunk. That creates real scarcity over time so it’s definitely an age-worthy investment.”
To diversify your portfolio, Aaron advises looking to Italy. “If you’re risk averse, Barolo 2016 was a fantastic vintage – something like the Vietti Barolo Brunate 2016 would be a great purchase,” he says.
And Biondi Santi wines from the Brunello di Montalcino region can offer something very interesting to investors with a little more appetite for experimentation. He shares, “It’s a very small Tuscan region with a handful of producers that make excellent wines. Biondi Santi started the appellation 150 years ago so they’re the icons here but a case of their wine is still (incredibly) great value compared to top wines in Bordeaux or Burgundy.”
If you have any remaining capital, Aaron suggests going for something more speculative that speaks to your personal tastes. Simply looking for what you like can lead to some interesting (and potentially profitable) discoveries. He shares, “In Chile or Rioja, for example, you can find some excellent wines for a few hundred euros a case from regions that are increasingly in demand.”
Investing in emerging regions is riskier, so do your research and identify which years had the best conditions. Those vintages could have better chances of appreciating in value and providing interesting returns in the mid-to-longer term.
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Aaron Rowlands
Investment Writer - WSET Level 3
Aaron Rowlands began his career as a financial journalist and discovered his passion for wine after spending time with a winemaker in Bordeaux. Combining his expertise in finance and fine wine, he has become well-versed in identifying new investment opportunities and building successful portfolios.
Kelly Liang
Wine Writer - WSET Level 4 Diploma in Wine in progress
Kelly Liang is currently studying for her Wine & Spirit Education Trust Level 4 Diploma in Wine, the highest qualification offered by WSET. A chance tasting of a Vouvray Demi-sec from the Loire Valley ignited her desire to learn everything she could about wine, leading her to achieve the prestigious WSET Levels 1 - 3 Awards in Wines. She brings her knowledge and passion to the wine industry.
*Past performance is not indicative of future success; the performance was calculated in GBP and will vary in other currencies. Any investment involves risk of partial or full loss of capital.
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